You're buying the same raw material from multiple suppliers, but which one is really better? If the one with the lowest price constantly delays, the one that delivers on time has problems with its quality, or the cheap raw material causes high wastage, how will you base your choice?
Measuring supplier performance is a need not only for large companies, but also for manufacturers, wholesalers and distributors of all sizes. The method known as supplier performance card (vendor scorecard) allows you to evaluate your suppliers with numerical data on topics such as quality, delivery, price and communication.
What is a Supplier Performance Card and Why is it Necessary?
Supplier performance card is an evaluation tool that allows you to compare the performance of each supplier by scoring them with the same criteria in certain periods (monthly, quarterly or annually). Thanks to this scoring, you can see the total cost impact of the supplier on you, instead of making a decision by looking only at the price.
Low price or low total cost?
If the supplier with a low unit price causes production stoppages due to delivery delays or increased wastage due to quality problems, it will actually cost you more. The performance card makes these hidden costs visible.
Data-Driven Supplier Development
You can give concrete feedback to the low-scoring supplier and show with numbers in which areas improvement is expected. This moves the supplier relationship to an “improvement” focus rather than a “blame” focus.
Supplier Evaluation Criteria and Point Weights
Each business determines criteria and weights according to its own priorities. The table below shows the most commonly used evaluation headings and sample weights for manufacturing companies.
| criterion | Weight | How to Measure? |
|---|---|---|
| Quality (Waste/Rejection Rate) | %30 | Percentage of defective products in the accepted batch |
| On-Time Delivery | %25 | On-time shipment rate according to order date |
| Price Stability | %20 | Price level and fluctuation rate relative to the market average |
| Communication and Flexibility | %15 | Response time to requests, ability to adapt to urgent orders |
| Document and Regulatory Compliance | %10 | Documents such as invoices, delivery notes and analysis reports must be complete and accurate. |
Scoring Calculation Example
When you evaluate two suppliers with the same criteria, you can see that price alone is insufficient to make a decision. In the example below, Supplier A is cheaper in unit price, while Supplier B stands out in total score.
| criterion | Weight | Supplier A | Supplier B |
|---|---|---|---|
| Quality (out of 100) | %30 | 70 | 95 |
| On-Time Delivery | %25 | 65 | 90 |
| Price Stability | %20 | 95 | 80 |
| Communication and Flexibility | %15 | 75 | 85 |
| Document Compliance | %10 | 80 | 90 |
| Weighted Total Score | %100 | 75,5 | 88,5 |
Result from the example
Although Supplier A appears to have an advantage in unit price, it lags behind in total score due to its weakness in quality and delivery. When the wastage, production stoppage and rework costs caused by Supplier A are calculated, the total cost to the company may be lower despite Supplier B's higher unit price.
Where Should Scoring Data Be Collected From?
In order for the supplier performance card to be reliable, data must be collected automatically through the system instead of entering it manually. One ERP system within which real data taken from the following modules feeds the scoring:
- Purchase Orders: Order date, delivery date, incoming quantity and unit price information
- Quality Control Records: Incoming material inspection results, rejected batch rate
- Warehouse Entry Records: Actual delivery time, missing or excess shipment quantity
- Waste and Production Reports: Which raw materials cause wastage in production on a supplier basis?
- Cost Accounting: Effect of supplier change on unit cost
Supplier Rating Automation with ERP
It is possible to prepare a supplier scorecard with Excel alone, but it is difficult to be sustainable. Collecting data from different sources, updating tables and reporting every month takes a lot of time. Korgün ERP's purchasing module automatically collects performance data on a supplier basis and updates the scoring instantly.
Data is Collected Automatically
Purchase order, delivery and quality data flows into the system without manual entry.
Periodic Comparison
Follow the improvement trend by seeing the past performance of the same supplier.
Alternative Suggestion
For the low-scoring supplier, the system lists alternatives that provide the same material.
Businesses that establish a supplier scoring system correctly detect supplier-related problems before they occur, turn to alternative suppliers in a timely manner, and make purchasing decisions on the basis of "most efficient" rather than "cheapest". Methods to reduce stock and supply costs You can improve your entire purchasing process by reviewing it.
Getting Started: 3 Steps
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1
Set the criteria. Choose the 5-6 most critical topics for your business and determine their weight according to your industry priorities.
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2
Identify data sources. Determine which data will be pulled from which module. If existing ERP data is insufficient, first establish the data collection infrastructure.
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3
Create a regular evaluation schedule. Update the scorecard on a monthly or quarterly basis and share it with suppliers.
For order and delivery records that will be a source for supplier evaluation Scope of order tracking program examine; further verify scoring and reporting needs.
Manage Your Supplier Performance with ERP
By collecting your purchasing data in a central system, monitor supplier performance in real time, quickly switch to alternative suppliers and control your purchasing costs.