Why do we need a Supplier Scorecard? | DCR Workforce Blog

Why do we need a Supplier Scorecard?

Why score Supplier Performance?

Companies generally find their suppliers through on-the-phone sales pitches or references if not advertisements and emails/newsletters. But, as always, the proof of the pudding is in the eating – however convincing the sales pitch may have been. While it may not be necessary to evaluate suppliers on a monthly basis – many CW managers swear by having a review process in place as imperative to the effectiveness and overall success of the professional relationship with one’s supplier. Many believe in scheduling it on a quarterly basis and consider an annual review as being very effective. Thus, a supplier scorecard has naturally become an essential part of all self-respecting VMS solutions today. While a Contingent Workforce program offers a whole lot more than a supplier evaluation, many people swear by the critical nature of the function for the success of the program.

Parameters for Evaluation:

Going by the adage that we cannot manage anything that cannot be measured, supplier scorecards provide the opportunity to track and measure the relative performance of suppliers, and also provide the CW manager with opportunity to verify the improvement shown over time. As these cards are highly customizable, they provide one with ample scope to drill down into the performance through collecting and tracking data. Having collected it, managers should not treat it as goal-less exercise and just a matter of automatic data collection and filing – to put a yes or tick in some box which asks if the data has been collected. If the data is not reviewed and feedback not provided to the supplier along with inputs on where the improvement is necessary – the whole idea of creating and maintaining a scorecard becomes an exercise in futility.

While there are no standard parameters that need to be incorporated in a supplier scorecard, a company must have a keen understanding for the specific information/data required to derive a clear snapshot of a supplier’s performance.

Some of the following essential, though not exhaustive, criteria could be incorporated in the scorecard:

  • The SLAs of the contract with supplier
  • How well the supplier met the deadlines
  • Quality of Products/Services
  • Invoice submission
  • Quality of reports received

Structuring it for a Win-Win:

By putting in place a review process for the relationship on performance criteria and mutual support (or lack of it), any possible changes may be adopted and expectations can be reviewed on both sides.  This can also provide an opportunity to share any changes in organizational strategy and requirements with the supplier. Such a structured approach helps to resolve any small issues before they become too big for effective management.

A strategic approach devoid of any negativity needs to be adapted to work around the general anathema to feedback which may be manifested by the suppliers. Te focus needs to be on establishing an atmosphere of collaboration and mutual support based upon a strong base of communication. Who can tell what best practices the suppliers could introduce to the CW program given an opportunity to communicate and share their thoughts and experiences?

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.