Supplier Performance Metrics
Supplier performance metrics are indicators businesses look at to determine how their suppliers are performing in a variety of different areas. These are sometimes referred to as supplier KPIs (key performance indicators). The answer to “what is supplier performance?” varies based on each business’s unique goals, but is related to the value that the supplier provides to the company.
MetaCX makes it easy to plan and track supplier performance metrics, or KPIs, in the evaluation of suppliers. So, what is supplier performance evaluation, what is supplier performance measurement, and what goes into this process of determining a supplier’s value? Put simply, supplier performance evaluation—otherwise known as supplier performance measurement—is a framework to evaluate a supplier’s overall impact on a buyer.
Relevant metrics taken into consideration in the evaluation process may pertain to financial impact, ROI, operational efficiencies, etc. These metrics might also monitor contract compliance, ensuring that vendors honor the agreements they set with their buyers at the beginning of the partnership. Essentially, businesses want to know what value they are getting from the supplier.
They want to know which needs are being met, and where there’s still room for improvement. Once the evaluation is complete, vendors are given a supplier performance rating based on the value they’re providing. Businesses look at this rating, stack it against their company’s key goals and needs, and then decide whether or not the vendor is worth the cost. It’s an easy and effective way to see exactly how a supplier is impacting your business—whether for better or for worse. It allows you to make the most informed decision possible when evaluating different vendors.
MetaCX brings suppliers and buyers together to focus on the creation and delivery of value, and this is done by measuring and managing supplier performance metrics. The platform aligns suppliers and buyers on expected outcomes, which in turn allows for vendors and customers to connect where it makes the most sense for both parties.
MetaCX makes it a priority to remove the guesswork from the supplier/buyer relationship so that you can feel confident in your vendor’s ability to meet your needs. This metrics-based alignment helps create accountability and focus for the relationship, thus creating a better experience for all involved.
Supplier Performance Management
The importance of supplier performance measurement cannot be overstated. By tracking performance, you know exactly how you’re benefiting from a particular vendor, eliminating the confusion that is common in most supplier partnerships.
But why is it important to measure and monitor supplier performance over time? How is this supplier performance management carried out? Better yet, what is supplier performance management? In a nutshell, supplier performance management is the process by which a supplier’s performance is tracked and measured. SPM involves the measurement of KPIs to determine how well a vendor is performing at any given
time for any given objective or supplier performance KPI. Measuring performance over time allows you to monitor the progress of the vendor relationship, and to ensure value delivery over the course of the contract.
There are numerous benefits to this process—primarily, financial. It should come as no surprise that the more businesses know about their vendors, the more money can be saved. This is partially due to the fact that having a centralized source of supplier data makes it easy to track potential avenues for cost savings.
Those managing supplier relationships can use this information to end low performing vendor partnerships and funnel the money saved into higher-yielding vendors or operations. Additionally, SPM is a valuable tool for reputation management. No one wants to partner with a vendor known for low-quality or unreliable products, and SPM can inform your business of the best—and worst—vendors to work with.
Supplier Performance Management Framework
An effective supplier performance management framework provides a clear outline of the processes involved with managing supplier data. It allows an organization to operationalize and scale vendor performance measures easily. It should include both quantitative and qualitative supplier performance measures that are shareable with third parties. Common tools used to measure supplier performance include the supplier performance report, a vendor scorecard dashboard, and the supplier performance index formula.
A supplier performance report compiles a list of data and desired outcomes to help you determine whether your vendor of choice is upholding their end of the business partnership. Similarly, your business might use a vendor scorecard dashboard to measure a vendor’s success in different key areas—this is particularly useful when comparing one supplier to another. A supplier performance index formula is one of the best supplier performance measurement tools for capturing quantitative data that can show you how your vendor is performing on certain KPIs.
