At this stage of procurement, the buyer company should do a supplier performance evaluation. The procurement department gives feedback on whether the purchased item solved the problem or has met the requirement or not. After receiving the product, the procurement team reviews the product quality and features to ensure the supplier evaluation.
Supplier performance evaluation may be formal for major procurements involving decision-makers in the organization and the vendor’s technical team. For smaller purchases, supplier evaluation is often informal and in-house. For example, suppose the company ordered safety glasses that arrived late or were damaged. In that case, the company may decide not to buy from that vendor again without ever informing about the problem.
Importance of supplier performance evaluation
Supplier performance evaluation is the process of determining whether or not to work with a new or established supplier based on their delivery, price, production, and management, technological, and service quality. In both instances, a common supplier performance evaluation system for current and future suppliers will be used.
Problems can occur with every purchase
Regardless of the purchased product’s value or type, the buyer company may experience some problems during the purchasing process. Then, the procurement team reviews their earlier decision and gives the previously rejected supplier a chance. This situation is an enormous failure for a vendor and a sales expert in terms of supplier performance. You just lost a valuable customer.
Always ensure a successful supplier performance
Always be conscious that the job is not over after receiving the order to avoid this kind of unpleasant situation. You should constantly check the customer’s evaluation and feedback process to reach perfect supplier performance. Especially monitor the customer satisfaction level or complaints carefully so that you can take corrective actions promptly before any significant damage occurs.
Only providing customer satisfaction can cause an effective and long-term relationship. Never forget who you are. You are an industrial sales expert. You are not only in the sales business but also in the customer satisfaction business. Without one, neither does the other.
Supplier performance evaluation strategy
You should develop an actionable supplier evaluation strategy that includes both broad and particular dimensions. Without this, the subsequent steps are pointless or, in the worst-case scenario, may reflect incorrect insights that are detrimental to your company. The following are some critical parameters to include in your evaluation indicators
Due to the fact that negotiations can build or break business relationships with suppliers, this is an important issue to keep in mind. Price consistency is essential for supplier performance evaluation. Economies of scale enable your business to establish a win-win situation with providers eager to cut their pricing.
As a result, you can profit from significant or recurrent deals with them. Keep an eye on how closely a business adheres to its estimations – if unexpected charges, unannounced taxes, or surprise costs are a common occurrence, you should raise an alarm against the supplier in issue.
Another factor to consider is the total cost (both financial and non-financial) that your business suffers when working with suppliers. While the primary element is the price of the products or services purchased, additional components include the costs of delivery, relocation, packaging, and disposal.
A comparison of quantities ordered and received should also be taken into account. Occasionally, suppliers will provide an advanced shipment notice confirming and explaining delivery problems.
Inspections should aid in identifying evident product faults, rejections, and returns, among other things.
Many indicators of service excellence include quick reaction times to concerns and a consistent level of client satisfaction.
Order processing times and pre-delivery waiting periods are closely tied to your level of satisfaction with the supplier.
Terms of payment
Flexible payment methods and terms provide sourcing firms with payment elasticity, which is far better than a rigid payment procedure.
Industry- and domain-specific certifications are not merely another supplier performance evaluation indicators. They establish a level of trust and a minimal standard of quality from the supplier in question.
Enhancements in value
Value enhancements may appear to be uncommon luxuries from the majority of vendors. For some, value addition is pre-programmed. These may include concerns and conflicts resolved, response times, and reactions to order modifications, among others.
A provider who innovates and develops across all facets of their products outperforms those who do not develop in the long term.
Healthy finance enables suppliers to provide superior service, innovate more effectively, and adapt more readily to extended payment cycles.
Tax compliance, regulatory requirements, and agreement conformance are just a few of the areas to examine. Additionally, there are additional geographical and domain-specific requirements.