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Supplier Performance Measurement

A certain business will not be successful if the suppliers that it has are poor performers. Indeed, suppliers are one of the biggest factors that will greatly affect the condition of a particular company.

For this reason, it is therefore important for a company to have a supplier performance measurement that will help it in knowing the level of performance that their suppliers render.

No business owner would like to see the downfall of his business. Although there are numerous factors that would greatly affect the standing of a particular company, suppliers are one of those which have a great effect.

What is Supplier Performance Management?

Supplier Performance Management is actually the process wherein current suppliers are being assessed as well as measured against the contractual agreements. Standard performance meetings will be made together with the customary performance meetings held between the supplier and the business itself. Rating of the Supplier Performance Measurement will be determined bi-annually and will be done on the list of the derived suppliers wherein the company undertakes the biggest spending level, strategic impact as well as market complexity. The scorecard of performance balance will be completed by the assessment team’s members and will be endorsed before the results will be published to other suppliers and internal business units. More review meetings will be held between the supplier and business in order to discuss other issues related to particular performances.

Measurement of Good Performance

A supplier’s good performance is very paramount to your organization’s effectiveness. But, good performance is something that does not automatically happen. It calls for management and the initial step for the management of supplier performance would to measure what really it is. Performance measurement will be something on-going with the use of performance criteria as pointed out in your contract and also, based on the definition of your business requirements.

Usual Factors Being Measured

The first factor measured in the performance of a supplier is the price. Do you actually get the best price? Next is the quality. Are your suppliers able to satisfy you when it comes to quality? Another factor is innovation. Are you regularly informed by your supplier regarding new services and products that can help in improving your business? When it comes to delivery, is punctuality one of the traits of your suppliers? Are all supplies arriving in perfect condition? As for account management, are your suppliers responding quickly to the queries or orders that you have given to them? Lastly, do your suppliers live up to their side of agreement in the SLA? If all the questions got a positive response, then, you did a good job in selecting the right supplier.

Quantifying the Factors

The best way to quantify the mentioned factors is to use a scale. For instance, you can relate the performance of the supplier for each of the factors using scale 1 which means poor performance to 10 which means excellent performance. You can then weigh each of them so that you can take note of the importance that they give you. Then, add all the weighted score to arrive at the total performance score for that supplier.

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