Judging a vendor can be a repulsive and challenging task. If you are trading with a supplier that is always reliable with deliveries, never shorts shipments, paperwork is in order and provides invoices that match your purchase order pricing. Then this type of vendor performance review will be enjoyable. If the vendor ships inaccurate materials, rarely meet promised delivery dates and require consistent expediting this will usually mean the vendor review will earn a poor rating and will require that a firm message is delivered to ensure improving measures are taken, resulting in less business or possibly dropping a supplier altogether.
The evaluation process will help facilitate this process. If you wish to redeem this vendor, you need to apply efforts to help them in introducing corrective measures.
Price performance of a vendor is easily followed as inconsistencies between agreed to prices and those invoiced by vendors should be promptly discovered and brought to purchasing department attention during the year.
Here are some measures to help you with the process of evaluating a vendor:
- Do your homework before calling the vendor for the review.
- Start by identifying a key vendor.
- Choose a vendor that is in your top 20% for a number of purchase orders issued.
- Use the ABC Pareto distribution principle.
- Plan your annual spends with the vendor. If statistics are available, check the number of purchase orders issued, including line items per purchase order versus an estimate of shipments required to complete delivery of the purchase orders. Review incorrect shipments, short shipments, poor or incomplete paperwork.
- Circulate your evaluation form to departments — ask for their feedback and examples of both shortcomings and of good practices.
- Complete the first draft of the evaluation, reviewing the weights you have placed on specific areas of importance. With some vendors, a higher weight may be placed on service levels versus supply of tangible goods.
- Study and finalize it with your backup reporting, statements. Plan for a time when you are not under pressure and you can dedicate at least 1 hr of uninterrupted time.
- Book Boardroom – Perform the review in a neutral environment like a boardroom and avoid your office unless you need access to a computer system. Put the vendor at ease.
- Give the vendor the chance to respond to each issue and document their response.
- Ask coherent questions. Ask the vendor how can you improve service levels?
- Tell them what they are doing right. The good effort needs to be approved and noted in the evaluation.
- Finish with a review of where you feel they need to pull up their socks, provide a copy of the evaluation and ask them to identify how they can improve in the areas of weakness noted.
An Individual goal is to hopefully improve productivity at both operations. Add complete by dates for action items and ensure follow ups. Make sure to evaluate every vendor who is important to the profitability of your organization should be appraised at least once annually.
To evaluate a vendor on all viewpoints of performance one need to develop a template, this measures all levels of service.
Tradove helps you know about the reviews of the different vendor so you can expect profitability. To know more, type vendor reviews on Google and get all your questions answered by our team of expert.