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It makes no difference what kind of business you are in, suppliers and providers play a key role in the success of your business. Having a formalized system to monitor and evaluate the suppliers and their performance is vital for the proper operation and profitability of your business. Big companies take care of their suppliers by treating them as their associates that help in the growth of the company. They believe that this mutually beneficial venture impacts the price they negotiate today and the quality of service they get in the future. How to do supplier performance evaluation? Designing an Evaluation Strategy There are common techniques to assess the performance of a supplier, including evaluation forms, surveys, system settings and software applications. You can design a survey where you have your own employees to answer questions and give ratings to suppliers. You can review the corrective actions you need to issue a supplier, the products you need to return because the supplier did not match the specifications, or the number of complaints you have received due to bad service from a supplier. You can also monitor the suppliers by making periodic checks. The bottom line is that you need to create measurements or reports at the beginning of purchase and throughout your relationship with the supplier. Maintain Good and Beneficial Relationships Consider your suppliers as part of your team and treat them accordingly. Communicate regularly and openly. Technology is good, but do not neglect the personal touch of a telephone call or face to face meetings. Also, prevent clashes with suppliers by paying on time or at least by truthfully answering the issues of late payment. Be honest and clear with your suppliers. Make sure that they understand the expectations and needs of your company. Decide When You Have to Issue a Red Flag While monitoring the performance of a supplier, you must decide when to issue a red flag and when to praise. Show appreciation for a job well done; give an additional business to the supplier if he shows excellent performance. Bad suppliers will supply products that are mediocre and cause a problem with your customers. You can drop a supplier if he is not performing well, but strategically it's better to keep your suppliers instead of replacing them all the time. By giving them a warning, you give them an opportunity to fix the problem with your supplies. Cut Weak Links Nobody, of course, will tolerate poor service on an ongoing basis. At some stage, you may want to get rid of some of your suppliers who are not performing well. After giving them a warning, put them on a short leash or a notice before cutting ties completely. Call the supplier and give them the chance to correct the situation. Send digital photos, emails and quality reports. So that there is no mystery when there is a problem or question. The relationship with your supplier is a trading partnership, and if the two sides are working to ensure that the partnership is successful, it will be a success. In the long term, a win-win relationship with your supplier will be a competitive advantage. For more information visit Supplier Performance Evaluation. About the Author: Jack Jackson is an expert on sourcing and outsourcing.
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