Comparing Supplier Scorecard Insights | DCR Workforce Blog

Comparing Supplier Scorecard Insights

Michael Koploy, who is an analyst with Software Advice, has drawn our attention to his post on the best practices in supplier performance management based on expert advice sought from Sherry Gordon of the Value Chain group. (For the full post – go here: http://tinyurl.com/catohe6) I thought a comparison of what we have shared in our earlier posts would make for interesting comparison and possible insights in the matter.

We draw a comparison between the approaches taken by our panel of expert bloggers – to help our readers to derive a deeper insight into the matter through this additional information:

Michael Koploy with Sherry Gordon

DCR Workforce on its Blog

1. Scoring of Performance:
  • Establish supplier performance expectations and build Scorecards around Business Goals to align KPIs with business goals.
  • Focus on quality – not quantity.
  • Uncover hidden cost drivers and risks
  • Find business and performance improvement opportunities
  • Reduce risks and supplier cost
  • Discover additional value from suppliers.
  • Derive a clear snapshot of a supplier’s performance.
  • Use four different perspectives – customer, internal business, innovation & learning, and financial – to gauge supplier performance.
  • Understand the underlying success factors to promote a sustainable quality with a sense of purpose and direction
  • Measure important metrics which are relevant to the business and its goals.
  • Customize the scorecard components to the organization’s particular needs.
  • Do not go for a large number of metrics as quantity does not always lead to quality.
  • Obtain the sign-off of senior management
  • Use discretion to measure only those with whom we have performance issues and complaints – to do so and leave the others who provide the required performance.
2. Evaluation Processes:
  • Build right metrics into the scorecard
  • Create specific business processes to communicate performance with suppliers
  • Establish how suppliers will be recognized and rewarded for good performance
  • Establish how new business will be awarded to existing suppliers
  • Establish when to disengage with an underperforming supplier.
  • Use internal stakeholder surveys can be used to measure performance data.
  • Track the SLAs , deadlines and Quality of Products/Services
  • The metrics need to be objective rather than subjective and acceptable to all stakeholders.
  • The criteria may be weighed on a rating scale and with prioritization for important scores which allow for a comparative assessment of supplier performance.
  • Data should be carried to the scorecard without requiring too much of tweaking and cleansing.
  • Internal stakeholders need to be committed, proactive and responsible in their approach to the activity of collecting the data inputs required for the scorecard.
  • Attention must be paid to the feasibility of having access to the data/information (if it is internally available or needs to be obtained from the supplier) before adding it to the scorecard inputs.
  • Evaluate the commitment – of time and resources
  • Use IT Resources as some of the data will be readily available and easily gleaned from the IT resources
  • Ensure cross-functional participation for either qualitative or quantitative inputs
3. Action
  • Critical importance to the sharing of scorecard results with each supplier
  • Initiate action to improve performance
  • Keep lines of communication open for mutual benefit and strong relationship
  • Use software for scorecard building capabilities and performance data that is easy to access, share and analyze.
  • Motivate suppliers and push them to higher levels of effort and commitment through rewards and recognition.
  • The scorecard results must be shared with the suppliers, irrespective of the standard of their performance levels – and absolute clarity provided on organizational expectations, with target areas of good-to-have and must-have improvements.
  • Appropriate revisions to the tiered supplier list (where Tier 1 gets the first shot at any requirement),
  • Corrective measures and even disengagement to impress upon the suppliers that their ongoing relationship with the organization will be impacted in a positive or negative manner as a result of the scorecard assessment.
  • Effective change management effort encompassing the overall supplier performance
4. Sharing Information
  • Supplier performance information needs to be visible internally
  • Stakeholders outside of procurement and supply management who are impacted by supplier performance all need access
  • Consider supplier performance is a leading indicator for supply risk providing early warning signs and provide time to take action.
  • Evaluate suppliers and work to improve performance empowering managers to fill the gaps in their supply base and establish a stronger foundation to build upon.
  • Use the review process to establish mutual support, share organizational strategy and requirements.
  • Resolve any small issues before they become too big for effective management.
  • Establish an atmosphere of communication, collaboration and openness to feedback.
  • Apply the insights to improve a supplier’s ongoing performance and delivery.
  • Share results with the various internal customers who are in some way involved with the output provided by the supplier
  • The outcome should not be a matter of suspense or create unnecessary tension among the participants.

The DCRWorkforce blog also discusses an addition angle – which covers ways in which a Scorecard can be set up for Failure:

  • Ill conceived scorecards with no method or direction offering an entirely undependable output.
  • Use of erroneous scoring methods or subjective approach affecting relationship with suppliers.
  • Burdensome data collection program or manual keying in of data with no data integrity
  • Data inputs not really comparable as cut off dates are applied differently, or averaged or tweaked running its credibility.
  • No inputs from internal customers
  • Data is averaged or tweaked so much that the picture presented is not credible anymore.

We thank Michael for sharing the insights from his post with us and for providing us with this opportunity to review and re-present our previous posts. We invite inputs from our valued readers on further insights or fresh thoughts that could add value to this topic.


Disclaimer:
The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.