Supplier scorecards are an essential component of the supplier performance management (SPM) function. In order to achieve business excellence, measuring and tracking supplier performance is a key ingredient of the process. At the same time, the matrices which are designed to derive optimal results from a supplier scorecard should also be aligned with organization’s goal, business requirements and SPM strategy.
To effectively manage a well performing supply chain, the stakeholders should utilize a scorecard and ranking approach that has a composite weighting scheme to provide a balanced perspective. This can be used to award future business based on overall past performance and promised (quoted) performance.
One of the golden rule to develop
supplier scorecard is – quality is important than quantity. The benefits of
supplier scorecards include increased two way flow of communication, improved
supplier performance, mitigating risk and uncovering hidden costs. A
well-defined scorecard also provides a value to establish plans to improve
supplier relationships and maintain consistent satisfactory supplier
performance levels.