Ideally, your supplier performance monitoring format of choice will enable you to centralize your supplier-related data in a single space that is easily accessible to all members of your team and of the supplier’s team. It should also suggest action steps you can take to improve metrics where they are lacking, and track demonstrable improvement over time. It’s important to pay attention to whether or not you’re hitting your business goals, and how you can get closer to where you want to be if you aren’t already there. These metrics are critical to the success of any partnership between your business and your vendors.
In short, supplier performance management best practices involve the use of tools for understanding vendor performance across various operations and teams. Knowing how to measure supplier quality performance can be challenging for those who are new to the space, but MetaCX can help you implement this kind of framework.
MetaCX streamlines the supplier evaluation process to help give you a clearer picture of the performance of each of your vendors. Further, the platform is compatible with all SaaS applications and websites, making it easy for your organization to utilize our framework for managing supplier performance and keeping up to date on quality indicators across the board. This supplier performance monitoring procedure alleviates the burden of having to track each element individually, as it compiles data into a more robust template of information in which you’re able to easily make connections between various aspects of the SPM process.
Supplier KPI Scorecard
A supplier KPI scorecard is a tool used to track and rate vendor performance across different key performance areas that are important to your business. Scorecards might include a vendor performance evaluation checklist, which outlines your organization’s most critical elements for vendor success, as well as the processes performed to evaluate these metrics.
Vendor scorecard metrics often include a number of supplier scorecard categories—for instance, cost, quality, delivery, logistics, and quality management—and vendors are given a score in each of these categories. Your supplier might be doing well in terms of cost, but their delivery is lacking, so by utilizing a scorecard, you’re able to get a more nuanced view of how your vendor is performing. A vendor might not be entirely effective or ineffective, so it’s important to recognize where they’re performing to your standards and where there’s room for improvement.
Ultimately, the purpose of vendor scorecard metrics is to track performance and score vendors according to the objectives of various sectors of your organization, and these will vary depending on your specific goals. Your supplier scorecard metrics are the best way to get a handle on both the positives and the negatives associated with your supplier, but more importantly, they categorize information so that you get the full picture.
A supplier performance metrics scorecard also provides insight into whether or not your business goals are in alignment with your vendor’s performance—in other words, it provides hard data on how a supplier benefits your organization. You can then use this information to make changes as needed. On a more basic level, they can be used to track the number of items or deliveries you’ve received from a particular vendor, which is another critical element that factors into the overall value that the vendor offers.
Supplier Performance Monitoring Template
A commonly-used supplier performance monitoring template is the supplier performance scorecard template XLS. A supplier KPI scorecard template tracks and evaluates how well your vendor is performing with each KPI you have outlined, and a vendor performance scorecard template scores and categorizes your supplier’s performance across different areas of your organization.
A supplier performance report template details your partnership’s contract agreement, as well as the evaluation criteria used to measure your vendor’s success. Note that in this example of a supplier performance report template, the timeline and key players involved in the contract are outlined extensively.
You might also consider using a supplier performance measurement pdf if you’re looking to create a template that’s easily shareable across mediums. If your team is adept at Excel, you could also create a supplier performance scorecard template excel sheet, which allows you to input data and score your vendor on various relevant categories. A supplier performance evaluation pdf is similar to a supplier performance measurement pdf in that it enables users to easily view and access the document.
A supplier performance report excel template is nearly identical to a supplier performance scorecard template excel sheet—the main difference is that the former typically reports on performance after the fact, while the latter keeps score before a final evaluation is performed.
Tracking supplier performance metrics is critical to getting the most out of your vendor relationships. These metrics provide an incredibly useful visualization that provides your business with a more thorough and holistic understanding of how well your suppliers are meeting your outlined expectations.
At MetaCX, we make sure to align your business goals with your vendor’s, forming a connection that allows both parties to get the most out of your collaborative efforts. Get in touch with us today to learn more about our SPM services and how we can help your organization manage your supplier performance metrics in order to achieve better outcomes with your chosen vendor(s).