With all of your current suppliers, how do you choose the best supplier?
In order to best track and evaluate suppliers’ performance, your team needs to align on criteria, in which suppliers will be continuously evaluated upon.
So, where to start?
A first step to developing supplier performance criteria is to ensure that you’re taking a holistic approach to performance evaluation. This means you need to take into account KPIs that will cover various stakeholder disciplines. You can’t solely be concerned with evaluating performance criteria that will deepen sourcing & procurement insights into supplier performance.
You should use this KPI building exercise as an opportunity to align common goals within the broader business organization; taking into account the goals/performance indicators of sustainability, quality, risk, supply chain, production, marketing & sales in relation to the broader supplier base.
Finding the right levels of granularity to your evaluation/performance criteria is important. At Kodiak Rating, we aid customers to evaluate supplier performance within six parameters with various sub-parameters that belong to each of those six.
Kodiak Rating’s Key Six Supplier Performance Parameters:
- Quality Performance
- Supply Chain Performance
- Commercial Performance
- Innovation Capacity/Performance
- Sustainability Performance
Under each of these performance areas, you should look to identify sub-parameters for supplier performance. Of course, the more granular of performance evaluation you’d like to do, the more you should be taking into account the supplier group or supplier type (Producer, logistics, IT, Marketing, Agent/Trader, Contractor, etc.). It’s important to evaluate supplier performance in line with that supplier’s relevancy to your organization; pretty much make sure you’re comparing apples to apples, and not oranges to apples.