Almost all procurement departments use supplier scorecards where their business partners that actually use the supplier’s services give a score for how useful they think the service is. Scorecards are a highly reliable way to work out whether or not a supplier is providing value for money but, for the most important vendors however, a scorecard should only be the starting point.
Procurement teams should delve deeper to find out why stakeholders gave suppliers a certain score. Doing so will make the most of partnerships with high performing suppliers and allow Procurement to concentrate resources on improving the bad performers.
Going Beyond the Scorecard
To get this information, procurement teams should first determine which stakeholders to interview. They should make a list of those who gave a supplier either very low or very high scores: these business partners clearly have strong views about the vendor. They should also pay particular attention to metrics that they’ve weighted more heavily than others, and those that line up with major corporate priorities. Finally, they should select stakeholders from different areas of the business to get a variety of perspectives.
When they meet with these business partners, probe for the right insight. Begin by asking broad questions about their overall experience with the supplier, like:
- Can you give specific success and/or failure stories for this supplier?
- What is the biggest difference between what you expected from the supplier and what actually occurred?
- What is the one reason you would or would not use this supplier again?
Then, move on to specific metrics to find clues to the cause of strong or poor performance. Ask:
- Who (from both parties) was involved most directly with this relationship?
- What external factors that were outside of both parties’ control might have contributed to strong or poor performance?
Questions that can be asked for low-scoring metrics include:
- Why do you think the supplier underperformed?
- How would you like to see the supplier fix this in the future?
- When did you realize that there was a problem or that a problem was likely to occur?
- Where did you feel the most pain for this supplier not meeting expectations?
Use the information to put together a continuous improvement plan and present it to the supplier at the next review meeting. Whether the procurement team is interested in expanding a partnership, or simply making sure that suppliers deliver the contract value they’ve promised, this process will provide concrete evidence that helps both parties pursue those goals.