There are clear business benefits
from reviewing supplier performance
- Increase performance visibility.
When companies do not know the facts about how their suppliers
are performing, supplier management tends to be based on
guesses. Moreover, the simple act of measuring performance can
help improve performance. This improvement can be even more
dramatic when companies award additional business on the basis
of suppliers meeting performance goals.
- Uncover and remove hidden waste and cost drivers in the
The supply chain is full of inefficiencies. Some of these
inefficiencies can be improved by better communications
between customers and suppliers.
- Leverage the supply base.
By measuring supplier performance, an enterprise can set a
threshold for its suppliers that can lead to higher-quality
- Mitigate risk.
Insight into supplier performance and business practices helps
reduce business risk, particularly given companies increasing
dependence on its key suppliers.
- Improve supplier performance.
The goal of supplier evaluation should be supplier performance
improvement. While simply measuring performance has a positive
effect, supplier evaluation can be most effective when it
leads to continuous improvement activities and actual supplier
'Supplier Evaluation: Benefits, Barriers and Best Practices',
Sherry R. Gordon, Vice President Supplier Performance
Intelligence, Emptoris, Inc.
91st Annual International Supply Management Conference, May 2006