What is the primary goal of using key performance indicators in SRM?

The primary goal of using key performance indicators (KPIs) in Supplier Relationship Management (SRM) is to quantify supplier performance and drive improvements. KPIs provide a measurable way to assess how well suppliers are meeting agreed-upon standards and expectations. By tracking various performance metrics—such as delivery time, quality of goods, pricing, and responsiveness—organizations gain insights into their suppliers' effectiveness.

This data-driven approach enables companies to identify areas where suppliers excel and where improvements are necessary. It facilitates a continuous feedback loop, encouraging suppliers to enhance their performance over time. Additionally, using KPIs fosters a collaborative relationship between the organization and its suppliers, allowing both parties to work together towards common goals, which ultimately leads to better supply chain efficiency, reduced costs, and improved service delivery.

The other options do not align with the purpose of KPIs in SRM. Creating more paperwork does not contribute to the efficiency or effectiveness of supplier management, while establishing rigid contracts can lead to inflexibility and hinder collaboration. Limiting communication with suppliers contradicts the fundamental principle of SRM, which emphasizes open dialogue to enhance relationships and performance.