SGP's 'traffic light' monitoring system stops supply chain issues

14 September 2011

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14 September 2011 | Adam Leach

A ‘traffic light’ supplier rating system has helped property management company SGP to take fast action to solve potential problems in the supply chain.

The company manages the performance of about 100,000 suppliers on behalf of clients to provide property and facilities management services – 400 of which the company spends more than £50,000 with annually – so the business needs to know if a vendor is underperforming. SGP’s clients include Arcadia Group, Pizza Hut and Subway.

Martyn Sherrington, head of procurement, SGP Property & Facilities Management, told SM: “It’s a red, amber, green pictorial view of our suppliers’ performance, measuring it against a number of KPIs which we’ve agreed on with the client.”

Any issues are identified and analysed by the company’s 100-strong team of employees that work in its around-the-clock call centre. When a problem occurs, the team can analyse the issue and ascertain the reasons behind it.

Should a supplier drop into the ‘red zone’, Sherrington and his team will work with the vendor and communicate the problem. “We can quickly pin down why they are failing, tell them which jobs they have failed on and understand whether it was a near miss or something more serious,” added Sherrington.

“There was one particular supplier, which was handling a national contract, that had subcontracted out the work for a particular region and the monitoring system enabled us to see that the sub-contractor was letting them down. As a result, they went and recruited someone in the area and their score soon went up again.”

And it is the companies diverse supply chain, catering for the needs of many clients in many areas of the country, that enables the strategy to work. If a supplier’s performance drops, SGP is well-placed to bring in an alternative that it already has a contract with.

“The supply chain is dynamic in that it is changing all the time,” says Sherrington. “We’re putting people in place where they have the best chance of success. It’s about understanding where a supplier has good capacity.”

Martyn Sherrington is speaking at this year’s eWorldPurchasing & Supply Conference, held in association with CIPS on 21 September at the QEII Conference Centre in London.

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