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Purchasing Best Practice # 3: Managing Supplier Performance

PurchTips - Edition # 21

By Charles Dominick


How Are Your Suppliers Performing?

Supplier performance is critical to an organization. A supplier that performs well can help an organization be more efficient, produce higher quality products or services, reduce costs, and increase profits. A supplier that performs poorly will have the opposite effect. Therefore, it is obvious that measuring and managing supplier performance is one of the most important responsibilities of a purchasing professional.

Do you have a supplier performance rating program in place? If not, here are some insights associated with the five important decisions of implementing a supplier performance rating program.

  1. Which suppliers will you rate? Consider rating those suppliers with whom your organization spends a lot of money as well as other suppliers who can have a significant impact on your operations.
  2. What personnel in your organization will participate in the rating process? In addition to the purchasing staff, don't forget to include end users and stakeholders.
  3. What performance measures will you use? Use metrics that are aligned to the measurements used to gauge the success of your organization.
  4. How will you collect performance data? Implementation speed, IT support, and data integrity are among the many factors to consider when selecting among the four most popular data collection methods.
  5. How will you use performance data? Performance data must be used to reward good performance as well as to correct poor performance.

Spotlight On Professional Development Opportunities

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Is poor supplier performance driving you crazy? You won't have to work so hard if you apply certain proven techniques for evaluating and improving supplier performance. If you have wanted to implement a supplier ratings program but had difficulty getting started, Next Level Purchasing's online mini-course "Managing Supplier Performance" (MSP) is the perfect class for you. And, oh yeah, it's FREE!!!

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