How to Rate a Supplier's Performance

Identify supplier performance criteria to measure.
Identify supplier performance criteria to measure. (Image: Brand X Pictures/Brand X Pictures/Getty Images)

Companies use periodic vendor assessments to ensure continuous quality control. Companies also look at vendor performance during a re-approval process. Assessment rating systems consider industry benchmark standards, acquisition criteria set in performance contracts and data related to actual supplier outputs. Vendor performance ratings are also developed using feedback from staff with hands-on experience with the supplier's services or products. Evaluation tools for gathering vendor information include staff meetings, interviews, surveys and questionnaires that request descriptive narratives and rankings regarding performance quality.

Things You'll Need

  • Supplier performance data
  • Industry benchmarks

Decide what to measure. Quality performance factors identify critical product and service elements related to matters such as product quality, delivery times, customer service and meeting commitments. A vendor performance metric may, for example, identify 20 key measures linked to performance factors identified as key competencies valued by the company. Also, the supplier might have a written integrity policy or quality assurance manual related to critical operational systems that can help in developing performance evaluation criteria.

Gather performance information related to the supplier's quality factors under review. Obtain supplier performance data from managers and employees with direct oversight and workplace contact with vendor products and services. A supplier review meeting with key staff members is an opportunity to gain key performance insights based on the established supplier performance metrics. Develop a questionnaire for staff to gather data in relevant areas such as technical, operational and customer service capabilities.

Review industry benchmark standards for optimal performance. A benchmark serves as a standard to measure quality performance. When establishing the rating system for suppliers, review the industry quality standards for the performance metrics. Competitor information can be obtained from market research reports and industry publications. Also, if a certification system exists for the industry it will provide important insights on quality standards.

Develop a rating system or scorecard that ranks factors listed on the vendor performance metric. A survey scorecard summarizes the performance review findings. An example of ranking categories is "optimal," "acceptable," "marginal" and "unacceptable." Alternatively, use a numerical scale -- for instance one to 10 -- to rank category performances for supplier performance factors.

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