Supplier Score Card, Benchmarking Supplier Performance

Supplier Score-Carding is a continuous improvement tool that manages suppliers through benchmarking, and is a core enabler of the supplier sourcing strategy and the supplier matrix.

Effectively managing suppliers in a matrix organisation can be complex, supplier dependant departments will have a different opinion on which suppliers meets business objectives.

Supplier Score-Carding, delivered through the supplier management lead, ensures each supplier dependant department has a voice about supplier direction, is translated to a weighted score that benchmarks all suppliers.  The resulting supplier value score is coordinated and communicated through the supplier management lead as “One Voice to the Supplier”, together with a corrective action plan.

Read more about One Voice to the Supplier; http://wp.me/p7z4o2-Ht

Score-Cards can be managed monthly or quarterly; preference is quarterly as it will allow for fluctuations in the cycle between development and delivery of product.  Below is a Score-Card example that is simple to manage, and contributed to by the three core supplier dependant departments; Product Development, Quality and Procurement;

  1. Product Development; percentage product sampling completion on time (Key), and or product sampling failure rate (Secondary)
  2. Quality; percentage finished goods per purchase order approval rating on first time inspection. If there are self-accredited suppliers conducting quality audits, it will not be feasible to use audits as a KPI, it will be better to use return goods from store or percentage claims.
  3. Delivery; on-time delivery to the terms described in the purchase order.
  4. Value and Service;
    1. Value as a measure of price can be measured by purchase price variance or margin contribution.
    2. Service is an arbitrary non-benchmark able score where product development, quality and procurement each score a supplier out of 10 which is then averaged to formulate the score to form the assessment.

Read more about Costing Framework ; http://wp.me/p7z4o2-Hj

All four areas are allocated 25 points to form the total value score of 100 points, this score can be weigh in anyway preferred to suit business need.

All suppliers will be ranked with a value score out of 100, forming a ranking list. Based on the score and improvement measures, the supplier management lead issue a corrective action plan to each supplier, department responsibility and due completion.

The supplier management lead discusses Score-Cards and corrective action plans with all suppliers, and project manages all corrective action initiatives across responsible departments and suppliers.

Score-Carding forms a continual feedback tool to the supplier matrix development ensuring capability and capacity realisation and continual improvement.

Read more about Supplier Matrix; http://wp.me/p7z4o2-GV

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