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Vendor performance
Vendor performance management guides
Most companies know who their suppliers are. Far fewer know, with evidence, which ones are doing well. These four guides take you from a vague feeling to a regular, fair review.
By Procurement VMS Editorial TeamLast updated
- Guides
- 4
- Start with
- The framework
- Outcome
- A scorecard and a review rhythm
- Related tool
- Free scorecard template
The renewal meeting
Why memory is a poor basis for a renewal
Think of the last supplier renewal you sat through. Someone remembered a bad delivery in March. Someone else remembered a great fix in June. The loudest recent story won. A year of delivery records would have told a quieter and more accurate tale. Performance management is the habit of keeping those records, so the renewal conversation is about the year and not about the week.
The guides
Start with the framework
- Vendor performance management: a practical frameworkWhat to measure, how often, and who owns it.
- Vendor KPIs and metrics referenceA long list of measures across quality, delivery, service and cost.
- Vendor performance review processPreparing and running a quarterly review.
- Vendor scorecard template guideBuilding a scorecard with fair weights and a clear scale.
Keep it small
Three measures beat thirty
Start with these three, then add more only when a decision needs them.
Was it right
Quality, whether defects, rework or service errors.
Was it easy
How hard the supplier was to work with, scored by the people who deal with it.
What to avoid
Common ways a scorecard loses trust
Weights chosen in private. Suppliers and internal teams both distrust a score they cannot explain.
Scores that never lead anywhere. If a poor score has no consequence and a good one has no reward, people stop reading them.
Measuring what is easy rather than what matters. Invoice accuracy is simple to count, but it may not be why a supplier is valuable.
Choosing measures
Match the measure to the supplier
| Supplier type | Measures that usually matter |
|---|---|
| Goods and materials | On time in full, defect rate, price against index |
| Services and contractors | Service level hit rate, response time, user satisfaction |
| Software and subscriptions | Uptime, support response, adoption, renewal price change |
| Logistics | Delivery time, damage rate, accuracy of tracking data |
Start from what hurts you when a supplier is poor, then measure that.
A quarterly rhythm
How to run reviews without making them a chore
- Collect data in the last week of the quarterPull delivery, quality and service records from your systems, not from memory.
- Send the draft scorecard to the supplierGive them a few days to correct facts.
- Meet for thirty minutesFocus on two things that went well and two to fix, with owners and dates.
- Write down the actionsShare them the same day, and check them at the next review.
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Questions
Frequently asked questions
How often should I review supplier performance?
Quarterly for important suppliers, yearly for the rest. Watch critical suppliers monthly if a failure would stop your business.
Should suppliers see their scores?
Yes, as a rule. Shared scores give suppliers a fair chance to fix problems, and they usually improve results.
What is a good number of KPIs?
Three to six per supplier type. More than that and nobody can act on the results.
What if a supplier disputes the scores?
Share the data behind the score and listen. If the data is wrong, fix it. If it is right, agree actions.
Should performance affect payment?
Some contracts tie fees to service levels. If yours do, define the measures and the calculation in writing before the work begins.