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- Sept 7, 2006 -


Supply Chain Tip of the Week: Let your Suppliers Give you a Report Card


here's the criteria you should ask them to evaluate



SCDigest editorial staff

According to Jill Schildhouse and Robert M. Monczka from ISM’s Inside Supply Management magazine, supply organizations can really benefit from having their suppliers give the buying organization a report card.

It can open a company’s eyes to many improvement opportunities that it may be missing from looking at the supply chain from only its own perspective.

What should you ask suppliers to grade you on? The authors suggest the following:

Quality. Is the supply management department limiting or enhancing our supplier's ability to produce quality goods and services? Are quality requirements and work scope clearly defined? How about qualification processes?

Quotation and contracting. Does the supply management department provide contracting terms and conditions that are understandable? Are the Ts and Cs reasonable? Are contracts completed in a timely manner? Is the process effective and efficient?

Supplier performance feedback. Does the supply management department provide timely performance feedback to suppliers? Are the performance metrics valid? Is there a relationship between business awards and supplier performance and the measurement dimensions? Is there a relationship between performance and future business?

Procurement knowledge and skills. To what degree is the supply management department knowledgeable about the product or service and marketplace that they're dealing in?

e-Procurement. What is the quality of the e-system in which the buying company and selling company interact? Does the e-system provide suppliers with valid and timely information about requirements? Does the e-system allow suppliers to conduct more efficient invoicing? Can suppliers easily use the e-system?

Responsiveness. Is the supply management department responsive to supplier questions? Are calls returned in a timely manner? If there are supplier problems (quality, delivery, questions on specifications and so on), is the buying company responsive to identifying root causes and helping with corrective actions?

Business opportunities and payment practices. Is payment made in a timely manner by the buying company? Are payment terms similar to other leading companies in the industry? Does the supplier have an opportunity to grow their business with you?

Supplier relationships. Is the overall working relationship with the buying company a positive one? Does the buying company carry out what it says it's going to do? Does the buying company create an environment of trust? Does the buying company listen to innovative ideas from the suppliers and take action on them? Does the buying company look at ways to reduce total cost, going beyond price alone?

Ethics and business conduct. Is the company ethical in its business dealings with the supplier? Is information transfer handled ethically? How about intellectual property? Confidentiality?

Procurement internal/external communications. Is the strategy of the buying company clearly communicated to suppliers? Are suppliers kept abreast of major changes in business conditions? Can suppliers identify the key people who should be communicated with regarding issues?

Supply chain management. How accurately are short- and long-term requirements forecast? How effectively is pipeline inventory minimized? How willing is the company to change supply chain practices for improvements?

Competition/leading company comparisons. In addition, the survey should ask suppliers to rate your firm against competitors and other leading companies. The questions can be focused on the same areas as above, but abbreviated to a single benchmark question per area.

Formal surveys, today easily deployed using web tools, are the best ways to get this feedback, with follow up interviews and discussions as appropriate.

Should more companies ask for feedback on these types of areas from their suppliers? Anything you would add to the list? Let us know your thoughts.

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