Do You Measure Supplier Performance?
Your company has spent a lot of time and effort to run a competitive tender process, negotiated a good deal, signed the contract and implemented the new supplier. For some this is where the idea of the procurement process stops and the supplier is just left to get on and deliver the goods or service.
This would be fine if everything always ran smoothly and the supplier delivered exactly what was required every time. Unfortunately, in the real world, there are issues that arise with suppliers.
It’s important to remember that suppliers should not only be judged when things go wrong as sometimes it may even be beyond their own control and we’re all prone to making mistakes sometimes. To create a fairer and more balanced view of a suppliers performance, its equally important to record their performance when things go right or are exceptional. To get the most balanced view of a supplier opinions should be sought from a cross section of internal stakeholders who use them.
The fairest way to measure a suppliers performance is to establish a simple process to carry out and create a record of supplier performance assessment at pre-determined regular time intervals. This should then form the basis of constructive feedback to the supplier as well, as they can’t be expected to improve if they’re not made aware of any issues. Its equally important to feedback to suppliers what they’re doing right so they continue to so.
The criteria for which the supplier performance are based may vary from company to company. In its simplest form it will be based on the value and quality of the good or service, however it can include anything that is deemed to be important, such as ability to deliver on sustainability promises.
The supplier performance record should be reviewed when a contract is coming to an end so that if a supplier is underperforming they can be potentially excluded from the new tender. Alternatively if the incumbent supplier is performing exceptionally it might be easier to not go out to market and to just have a negotiation with them.
For many companies, especially larger ones, who have more resources, it’s easier to create processes and to formally monitor supplier performance. For those smaller companies with fewer resources there is one Supplier Performance solution that is an integral part of Supplier Management from oboloo, that has been designed specifically for SMEs. oboloo is an intuitive and simple solution that also incorporates sourcing, contract and savings management to enable companies to be supplier smart. To learn more please visit www.oboloo.com