“ANALYSING THE

PERFORMANCE OF A
SUPPLIER”
BY : CHARMY SHRIMALI
WHO IS CONSIDERED A SUPPLIER ?
 A SUPPLIER IS A PERSON OR BUSINESS THAT
PROVIDES A PRODUCT OR SERVICE TO
ANOTHER ENTITY.

 THE ROLE OF A SUPPLIER IN A BUSINESS IS TO

PROVIDE HIGH –QUALITY PRODUCTS FROM A
MANUFACTURER AT A GOOD PRICE TO A
DISTRIBUTOR OR RETAILER FOR RESALE.
WHAT IS SUPPLIER EVALUATION ?
 A SUPPLIER EVALUATION IS A PROCESS IN
WHICH YOU MEASURE AND MONITOR THE
PERFORMANCE OF YOUR SUPPLIERS. THIS CAN
BE DONE IN A REGULAR BASIS , OR QUARTLY
ANNUALLY.
 THE EVAULTION SHOULD INCLUDE A REVIEW
OF THE SUPPLIERS FINANCIAL STABILTIY ,
QUALITY OF PRODCTS OR SERVICES , DELIVERY
TIMES , AND CUSTOMER SERVICE.
WHY SUPPLIER EVALUATION IS
IMPORTANT ?
 SUPPLIER EVALUATIONS ARE IMPORTANT
BECAUSE THEY HELP YOU TO ENSURE THAT
YOUR SUPPLIERS ARE MEETING YOUR
STANDARDS AND REQUIREMENTS. THEY ALSO
ALLOW YOU TO IDENTIFY ANY POTENTIAL
PROBLEMS THAT COULD IMPACT YOUR
BUSINESS. BY CONDUCTING REGULAR
EVALUATIONS, YOU CAN MAKE SURE THAT
YOUR SUPPLIERS ARE PERFORMING AT THEIR
BEST, AND TAKE ACTION TO CORRECT ANY
PROBLEMS.
HOW DO YOU ANALYZE SUPPLIER
PERFORMANCE ?
 STEP -1 ESTABLISING PERFORMANCE
INDICATORS
First of all, one should create an actionable supplier
evaluation plan to finalize broad and detailed parameters.
Without this, the steps that follow are meaningless or in
a worse scenario, could reflect wrong insights counter-
productive to your business. Here are some must-include
parameters in your Supplier checklist:
Price: Because negotiations make or mar deals with
suppliers, it is a point to observe. With economies of
scale, your organization can certainly create a win-win
situation with vendors who willing to lower their prices
Cost :Another aspect is cost (monetary and non-monetary)
borne by your organization when dealing with suppliers.
While the major component is the price of the procured
goods or services, others include peripheral costs
associated with delivery, movement, packaging, and
disposal.
Quantity : A comparison between quantities ordered versus
received is also a consideration. Sometimes, suppliers
send an ASN (Advanced Shipment Notice) confirming
and explaining anomalies in the delivery.
 Quality :Inspection checks help detect any visible
product defects, rejections, and returns, etc
 Service :Some indicators of service excellence include
response times for resolving issues, and constant client
satisfaction engagement.
 Delivery :Timelines for the order process and pre-
delivery waiting period directly related to your
satisfaction with the supplier.
 Payment terms :Agile payment methods and terms offer
payment flexibility to sourcing organizations, much
more preferable than a rigid payment process.
 Certifications :Industry and domain-specific
certifications don’t just check off another box. They
ensure a level of trust and threshold of minimum quality
expectation from the concerned supplier.
 Value additions :Value additions may seem like rare
delights from most suppliers. For some, value addition is
built-in. These may deal with a resolution to issues and
conflicts, response times, reactions to order revisions,
etc.
 Innovation :A supplier that innovates in various aspects
of their offerings trumps others who don’t believe in the
long run.
 Financial health :Healthy finance equips suppliers to
serve better, innovate better, and be more adjusting to
longer payment cycles.
 Compliance : Some forms to check are tax compliance,
regulatory compliance, and contract compliance. There
are also other regional and more specific domain-related
requirements.
STEP 2: CLASSIFYING SUPPLIERS

TO START COMPARING SUPPLIERS,

START WITH CLASSIFYING THEM
INTO BUCKETS OF SIMILAR
CATEGORIES. ONE WAY TO DO THIS
IS BY GEOGRAPHY, AND ANOTHER
WAY IS BY PRODUCT TYPES.
STEP 3: CENTRALIZING AND
INTEGRATING DATA
 20% OF SUPPLIERS USUALLY RESULT IN 80% OF
BUSINESS NEEDS. HOWEVER, YOUR
ORGANIZATION MIGHT HAVE HUNDREDS OR
THOUSANDS OF SUPPLIERS ACROSS VARIOUS
FUNCTIONS. BRING ALL OF THEM ON ONE
CENTRALIZED PORTAL. CONSEQUENTLY, A
SUPPLIER EVALUATION TOOL LIKE IPERFORM
WORKS VERY WELL FOR THIS.
STEP 4: DEVELOPING A SOLID
EVALUATION APPROACH
ABOVE ALL, TO DEVELOP A
SOLID EVALUATION APPROACH,
START WITH SELECTING A
PERIOD, AND THEN MOVE ON TO
THE METHOD OF EVALUATION.
FEW EXAMPLES
INCLUDE:SUPPLIER
SCORECARDSCONTRACT
MANAGEMENTSIX SIGMA
STEP 5: COLLABORATING WITH
SUPPLIERS FOR REVIEW/ FEEDBACK
 NOT ALL ASSESSMENTS NEED TO BE
QUANTITATIVE. INSTEAD, CONSTANT
SUPPLIER-BUYER COLLABORATION CAN,
AT TIMES BRING OUT THE BOTTLENECKS
MUCH MORE VISIBLY. WHILE IT IS
ESSENTIAL TO CONDUCT REGULAR
MEETINGS, IT’S ALSO ESSENTIAL TO PAY
ATTENTION TO THE OPPOSITE TEAM.
DUE TO FEEDBACK CONVERSATIONS,
MANY ROADBLOCKS ARE ELIMINATED.
STEP 6: CREATING AN ACTIONABLE
PLAN
 FINALLY, IT IS TIME TO CREATE A FEASIBLE AND
ACTIONABLE PLAN WITH WAYS OF ACTION FOR
INDIVIDUAL SUPPLIER RELATIONSHIPS. ALSO,
IT IS NECESSARY TO ENSURE ACTION AGAINST
YOUR FINDINGS TO ENSURE CLOSING THE LOOP
ON YOUR EVALUATION EFFORTS. SUPPLIER
PERFORMANCE, WHEN DONE THE RIGHT
MANNER THROUGH THE OPTIMUM
COMBINATION OF PEOPLE, PROCESSES, AND
TECHNOLOGY, WORK WONDERS.
FURTHERMORE, IT HELPS IDENTIFY
PERFORMANCE GAPS AND DEVISE STRATEGIES
TO PLUG THEM.
THANK YOU