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SUPPLIER MANAGEMENT
SUPPLIER MANAGEMENT
The purpose of the CONTRACT is to enable COMPANY and CONTRACTOR to work together to create
superior long term value for both firms. The business relationship enacted by the CONTRACT shall be
performance based and underpinned by a culture of continuous improvement.
COMPANY and CONTRACTOR are committed to continuously improving performance throughout the
execution of the Works. COMPANY and CONTRACTOR will operate a Supplier Management (SM) process
which helps drive performance improvement year-on-year, through increased safety, reliability and
efficiency, thereby reducing total cost of ownership of the goods/ services.
Developing and agreeing performance metrics (Key Performance Indicators) based on the
value objectives. Targets for performance will be reviewed and updated annually to promote
year-on-year improvement. Qualitative and quantitative data is collected, collated and
reported through the communication channels established by the CONTRACT governance
structure.
Ensures consistent and rigorous management of performance to assure delivery against
targets. The performance of the CONTRACTOR and the relationship is reviewed and tracked
at set intervals against the stated objectives and goals. Interventions are made as required
and performance is monitored against improvement plans.
Ensures efficient communication and drives best practice across the Sector/ Sub-Sector.
SM has three (3) key elements, the application of which will lead to better engagement and subsequent
performance assurance:-
Set performance targets for continuous improvement based on best in class benchmarks.
As a minimum, key performance areas to be addressed will include HSSE, Cost,
Competency, Local Content, Efficiency, Quality and Innovation.
Establishing processes to formally measure, compare and improve performance. This requires a
mechanism for bringing together performance data in a way that allows it to be acknowledged,
understood and acted upon both internally and externally.
Actual performance will be measured throughout the CONTRACT life by use of a scorecard that
will be developed and implemented following CONTRACT award. CONTRACTOR will be
responsible for completing the scorecard on a quarterly (or as agreed) basis. Scorecard content
will be reviewed and approved by COMPANY REPRESENTATIVE on a quarterly basis.
Reviews of actual performance versus targets will be performed on a regular basis (once a
quarter or other frequency as mutually agreed) throughout the life of the CONTRACT. COMPANY
and CONTRACTOR shall meet formally to discuss the previous quarter's performance and identify
any performance gaps and opportunities for improvement.
In all such Performance Review Meetings (PRMs), CONTRACTOR shall prepare minutes of meeting.
CONTRACTOR shall submit proposed minutes to COMPANY for confirmation. If appropriate,
COMPANY shall acknowledge the agreed minutes as being a true record of the meeting in
question.
Progress on follow-up actions from PRMs will be recorded and monitored on a Corrective Action
Reporting (CAR) or other form of mutually agreed action tracking report register maintained by
CONTRACTOR. CONTRACTOR shall provide interim performance data on a monthly basis.
The governance structure for SM teams shall be agreed within the first two (2) months after the
Effective Date of the CONTRACT.
The following balanced scorecard shall be used as a basis for open, cooperative, performance
focused discussion during Performance Review Meeting held between COMPANY and CONTRACTOR.
COMPANY emphasizes the importance of continuous performance improvement under the CONTRACT
hence the KPIs themselves, the KPI’s targets or the basis of KPI measurement shall be revised from
time to time with mutual agreement of COMPANY and CONTRACTOR.
The balanced scorecard and KPIs shall be finalised prior to award of a CALL OFF. Below is an illustrative
example:
Principle
months of PRM
3. Assess CONTRACTOR’s performance in delivering safe
Zero Major Findings Monitor
engineering designs through audits performed on the project.
sum of Yellow findings, with
improving trend