What is a Vendor Performance Evaluation?
Organizations must make informed decisions to select the right vendor; otherwise, it can directly impact the company’s costs and operations. To ensure continuous and smooth operations, you must regularly evaluate the vendors based on criteria suitable for your organization’s needs and requirements. Every organization needs to track vendors and assess them to gain insights into their performance and determine whether they satisfy the organization’s needs.
Evaluating vendors is a constant process, and specific criteria and standard approaches must be used to track and assess their performance effectively.
Criteria To Consider While Evaluating Vendors
Manufacturing and distribution companies can tailor the criteria for evaluating vendors to meet your company’s specific needs, which will help you select the right vendor. These are a few essential criteria that every company should consider when evaluating vendors.
Quality
Track the quality of the products supplied by vendors. Quality is a critical factor for manufacturers and distributors, so it’s essential to ensure that the products supplied by vendors meet the compliance requirements.
Quantity
Assure that the quantities delivered by vendors are accurate or if they run into shortages when you request a bulk order. It will help you track whether vendors can meet the required order quantities per your expectations.
Price
To ensure cost savings, monitor the cost of the product supplied by vendors. Rate vendors based on how frequently they change the prices or raise the unit cost price. It will help you renegotiate the terms of payments if necessary and select the vendor who meets your budget requirements.
Lead-Time
This is the time vendors take to deliver an order after it is placed. Track and calculate the lead time to compare the actual lead time with the standard one. Identify the root cause of the problem and ensure that corrective action is taken if the lead time is longer than the standard one.
Click here to learn other specific KPIs that you must consider. Once the specific KPIs or criteria are set, you must learn How To Track Vendor Performance. Learn the right tool, method, and approach to evaluate vendors utilizing the essential criteria and KPIs.
Conclusion
Regular tracking and monitoring ensure that the vendors are meeting the desired performance standards. Manufacturers and distributors should conduct regular reviews to identify areas for improvement. Finally, any necessary changes should be made to ensure the vendors provide the desired services.
eWorkplace Apps provides a comprehensive vendor rating system to manage vendor performance effectively to integrate with Acumatica ERP. Analyze vendor performance by managing scorecards, setting evaluation criteria, dashboards, and more. Would you like to explore how you can leverage the vendor rating system to measure vendor performance? Contact us for more details.
