Supplier Performance Evaluation Criteria

𝐑𝐞𝐟𝐥𝐞𝐜𝐭𝐢𝐧𝐠 𝐨𝐧 𝐚𝐥𝐥 𝐭𝐡𝐞 𝐬𝐮𝐩𝐩𝐥𝐢𝐞𝐫𝐬 𝐈’𝐯𝐞 𝐬𝐨𝐮𝐫𝐜𝐞𝐝, 𝐨𝐧𝐞 𝐭𝐡𝐢𝐧𝐠 𝐢𝐬 𝐜𝐥𝐞𝐚𝐫: 𝐩𝐫𝐨𝐜𝐞𝐬𝐬 𝐦𝐚𝐭𝐭𝐞𝐫𝐬. Taking shortcuts can lead to wasted money and a world of headaches downstream. (𝘙𝘢𝘪𝘴𝘦 𝘺𝘰𝘶𝘳 𝘩𝘢𝘯𝘥 𝘪𝘧 𝘺𝘰𝘶'𝘷𝘦 𝘦𝘷𝘦𝘳 𝘣𝘦𝘦𝘯 𝘢𝘴𝘬𝘦𝘥 𝘵𝘰 𝘧𝘢𝘴𝘵-𝘵𝘳𝘢𝘤𝘬 𝘙𝘍𝘗 𝘳𝘦𝘲𝘶𝘪𝘳𝘦𝘮𝘦𝘯𝘵𝘴, 𝘰𝘳 𝘩𝘢𝘥 𝘭𝘦𝘢𝘥𝘦𝘳𝘴 𝘱𝘶𝘴𝘩 𝘧𝘰𝘳 𝘤𝘦𝘳𝘵𝘢𝘪𝘯 𝘴𝘶𝘱𝘱𝘭𝘪𝘦𝘳𝘴, 𝘪𝘨𝘯𝘰𝘳𝘪𝘯𝘨 𝘮𝘢𝘵𝘦𝘳𝘪𝘢𝘭 𝘳𝘪𝘴𝘬𝘴?!) 𝐖𝐡𝐚𝐭 𝐈'𝐯𝐞 𝐥𝐞𝐚𝐫𝐧𝐞𝐝: 💡 𝙁𝙤𝙘𝙪𝙨 𝙛𝙞𝙧𝙨𝙩: Be specific about your needs in RFx docs. If you’re unclear, suppliers will be, too. Before going to RFP, always have quantifiable evaluation criteria finalized and approved by the Spend Owner. 💡 𝙄𝙩’𝙨 𝙣𝙤𝙩 𝙟𝙪𝙨𝙩 𝙥𝙧𝙞𝙘𝙚: The cheapest option often costs the most in the long run. Prioritize value over price. Suppliers who price things materially lower than benchmark norms usually cut corners somewhere to meet margins. 💡 𝘾𝙝𝙚𝙘𝙠 𝙧𝙚𝙛𝙚𝙧𝙚𝙣𝙘𝙚𝙨 𝙩𝙝𝙤𝙧𝙤𝙪𝙜𝙝𝙡𝙮: Source independent references via your network. Past performance tells the real story. Ask the right questions and listen closely to the answers.  💡 𝙏𝙝𝙞𝙣𝙠 𝙖𝙝𝙚𝙖𝙙: Can the supplier grow and evolve with your business? Are they innovative and flexible? Does their company culture and ways of working align with yours?  💡 𝙆𝙣𝙤𝙬 𝙩𝙝𝙚 𝙧𝙞𝙨𝙠𝙨: Most suppliers come with some level of risk, the key is understanding and managing it. Conduct due diligence on short-listed suppliers. Outputs should inform the down-selection process, with material deficiency action items included in the contract. 💡 𝘾𝙝𝙤𝙤𝙨𝙚 𝙥𝙖𝙧𝙩𝙣𝙚𝙧𝙨, 𝙣𝙤𝙩 𝙫𝙚𝙣𝙙𝙤𝙧𝙨: The best suppliers care about your long-term success and aligning with your goals.  Look at proposals holistically, thinking beyond the transaction and into value creation. 𝐇𝐞𝐫𝐞’𝐬 𝐭𝐡𝐞 𝐭𝐡𝐢𝐧𝐠: Looking back, I’ve been at firms in seasons where costs were prioritized over total value, often leading to short-term gains but long-term challenges. There were times I should’ve taken a firmer stance about material supplier risks identified and bias in the selection process.  As procurement peeps, we provide recommendations based on long-term value, risk management, and partnership potential. This includes having the courage to speak up with informed and actionable guidance when things don't pass muster. The goal is to ensure sourcing outcomes build a foundation for success, not just a quick win. 📢 𝙋.𝙎. 𝙒𝙝𝙖𝙩 “𝙨𝙘𝙝𝙤𝙤𝙡 𝙤𝙛 𝙝𝙖𝙧𝙙 𝙠𝙣𝙤𝙘𝙠𝙨” 𝙨𝙤𝙪𝙧𝙘𝙞𝙣𝙜 𝙡𝙚𝙨𝙨𝙤𝙣𝙨 𝙬𝙤𝙪𝙡𝙙 𝙮𝙤𝙪 𝙨𝙝𝙖𝙧𝙚 𝙬𝙞𝙩𝙝 𝙮𝙤𝙪𝙧 𝙮𝙤𝙪𝙣𝙜𝙚𝙧 𝙥𝙧𝙤𝙘𝙪𝙧𝙚𝙢𝙚𝙣𝙩 𝙨𝙚𝙡𝙛?

