Tuesday 1 July 2014

How to Manage your Supplier Scorecards

Authored by Azra Sultan

Supplier scorecards are an essential component of the supplier performance management (SPM) function. In order to achieve business excellence, measuring and tracking supplier performance is a key ingredient of the process. At the same time, the matrices which are designed to derive optimal results from a supplier scorecard should also be aligned with organization’s goal, business requirements and SPM strategy. 

To effectively manage a well performing supply chain, the stakeholders should utilize a scorecard and ranking approach that has a composite weighting scheme to provide a balanced perspective. This can be used to award future business based on overall past performance and promised (quoted) performance.

One of the golden rule to develop supplier scorecard is – quality is important than quantity. The benefits of supplier scorecards include increased two way flow of communication, improved supplier performance, mitigating risk and uncovering hidden costs. A well-defined scorecard also provides a value to establish plans to improve supplier relationships and maintain consistent satisfactory supplier performance levels.