Measuring supplier performance

How To Measure Supplier Performance?

Having run a competitive tender process, negotiated a good deal, signed the contract, and implemented a new supplier took a lot of time and effort. Some people consider this to be the point where the procurement process ends and the supplier is just left to deliver the goods or services.

It would be okay if everything always went smoothly and if the supplier delivered exactly what was requested. In reality, however, there are often issues with suppliers.

It is important to remember that suppliers are not only to blame when things go wrong, since often it is beyond their control and we are all prone to mistakes. It is equally important to record when things go right or were exceptional for a supplier to create a more accurate and balanced picture of their performance. For the most balanced view of a supplier, opinions should be sought from a cross-section of internal stakeholders who use them.

For the best measurement of a supplier’s performance, it is important to establish a simple process to conduct the assessment and document it at predetermined intervals of time. The feedback should then be used to provide constructive feedback to the supplier, as the supplier can’t be expected to improve if they’re not informed. Also, it’s important to let suppliers know what they’re doing well so that they’ll continue.

The criteria for determining supplier performance may vary from one company to another. It will, in its most basic form, be based on the value and quality of the good or service, however anything considered important can be included, such as the ability to deliver on sustainability promises.

When a contract comes to an end, the performance of suppliers should be reviewed so that if a supplier is underperforming, they can be excluded from the new contract. Alternatively, if the incumbent supplier is performing exceptionally well, it might be easier to just negotiate with them rather than go out to market.

Companies with more resources, especially larger ones, are in a better position to create processes and formally monitor supplier performance. Smaller companies with fewer resources can take advantage of oboloo’s Supplier Performance, which is an integral part of Supplier Management. Designed exclusively 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

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