How to set up the Balanced Scorecard for supplier on ERP system?

Setting up a Balanced Scorecard (BSC) for supplier management within an ERP system involves several steps to ensure that the suppliers’ performance aligns with your company’s strategic goals. Here’s a step-by-step guide to help you set this up:

1. Define Strategic Objectives

Identify the key strategic objectives for your supplier management. These might include:

• Cost efficiency
• Quality improvement
• On-time delivery
• Innovation and technology advancement
• Sustainability and compliance

2. Develop Key Performance Indicators (KPIs)

Create specific KPIs to measure these objectives. Examples include:

• Cost: Purchase price variance, cost reduction achievements
• Quality: Defect rates, returns, supplier quality ratings
• Delivery: On-time delivery rate, lead time
• Innovation: Number of new products introduced, collaborative projects
• Sustainability: Compliance with environmental standards, CSR initiatives

3. Set Targets and Benchmarks

Establish clear targets and benchmarks for each KPI. These should be realistic, time-bound, and aligned with industry standards or historical performance data.

4. Configure the ERP System

Set up the Balanced Scorecard in your ERP system:

a. System Setup:

• ERP Modules: Ensure the relevant ERP modules (e.g., Supplier Management, Procurement, Quality Management) are active.
• Data Integration: Integrate data sources such as supplier databases, procurement records, quality control systems, and delivery tracking systems.

b. KPI Implementation:

• Data Fields: Define the data fields required for each KPI.
• Data Collection: Set up automated data collection and entry points. For example, quality metrics can be gathered from inspection results, and delivery metrics from shipping logs.

c. Scorecard Configuration:

• BSC Module/Functionality: Use the BSC module if available, or customize dashboards and reports to reflect the BSC framework.
• Mapping Objectives to KPIs: Map each strategic objective to its corresponding KPIs within the system.

d. Reporting and Dashboards:

• Custom Reports: Create custom reports and dashboards to visualize the KPIs. Use visual elements like graphs, charts, and heatmaps.
• Automated Alerts: Set up automated alerts for deviations from targets.

5. Data Entry and Management

Ensure accurate and timely data entry. Regularly update the ERP system with relevant supplier performance data. This can be automated or done manually as required.