Supplier Performance Management Best Practices

Following supplier performance management best practices and using proper metrics could help you identify and deal with supply chain issues early on, avoiding stock-outs, production bottlenecks, or other complications that could arise due to unreliable suppliers.

Why use supplier performance management?
Pricing is crucial when choosing a supplier and measuring their performance, but it should only be one important aspect of your vendor evaluation policy.

In fact, in supplier performance management, pricing should come into play only after you have assessed your vendors in terms of quality, accuracy, and improvement.

Even though getting a good deal money-wise should be a key consideration, low material and delivery costs will not pay off if you consistently receive defective goods, if deliveries are always late or quantities off, or in case lead times are very long.

All of the mentioned shortfalls could greatly hinder your manufacturing processes and become hidden cost drivers, therefore it is always recommended to follow supplier performance management best practices.

Timecode:
0:00 Introduction
0:22 Why use supplier performance management?
01:15 Supplier performance management best practices
01:52 1. Know which KPIs are important to you
05:49 2. Create a supplier scorecard
06:40 3. Set up evaluation processes
07:18 4. Communicate the results to your suppliers
08:03 5. Communicate the results internally
08:44 When to look for a new supplier
10:17 Conclusion

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