Sophie Dye, 10 October 2017
Procurement Leaders’ supplier relationship management (SRM) report (opens new window), published in July 2017, found 49% of collaborative projects between suppliers and buying organisations run through a formal SRM programme end in failure.
Although the findings of the paper would seem to suggest it might be better to just scrap any programme you have in place and hope for the best, that would be the wrong conclusion to draw from the research. The key to success is choosing the right suppliers – strategic partners – to collaborate with. It is, therefore, vital for procurement executives to identify these organisations.
One such way is through a scorecard. However, it has to be used in the right way. Here are three tips to creating a supplier scorecard:
Understand what is important to the greater business
When designing a scorecard, each different element should be weighted according to the importance of each criterion to the business and the procurement team. Price, innovation and sustainability are among the considerations that should be included in the scorecard.
Procurement teams should then align the weighting to their targets and put greater emphasis on the areas in which they are being assessed.
Make them accessible and user-friendly
Scorecards should be as simple as possible as well as use the latest technologies to make sure they can be accessed according to individuals’ preferences.
It is also worth considering the communication strategy around the rollout of the scorecard to ensure suppliers know what, if anything, is being asked of them and how they will be supported to improve their score.
Use supplier scorecards to help improve the function
By acting as a tool to thoroughly assess each supplier’s performance, the scorecard will enable buyers to quickly identify the value an organisation can offer the business – aside from mere savings. This will help the function find those new ideas that will ultimately help the buying organisation win market share.
Read Procurement Leaders’ case study on how packaging firm DS Smith built a supplier scorecard (opens new window)
This article is a piece of independent writing by a member of Procurement Leaders’ content team.