| Good supplier performance is paramount to the | | | | account their relative importance to you. If you then |
| effectiveness of your organisation. However, good | | | | add up each weighted score you will arrive at an |
| performance does not always happen automatically. | | | | overall performance score for the supplier. |
| It has to be managed and the first step in supplier | | | | If you measure suppliers regularly in this way you can |
| performance management is to measure what it is. | | | | track performance and spot adverse trends early |
| Measurement of performance should be on-going | | | | enough to do something about it before it becomes |
| using performance criteria that are specified in your | | | | a problem. |
| contract and based on your business requirements | | | | The way to do it is to plot successive total |
| definition. | | | | performance scores over time (weekly or monthly) |
| Typical factors that are measured include the | | | | on a graph using the horizontal axis for time and the |
| following.o Price - are you getting the best price?o | | | | vertical axis for the performance score. |
| Quality - are you satisfied with the quality of your | | | | You can then draw a horizontal line across the graph |
| supplies?o Innovation - do your suppliers regularly | | | | at the performance level that signifies unacceptable |
| inform you of new products and services that might | | | | performance. If successive scores show a downward |
| help improve your business?o Delivery - are your | | | | trend, you can extrapolate that trend to forecast |
| suppliers punctual? Do the supplies arrive in good | | | | when the actual score will hit the unacceptable |
| condition?o Account management - do your suppliers | | | | performance level. This gives you time to discuss |
| respond quickly to any orders or queries that you | | | | with your supplier the underlying causes of the trend |
| place with them?o SLAs - are your suppliers living up | | | | and correct them before they become a real |
| to their end of the agreement? | | | | problem. |
| What you need to do is to quantify each of these. | | | | This creates a "win-win" for you and your supplier - |
| You can do this by, for example, relating a supplier's | | | | you get the performance you need and your supplier |
| performance on each factor on a scale of 1 (poor | | | | doesn't incur any costs or penalties for poor |
| performance) through to 10 (excellent performance). | | | | performance. |
| You may want to weight each factor to take into | | | | |