Are your procurement practices stuck in a "ONE-SIZE-FITS-ALL" mindset? We’ve all seen it: A company with strong sustainability goals tries to enforce the same standards across every supplier, expecting one policy to work in vastly different environments. But when it comes to sustainable procurement, what if the key isn’t in replication but flexibility? Take Toyota Motor Corporation, for instance. Their long-standing relationships with suppliers show that collaboration and visibility drive better results than rigid rules ever could. In fact, they describe their interactions as “almost intrusive” but in the best way. This approach ensures both sides remain committed to shared goals, like reducing waste or enhancing resource efficiency, while allowing each partner to bring unique solutions to the table. Imagine this: Rather than prescribing exactly how each supplier should reduce packaging waste, set a shared target say, a 15% reduction. One supplier might use smaller boxes, another might swap materials entirely. Both achieve the goal, but each does it in a way that suits their specific setup. But here’s the trick: For this mindset shift to work, transparency is essential. It’s about creating a culture of openness, where every team and supplier feels empowered to innovate toward that common objective. Consider taking inspiration from the UN Sustainable Development Goals. Which aligns with your company’s values? Could you integrate these into your procurement practices to guide not just one supplier, but your entire supply chain toward a long-term vision? Switching from a prescriptive policy to a shared goal mindset doesn’t just drive sustainability it fosters trust, creativity, and results that everyone can own. So, Is it time to rethink how you define “BEST PRACTICES”?

"But what if we discover something we don't like?"—The unspoken thought many executives have when considering asking their suppliers harder questions about sourcing, safety, and sustainability practices. 🙈 The reality is most brands know very little about their supply chains, and historically that has been by design. The less you know, the less responsibility brands have to take action. Companies are disincentivized to take action and seek transparency. (Ritual launched with open sourcing our supplier names and final place of manufacturing, a bold move in an industry not know for traceability.) 👷♀️ The impact of this lack of rigor is profound, according to human rights experts nearly every supply chain has child or forced labor, this is particularly true for certain high risk materials, minerals, crops, and regional locations. If you receive a dead end with suppliers, the black box tells you they don't know their supply chain, or there is something to hide. 🌍 Not knowing where ingredients come from means companies can't assess or properly measure environmental impacts like carbon, deforestation, impacts to communities and water quality. 🔬 Without more transparency, companies can't take action on chemical safety concerns like hidden PFAS in colorants used in makeup or phthalates in manufacturing equipment. Given the slow progress on traceability, what do you all think it will take to accelerate companies taking action? My answer remains consistent: 1) more consumer pressure and hard questions, 2) improved regulatory requirements that are not focused on checking boxes, and 3) companies and certifying bodies willing to ask hard questions. The biggest risk of all is inaction. #responsiblesourcing #traceability #traceablesupplychains #supplychaintransparency #VMS #madetraceable #scope3 #humanrights #chemicalsafety Ritual Katerina Markov Schneider Hat tip to Alison Taylor for sharing this a while back. Encourage a read of the full report: https://lnkd.in/gbK8SPrB

