- How do you continuously follow up and feedback your suppliers’ performance?
- How can you improve the support from your suppliers to better serve your company?

Supplier Scorecards
Most companies have systems in place to follow up and measure their suppliers’ performance but do they really use them in an optimal way? A common problem is that often there are no objectives in place for the suppliers; neither do they get an objective feedback of how they perform and how they can improve. For a supplier, the scorecards are gold! If the scorecard process works the suppliers will get continuous feedback of how they perform to you as their customer and how they can serve you even better. The scorecards are also an early warning signal for the supplier to take corrective actions in time before it is too late and they might lose business.

What should a scorecard contain? Here are some parameters we think is important to measure your suppliers on:

· Quality of delivered goods or services: what is the rejection rate on incoming material? What are the yield rates? How well does the service or material comply with the specs?

· Delivery of goods or services: what is the delivery precision based on requested date as well as on confirmed delivery date? Do they deliver on time according to the agreed plan?

· Cost: How cost competitive is the supplier? How do they work with continuous improvements to reduce costs by efficiency and value engineering?

· Responsiveness: how fast is the supplier in their communication? Are they flexible for upsides? Are they flexible with new client requests?

· Innovation: does the supplier come up with new innovations that you could benefit from? Is the supplier a technology leader or follower?

· CSR: does the supplier has systems and processes to work and comply with Cooperate Social Responsibility?

· Lead time: how fast is the supplier to deliver and bring the service or product to market?

· Customer’s voice: what does the end customer say about the product and service? Collect information from internal stakeholders as well as product owners.

How should you work with your scorecards?
The suppliers should be measured on the parameters above continuously and the supplier should receive feedback at least once per quarter. It is also preferable to show historic performance of the suppliers to track their progress over time. Bold targets drive performance. Don’t be afraid of setting bold targets on your suppliers to drive even higher performance. You can have stretch targets and targets and also a financial reward if they meet certain objectives. Important is to collect objective data as well as subjective data and consolidate in the scorecard and really give the feedback to the suppliers to help them become better. Make sure you create the score cards cross functional. The scorecard should be the consolidated feedback from your company, not only sourcing.

Common pitfalls

- Companies collects data but never gives the feedback to the suppliers

- Feedback and performance issues are not really followed up over time. The feedback is a onetime happening

- Difficult to collect objective feedback from systems meaning the suppliers could get faulty feedback

- Forget to interview internal stakeholders. Cross functional feedback is best to get one voice to the suppliers from your company.