Measure for success

Sun Microsystems Inc. bases its extensive supplier performance management process on a scorecard which ranks suppliers under a number of categories, according to Randy Louie, Sun's director of customer fulfillment. Here's how Sun prioritizes the categories:

Cost is the most critical area as Sun strives toward consistent profitability. Louie's team assesses market pricing and measures suppliers against it. He seeks competitive pricing for the service level Sun requires.

Quality is no less important than cost, but Sun gives it a bit more weight. "All products and services provided by 3PLs are measured in the context of the quality of service we receive," notes Louie. Transportation measures, for example, include amount of product delivered damaged and accuracy of invoices and documentation.

Third-ranked availability means, for example, when Sun pays for three-day service, does product arrive in three days? How often does the 3PL meet agreed-to service levels? Sun's target is 99% of deliveries meeting specified service levels.

Fourth is strategy and technical development. Sun encourages partners to develop and invest in technology to increase their competitiveness. And Sun openly hopes to influence the strategic direction logistics providers take. "We advocate direct ship from supplier to customer with no touch points between. Many 3PLs only do it regionally. We keep driving for global direct ship capabilities with end-to-end visibility," notes Louie.

"We bring our strategy directly to the 3PLs. We agree on initiatives or programs we believe will enable us to achieve our objectives. We score suppliers against goals that include initiatives such as implementing direct ship in a region," Louie explains. "We define and measure success on those initiatives and factor that into the score in this category."

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