Supplier Report Card
Written on 8:58 AM by Shaun Hutchings
What is a supplier report card and how are they used?
Is a critical component of our overall Supplier Relationship Management strategy as more and more companies rely on their suppliers to provide an ever-increasing portion of the value delivered to customers.
Is to measure / provide accurate supplier performance information based on input from various functional areas.
This in-turn leads to healthy competitive supplier behavior in the areas of:
- Product Cost
- Product Leadership
- Quality
- Operational Excellence
- Service and Customer Intimacy
All suppliers are rated according to quality and delivery data. Core and critical suppliers will be rated based on both quantitative and qualitative information when data becomes available. Qualitative measures include cost management, technology, general management, and responsiveness. In addition, operational data is obtained from our systems relating to areas of procurement, receiving, and quality/inspection.
They show how good a supplier is doing so they can constantly compare them with other suppliers when a decision is to be made to get a new supplier or stick with the one they currently have they can easily make a decision. Also with the report card it gives the supplier a little extra incentive to perform better because they are being graded. Just like students perform better because the grade on the report card is a bit more motivating to do better.
Should a Report card track many elements such as on-time delivery or just a few? What are the advantages / disadvantages of both?
I feel they should track what is important to them but at the same time track many aspects of the supplier. Such as on-time delivery I feel it should be summarized but it should not include in the report card every single delivery and shows how well that person is performing on each delivery. But I do feel if you summarize it, saying 60% of all deliveries were on time then you can see the overall grade in that area for that subject.
The advantages of tracking many elements are good because then it shows you are paying attention to all aspects of the suppliers business. This will motivate them to stay on top of their game in many elements not just a few aspects. Also the supplier will know what you’re grading on. When I go to class and the teacher does not set up a syllabus and just tells us he/she will give us a grade on what they feel we deserve it is so vague that it causes internal conflict and I am unsure what the teacher is looking for and it causes a little panic. But let’s say the teachers says 20% of your grade is on participation, 30% on homework, 20% on project, and then 30% on tests then you know exactly what the teacher is grading on and you know what the teacher expects and how well you should perform in those areas.
Some disadvantages to this are that the supplier loses focus of what is really important. They get too tied up with the grade or getting a good report card that they lose understanding what they need to be doing. Such as a teacher is teaching a concept and then gives a homework assignment on the material covered in class. A person that has lost focus only does what needs to be done to get a good grade on the assignment. That individual does not really care as much if they understand the material or not they just want to good grade. What really is important is that the student can learn and apply that principle that the teacher taught. So if a supplier can just focus on ‘getting a good grade’ on their report card by trying to please their purchaser and not really do what is needed to be done. They may perform, they may do well, but they may just do what is needed to get a good grade and that’s it.
I personally think that there are certain individuals including suppliers that need something to compare their work too, and a report card is perfect for that. It gives them a goal and aim so that they know where to head and what to do. Suppliers can use the report card as something to achieve and do well in. On a personal level I feel that supplier report cards are good, if they are used correctly. I also feel that having many elements that are being graded are good so that suppliers know what is important and what is not.
©2010, Shaun Hutchings, All Rights Reserved.
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