Whatever the product or service that your supplier delivers, you selection process will require them to have a certain minimum level of capability and experience. Suppliers should apply this capability and experience in their delivery process and produce an output (whether it is a product or service) that gives your organisation the outcome it expects. Unfortunately, this sequence doesn’t always work well with the result that the expected value you thought you were buying melts away.

What you need to do at the start of a Supplier Relationship Management (SRM) programme is to evaluate the value that is being lost in engaging with key suppliers. You can do this by using a questionnaire that asks a cross-section of people to score your suppliers on a scale from very good to poor against each of the criteria of capability, experience, outputs, outcomes received and value for money.

When you analyse the scores, you may find that suppliers are often rated very highly on the input scores (in other words their capability and experience). After all, they have used these to select the suppliers during your tender process.

However, as you work through the list of criteria, the scores generally decline until value for money is often the lowest score. In other words, people believe that value is lost once actual delivery of the purchased goods or services starts.

A quick way that you can use to assess the lost value for some of your key suppliers is this:-

Start by listing your top 5 suppliers and draw three columns next to this list. Title the first column “capable”; column 2 “delivery”; and column 3 “value for money.”

Now, consider your first supplier and whether or not you think that supplier is capable of delivering a good service. If your answer is yes, then put a tick in column 1 against this supplier. Complete column 1 for all 5 suppliers.

Next, consider whether or not your first supplier is delivering a quality result (column 2) and whether or not they are consequently delivering value for money (column 3). Put a tick in columns 2 and 3 if your answer is yes and a cross if the answer is no.

Now complete the exercise for the remaining 4 suppliers.

The result from this exercise will give you a feel for whether value is being lost with these 5 suppliers. Generally, if column 3 has fewer ticks than columns 1 and 2 then you are losing value.

Finally, why not share this exercise with your colleagues and see if there is a consensus view on lost value. If there is, then this is the start of building a business case for SRM.