Definition: 

Supplier Management and Development is the process by which you measure the consistency and effectiveness of a supplier and communicate that feedback to them.

• What it is: Supplier agreements and contracts define a number of requirements and obligations on the part of the supplier. The measurement of how the supplier is complying 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 does it do: It is a process to make sure that the suppliers are living up to their obligations and meeting the requirements of the supply agreements. It must include metrics to track performance and a process for resolving conflicts.

Uses:

• How is it 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, you can have situations evolve where your needs are not being met by the supplier.

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 scorecardsLinks to an external site.
• Creating a Vendor Performance Evaluation System
• Step-by-step process:

• Gathering data: Develop a supplier scorecard and measure the metrics included.
• Analysis of data: Graph the metrics and include charts, tables, and graphs that show the metrics over time and indicates the level of performance of the supplier.
• Interpretation of results: Identify trends to indicate maintenance, improvement, or deterioration of performance of the supplier. Use this information to require resolution of non-complying performance, or to end contractual agreements and start the search for a new supplier.
• Presentation of results: Present PowerPoint slides that include the scorecards and other metrics to describe the performance. Share with suppliers and leadership within your own company.

Template for capturing data:

Template Form: Vendor Scorecard Template.xlsxDownload Vendor Scorecard Template.xlsx

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 own company.

Examples:

 Supplier-Performance-Scorecard-Tool.xlsxDownload  Supplier-Performance-Scorecard-Tool.xlsx

Additional resources:

How to give a Quality Score to your Supplier