Suppliers can make or break a Procurement team. And yet, supplier relationship management (SRM) remains an underutilized tool for many teams because of lack of time, resources, or know-how. 💡What is an SRM framework? A set of structured strategies and processes intended to enhance supplier performance and build relationships that can deliver a competitive edge. 💡 How do you use it? 1️⃣ Segment suppliers so the right SRM approach can be administered to each supplier. Make use of Kraljic matrix, preferencing, etc. I managed Spices commodity - a market with many suppliers and many customers. The category was largely transactional with the exception of some high profitability SKUs. 2️⃣ Measure supplier performance with defined KPIs and assess regularly to provide actionable feedback. It requires regular upkeep. A client of mine faced supplier performance issues repeatedly across several locations. There were no agreed upon metrics so there was no reliable way to track performance and deliver improvements. A scorecard solved the problem, even if it took months to roll out. 3️⃣ Build relationships through specific strategies based on segmentation. Set up recurring update calls. They are a great way to stay abreast of supplier performance, stakeholder feedback, new business needs, and changing market conditions. I had a bottleneck category with a development supplier. mutual win was to leverage the supplier’s innovation capability while de-risking supplies. So, our meetings would cover supply market risk + NPD discussions. 4️⃣ Assess and mitigate risk Identify risks associated with each supplier, be it financial, supply disruption, sustainability, etc. Risk can be rolled into the performance score card as well. Mitigation plans can include alternate supplier development, or build in contingency plans. 5️⃣ Manage relevant aspects through contracts Usually a part of category strategy development, but deserves special mention when obligations must be contractually defined (for ex., strategic alliances, performance improvement plans, etc.) 6️⃣ Ensure alignment with Procurement and Business goals The ultimate goal of any SRM program is to further overall business objectives. During the COVID years, cost became a second priority to supply assurance across many categories. Many of us tinkered with our strategies to rebalance priorities. Supplier communications became far more frequent to better understand market conditions, waivers were given on key KPIs like On Time In Full, etc. 💡Why do I like it? It is a simple framework which is heavier in execution.. as it rightly should be, given that it takes time to build relationships. 💡What are the pitfalls of this approach? While the approach itself is solid, organizations face challenges due to poor data management coupled with a lack of integrated digital solutions that can seamlessly weave in SRM with day-to-day Procure-to-Pay activities including contract management.

Why process transparency builds long-term trust Customers don’t want to be surprised. They don’t want to guess what’s happening with their parts, or chase someone for updates. What they really want is a supplier who’s in control and that starts with transparency. You don’t need fancy dashboards or real time customer portals. Most of the time, it’s just about being clear and consistent. Here’s what that looks like in real production: 1. Startup reports that match the last approved run 2. Clear communication if a change is needed mid-run 3. A quick update if something unusual shows up even if it’s resolved 4. Sharing cavity pressure or part weight data if the customer asks Transparency doesn’t mean opening the door to every machine parameter. It means being proactive when something changes. It shows that you’re managing the process, not reacting to it. It also helps in pricing discussions. If the customer sees you’ve got a stable process with clear reporting, they’re less likely to push back because they trust what they’re getting. Are you logging enough data to explain what happened last run? Do your techs know how to communicate a deviation when something shifts? Would your customer describe you as consistent, or reactive? Trust gets built in the calm moments not when things go wrong. But transparency is what keeps that trust intact when they do. #CustomerTrust #ProcessStability #InjectionMolding

