Most supply chain professionals use supplier scorecards. These evaluations can help managers across industries identify and invest in the most productive supplier relationships. However, whether or not the partnership changes after a negative evaluation happens less often than you would suspect.
B2B customers often settle for sub-par partnerships. The drivers span convenience, budget, or other concessions that make discourage switching suppliers. Even with data in our hands, it’s hard to change the way we conduct business. But understand that changing process doesn’t have to mean changing partners. By utilizing a supplier scorecard, B2B customers can rank their suppliers over time. Doing so streamlines the determination of which relationships warrant performance improvement initiatives, and when it’s best to simply sever ties.
Scorecards influence focus on what matters most to the customer. Proactive determination of how to strengthen supply chain relationships. Not to mention, when utilized appropriately, scorecards help establish goals that strengthen supplier relationships.
In an article for Supply Chain Management Review, Robert J. Trent proposed that internal customers should evaluate supplier performance. He suggested this be done via a “web-based portal” that allows free-form comments or scores. Trent goes on to share a good example of involving internal participants with ADT Security Services:
“Fully 30 percent of a supplier’s performance score relates to something called ‘account management.’ This reflects how well a supplier works with ADT and responds to requests and concerns. Buyers actively solicit input from engineering, product management, marketing, sales, and product support before assigning a score, reflecting an extensive level of cross-functional input across the company.”
This additional step in the scorecard process can be powerful. By aggregating honest feedback across the many perceptions that make up the supplier relationship, internal customer reviews provide suppliers with an accurate analysis of their performance.
To further prove the point, consider this: In an article with Spend Matters, Jason Busch shared one of the 12 reasons why supplier scorecards fail is that internal stakeholders don’t provide input on a timely basis, if at all.
The Road Ahead
Without all encompassing internal customer feedback, a supplier scorecard does not provide a representative view. To assess the relationship in its entirety, the process must transcend the opinion of a select few. The goal is to aggregate the perspectives of all stakeholders – front line, mid-level, and c-suite. This ensures documentation of all interactions, from start to finish. Further, it influences honesty, transparency, and clear communication on the degree to which goals and objectives are being achieved.
We all know supplier and customer alignment is achieved through open and active communication. Scorecards are an essential tactic your organization can use to keep the lines of communication open, express new goals, and communicate areas for improvement.
Are you currently utilizing a supplier scorecard? Are you looking to justify a more comprehensive approach? You can use these educational resources to help your colleagues better comprehend how to enhance your supplier scorecard process.