When running a company, having a good vendor management system can be very important to measure supply chain efficiency. The results are determined by analyzing quantitative and qualitative data, usually done through a supplier scorecard.
This kind of system greatly impacts your business since it can make a difference in things like the supply chain health and the vendor’s performance.
What Is a Supplier Scorecard
The supplier scorecard is a document that allows the organization to measure things like vendor performance and supply chain risks. Since it represents a big part of business analysis, you must be extra careful when taking notes.
To achieve maximum effectiveness and determine the most important factors to monitor in your business, the precision and clarity of your observations are the key features. The more precise your supplier scorecard gets, the better.
Why Have a Supplier Performance Indicator
There are dozens of reasons to have a supplier scorecard. Besides using those scorecards as key performance indicators for the vendors, you can also use them for management practice and lots of other things.
The vendor management system also aims to minimize risks at the company along with the tracking objective. There are some supplier evaluation points when using the supplier scorecard that allows you to do such things. Here are some of these points:
Supply Chain Risks and Gaps
When evaluating the supplier performance measures, the risks and gaps of your scorecard are some of the most important to pay attention to. To maximize supply chain efficiency, you must have clarity of your entire process and also be aware of the vendor’s importance in the process.
Measuring the performance of the key suppliers with a basic supplier scorecard should be one of the first company objectives to achieve higher quality. The supply chain process can be hard to follow without procurement managers or a sheet to take note of these steps and the performance of each one, from the raw materials to the finished product.
Expectations
It’s good to communicate expectations when making the scorecards. This can include performance metrics, business goals, and anything you might want to communicate to your team before the beginning of the project. Doing this keeps the team on the same page and also minimizes the risk of an unexpected bad score on performance categories.
The other reason for having this in your supplier scorecard is to ensure relationship transparency. It may look unimportant, but guaranteeing a good relationship directly impacts the vendor performance data and increases product quality.
Cost of Production
A good evaluation point to include is the cost of service, no matter if it is for a product or service. By doing this, you can observe any increase or decrease in it and also see how the relations and vendors' decisions impact them
Another reason for doing this is to keep track of the total costs and know the best choices to make regarding the evaluation metrics and the total procurement cost. This gives the business owner a better idea of its production estimates and earnings.
Key Performance Indicators for Your Supplier Scorecard
When looking up supplier scorecards, there are many categories that you can include in your template. Thinking of this, you have to understand your business in order to decide which ones are the most important for you. After that, choose the KPIs that will impact the measurement of supplier performance and other things.
However, there are some instructions that you should consider following when analyzing your vendor scorecard, no matter what business you have. The following topics will help your company better control your procurement team and determine performance evaluations that can complement your work.
Quality Standards
When trying to measure vendor performance numbers, one of the most important topics to include in your document is a category for the quality standard. This doesn’t only regard safety compliance standards but also lots of other points of the production chain. It has more subcategories when put on the supplier scorecard, each one with its objective of the evaluation.
Responsive Standards
The score in this category will say a lot about your business and its relationship with the supply chain and clients. Here you will evaluate the responsiveness of your suppliers, no matter if it's with the raw materials or the final products.
There are always new standards when it comes to measuring responsiveness. Be sure to keep your supplier scorecards up to date to attend to these new standards.
Source: Sourceday
Delivery Standards
If your company works with delivery operations, this category is indispensable. Assuring that the deliveries will arrive on time and under the stipulated date is one of the keys to gaining credibility and having a good reputation as a company.
Be sure to include this category on vendor scorecards. Some orders may contain more complicated date combinations. When this happens, you may need a specific date software to keep track of those orders and evaluate the vendor delivery standards, but this won’t happen very often, depending on your business.
Price Standards
This is normally a harder category to evaluate and keep track of. Since sometimes companies work with a high number of different products and each one has its tolerance to price variation, scoring this will demand more time and organization than the previous ones.
Although including price variation is a hard task, having these metrics in vendor management systems is very important. Be sure to analyze your company and find out the best way to evaluate this score and its criteria.
Capability
Another important KPI when creating a supplier scorecard is the capability. Having control of things like financial stability and the team capacity to provide all the necessary work and product volume are key features on your scorecard.
Feedback
Another habit that has a huge positive impact on a supplier scorecard is asking for feedback. When you do this, you may end up having new insights and ideas that didn’t come up when analyzing pure numbers and metrics.
The same works for problems since the workers may identify flaws that interfere with the vendor’s performance or even general vendor relationships. This guarantees that you will better understand your company as a whole and will also grant you a way more effective supplier scorecard.
How to Create Supplier Scorecards
Before creating your supplier scorecard, there are many things that you need to consider. First of all, you have to reflect on your business and have a deep understanding of its steps, stakeholders, etc.
By doing this, you will have more accuracy and knowledge about your business objectives, making it easier to determine performance categories that best correspond to your necessities and expectations; it can be a grading scale scorecard or any other type. Creating a balanced scorecard adapted to best fit your type of business will have a bigger impact, whether it’s in vendor relationships or supplier management.
With this in mind, it’s good to know that there are dozens of tools for making vendor scorecards, from beginner ones to more advanced types of software. Although there is a huge variety of options available, we consider two of them the best for the job.
Excel and PowerPoint are great options for supplier scorecards, no matter if you are doing a grading scale or any other type because they both have a variety of tools. This makes the software capable of fitting any business and complexity you want to include in your vendor evaluations.
PowerPoint is more often used to make a presentation out of these scorecards, with multiple slides and a more pleasant presentation. On the other hand, Excel is better for creating the sheet itself and organizing the KPIs with their categories and all the columns you need to get your results.
Ready-to-Use Templates for Vendor Scorecard
If you want to use a ready template and just adapt it to your needs, there is no problem. This is a prevalent practice and will also work for your business in most cases. Be aware that some of these are not fully editable, so choose one that fits your needs.
Powerpoint Scorecard Indicator Template
This template was created for people to show the scorecard results as a presentation on PowerPoint. The main objective of this kind of template is to create a more dynamic and efficient communication to everyone involved, including team, stakeholders or any other party involved.
Vertical Scorecard Template
This template uses a vertical layout, being more indicated for those who also want to keep a physical copy of the material. It can also be better to work with if you have lots of categories in your scorecard.
Traditional Excel Template
This is the most common type of scorecard template available. It is an Excel document that can be personalized with all the categories you want. Best indicated for those who need versatility on the template and a large number of KPIs.
Where to Get a Microsoft Office Activation Key
You can find a Microsoft Office activation key at RoyalCDKeys for a considerably lower price when compared to other websites like Microsoft’s, for example. This way, you save a lot of money that you can use to invest in other things for your business.
Now you have everything you need to make the best vendor scorecard and measure the supplier performance of your business. Use the huge variety of tools available on that software to create a personalized template that fits your needs.
Remember that if you don’t want to create a supplier scorecard from scratch, you can also use ready templates of supplier scorecards and just edit them. It’s up to you to decide what is best for your company and what matters when building this kind of document.