Supplier Performance Scorecard
It is important to know that your organisation is getting the products and services from its suppliers for which you have paid. With repeat business or with more complex service requirements, it makes sense to monitor performance against contract requirements over time.
The two main reasons for monitoring performance are:
- To make sure that the supplier is meeting the performance criteria, such as service levels and quality, laid down in the contract
- To identify room for improvement
Many organisations use supplier performance scorecards to help them understand how their suppliers are performing against the contract.
A supplier scorecard is an evaluation tool which can be used to keep track of quality, and quantity and responsiveness of suppliers over a long period of time. It consists of a set evaluation period, during which the performance of a supplier is monitored. This period can be weekly, monthly or yearly.
A supplier scorecard also helps you measure how the supplier is performing against your other suppliers and against the industry standard for your sector. This information will help you when it comes to renewing or extending the contract, or choosing a supplier when you launch a new business line, for example.
The scorecard can be manually created for each supplier. Our example is based on a supplier of mosquito nets, called Flynets Ltd. It looks at three areas of performance: delivery, quality and cost and is based on the key performance indicators (KPIs) that are explicit in the contract with Flynets Ltd.
The evaluation period is monthly and calculates the variance from the ‘acceptable’ score agreed with the supplier. The ‘comments’ section gives space for probable reason why the target has been missed, met or exceeded and what action needs to be taken.
Typically, organisations choose four or five areas of performance and ask suppliers to work on improving in those areas for mutual benefit. Goals can be set which may also be used for ongoing supplier evaluation.
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Supplier: |
Flynets Ltd |
Contract Ref: |
003/2020 |
|
|
Key performance indicator (KPI) |
Performance target description |
Purpose / What does it measure |
Measurement Method |
|
|
Delivery |
In full |
% of LLINs delivered in correct quantity |
Suppliers compliance to correct quantity |
(Number of LLINs orders from the supplier delivered according to quantities in the contract agreement in a defined period ÷ Total number of orders from the same supplier during the same period) × 100
|
|
On time |
% of LLINs delivered on date/time |
Suppliers compliance to the delivery date or time |
(Number of LLINs orders from the supplier delivered according to delivery time in the contract agreement in a defined period ÷ Total number of orders from the same supplier during the same period) × 100
|
|
|
Quality |
Secure/no damage |
% of LLINs delivered or received without any defect |
% or proportion of LLINs that are received without any defect |
LLINs that are received defective and unable to be used are counted (Total quantities of LLINs in pieces or bales received with physical defects in a defined order ÷ Total quantities of LLINs in pieces or bales for the defined order) × 100
|
|
Compliance to specification |
% of LLINs delivered in full compliance to specification |
% or proportion of LLINs that fully meet procurement specification upon delivery. |
LLINs that are received outside of full specification in the contract are counted (Total quantities of LLINs in pieces or bales received outside specification in a defined order ÷ Total quantities of LLINs in pieces or bales for the defined order) × 100 |
|
|
Cost |
Cost to contract |
$ of the cost of LLINs invoiced at the contracted rate |
Proportion of purchase orders invoiced correctly. |
(Total number of invoices paid in line with the final purchase order for a defined number of final purchase orders ÷ Total number of invoices for all the defined number of final purchase orders) × 100 |
|
Supplier: |
|
Flynets Ltd |
Contract Ref: |
003/2020 |
|
|
Performance target description |
Acceptable score (A) |
Score this period (B) |
Variance from acceptable score (A-B) |
Comments |
|
|
Delivery |
% of LLINs delivered in correct quantity |
100% |
90% |
10% |
Reasons for not meeting target, implications on the contract, and improvement opportunities to be discussed in the next Suppliers briefing day. |
|
% of LLINs delivered on date/time |
100% |
85% |
15% |
Reasons for not meeting target, implications on the contract, and improvement opportunities to be discussed in the next Suppliers briefing day. |
|
|
Quality |
% of LLINs delivered or received without any defect |
100% |
100% |
0% |
Thank you for meeting the target. Lessons learnt and best practices towards meeting the target will be discussed in the next Suppliers briefing day. |
|
% of LLINs delivered in full compliance to specification |
100% |
95% |
5% |
Key things should be noted in terms of specification e.g. size, colour, in-country registration with National Regulatory Agency, chemical content, etc.
|
|
|
Cost |
% of the cost of LLINs invoiced at the contracted rate |
100% |
90% |
10% |
Reasons for not meeting target, implications on the contract, and improvement opportunities to be discussed in the next Suppliers briefing day. |
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