Companies embark on supplier scorecards for many good business reasons. They are concerned about supply risk, supplier quality, supplier responsiveness. They know that they should be measuring, understanding and improving supplier performance and mitigating risks. It’s the right thing to do. But as I’ve mentioned before, companies are often focused on the metrics themselves – the mechanics of obtaining and deploying the metrics on the scorecard. The gathering of metrics and data for supplier scorecards can be challenging and requires a lot of attention and care. Also, with the ever-increasing array of supplier performance management (SPM) software solutions available, it is easy to get caught up in the mechanics of data organizing and collection. Answering questions such as: Which KPIs should we use? Should they be the same across categories? Where will the data come from? How will we get internal users to give us feedback on suppliers? These are all very important questions and need to be addressed.
However, as they focus on the supplier scorecards and gathering the data, many companies neglect something important: creating the supplier evaluation process itself. Firms need to develop a supplier evaluation process, end-to-end, with identified goals, objectives, strategies, participants, roles and responsibilities, etc. in which the supplier scorecard is developed, deployed, acted upon and continuously improved.
The supplier scorecard is the tool that helps measure progress and indicates what problems need to be solved. The scorecard is not the end result. A tool is not a process. The scorecard tool can’t succeed on its own without a process. Companies need to keep in mind that supplier evaluation is a process, not a supplier scorecard.