Yesterday's bankruptcy filing by Marelli, a supplier to top brands like Stellantis, Nissan Motor Corporation and Tesla, underscores a critical truth for supply chain leaders: When financial health deteriorates, disruption follows, and your brand can be negatively impacted. Our data at RapidRatings shows that suppliers in poor financial health are: 🔻 2x more likely to have quality issues ⏱️ 2.6x more likely to miss deliveries 📉 Less likely to invest in compliance ⚠️ More likely to cause operational disruption This is an important reminder that financial health is the foundational element of supplier risk management. #SupplyChain #RiskManagement #Procurement #SupplierResilience  

Supplier evaluation and selection are key components of an organization's supply chain as they can either support smooth operations or introduce challenges if not handled intentionally. A well-thought-out supplier selection process supports long-term value creation and acts as a proactive risk management tool across your supply chain. Here are the core criteria to consider when evaluating suppliers: ➡️ Quality – This goes beyond just the output. Quality includes how the supplier runs their operations, their labor standards, and how well they meet the expectations that were outlined during the needs phase. Defining what “good” looks like requires input from across the organization. ➡️ Performance – This refers to the supplier’s ability to consistently meet expectations over time. Delivery accuracy, responsiveness, service level, and reliability are all part of this. While often tracked post-engagement, having clear expectations upfront can guide alignment early. ➡️ Capacity/Capability – Does the supplier have the ability (and flexibility) to meet your current and future needs? This includes physical capacity, operational capability, and even regional flexibility. Understanding this early allows for more resilience if other supply points are disrupted. ➡️ Financial Condition – A supplier’s financial health directly impacts their long-term viability. You need partners who are stable enough to weather market shifts and reinvest in improvement. Keep in mind, this is a two-way street—timely payments and fair terms matter too. ➡️ Price – Unit cost alone doesn’t give the full picture. Look at total cost of ownership: transportation, storage, handling, returns, service needs, and more. Focusing only on sticker price is short-sighted. Take a broader view of how cost plays out across your supply chain. ➡️ Technology – Information flow matters. Can they integrate with your systems? Do they require manual emails or do they support API, EDI, or supplier portals? The way data flows between your businesses affects performance, cost, and resource needs on both sides. ➡️ Geographic Location – Where your supplier operates will influence lead times, flexibility, risk exposure, and total cost. Geography also brings additional layers like tariffs, taxes, cultural norms, and even currency impacts. This is a critical one when thinking about resilience. Vendor selection should not be a reactive activity. Having a set baseline criteria based on what your needs are currently (and where they are headed long term) can make all the difference in how much value or risk gets built into your supply chain later! #supplychain #procurement #processimprovement

Visit 👏 Your 👏 Contract 👏 Manufacturer 👏 (both before and after awarding business) I've heard some wild manufacturing horror stories: A sales rep boasts about their great factory, only later to be found out that it is a joint-venture, a partner factory, double brokered to another country, or just completely DOES NOT EXIST. Before Awarding Business: ✅ Evaluate Capabilities: Assess facilities and technical capabilities. ✅ Quality & Compliance: Verify standards and quality control processes. ✅ Build Relationships: Establish rapport and set communication expectations. ✅ Operational Insights: Understand workflows and capacity. ✅ Risk Assessment: Identify and plan for potential risks. After Awarding Business: ✅ Quality Assurance: Monitor production and conduct spot checks. ✅ Process Improvement: Collaborate on efficiency gains and improvements. ✅ Strengthen Partnership: Deepen relationships and address issues effectively. ✅ Supply Chain Management: Enhance logistics and performance tracking. ✅ Innovation: Work on new product development and feedback loops. ✅ Compliance: Ensure ongoing compliance and ethical practices. Take the extra time to do some due diligence. Will it slow you down in the short term, yes. Will it make things move WAYY faster in the long run, also yes. #Manufacturing #Electronics #ProductDevelopment #Hardware