Definition: 

Supplier management and development is the process of measuring the consistency and effectiveness of a supplier and communicate that feedback to them.

• What it is: Supplier agreements and contracts define requirements and obligations on the part of the supplier. The measurement of how the supplier complies with the agreement and the process of resolving conflicts is the active supplier management process. The metrics are often captured in a supplier scorecard.

• What it does: It is a process to make sure suppliers fulfill their obligations and meet the requirements of the supply agreements. It must include metrics to track performance and a process for resolving conflicts.

Uses:

• How it is used: Supplier scorecards are used to determine if a supplier is living up to their obligations and provide a conflict resolution process when they don't.

• Where: All contract agreements should have a scorecard associated with it and the supplier scorecard metrics should track that performance.

• Why: If you do not track the metrics of the supplier performance, the supplier may not meet your needs. 

Limitations:

• Where it shouldn't be used: When purchases are transactional one-time purchases, the cost of supplier management is not worth the cost and effort.

• Any restrictions: None

• Warnings: If you measure the metrics but do not provide feedback to the supplier on their performance, they will not know when they are failing to meet your needs. Continual feedback is critical to supplier management and development.

Demonstrations:

• Supplier scorecards:

• Supplier scorecards

• Creating a Vendor Performance Evaluation System

• Step-by-step process:

• Gather data: Develop a supplier scorecard and measure the metrics included.

• Analyze the data: Graph the metrics and include charts, tables, and graphs that show the metrics over time and indicate the supplier’s performance.

• Interpret the results: Identify trends in maintenance, improvement, or performance deterioration by the supplier. Use this information to require resolution or end contractual agreements and start the search for a new supplier.

• Present results: Present PowerPoint slides that include the scorecards and other metrics to describe the performance. Share with suppliers and leadership within your company.

Template for Capturing Data

• Vendor Scorecard Template

Output Representation and Recommendations:

Present PowerPoint slides that include the scorecards and other metrics to describe the performance. Share with suppliers and leadership within your company.

Examples:

• Supplier-Performance-Scorecard-Tool.xlsx

Additional Resources:

• How to give a Quality Score to your Supplier