Friday Rant: Supplier Scorecards — Why Bother Unless You Follow-up

One of my great frustrations in supplier evaluation, an area that I may have spent far too many brain cells on at this point, is the hands-off approach to supplier scorecards that many firms pursue. Purchasing staff spend a great deal of effort and money on the process of developing a scorecard. They extract data. They massage data. They obsess over metrics. They try to develop the perfect scorecard. But then what happens once they've reached scorecard nirvana? Nothing much. They are so focused on getting the perfect scorecard that they neglect the communications process with suppliers. Without communicating performance expectations and what the scorecard results really mean to the continued business relationship with a supplier, scorecards can fall flat.

I have seen companies who go to all the trouble of developing good scorecards, then launch them like hand grenades at the supply base with no further information about what they're for and what they mean. Suppliers may become nervous or they may become angry. But when nothing really happens, they figure it's just another customer program that will blow over.

The real value of scorecards is realized during customer-supplier communications, when supply managers and suppliers actually meet and discuss performance results of a supplier evaluation process. The sharing of performance requirements and expectations and the development of greater mutual understanding and trust can help customers and suppliers uncover and solve problems. In the process, significant savings can be realized. Purchasing staff who previously knew suppliers as names on a delivery or quality exception report learn who they really are and what might be causing problems. Or they may uncover some good business practices that they can learn from. More importantly, they can develop a mutually-beneficial relationship that is conducive to solving problems. Suppliers, on the other hand, can learn what their customer is really expecting of them and may be more willing to engage in give and take with a customer they work with personally rather than sitting at a scorecard control panel launching directives from a distance.

The value of supplier scorecards comes from the communications and better relationships that they can bring about. While there may be a temporary bump in performance after scorecards are launched just because suppliers know they are being measured and watched, the improvements will not be sustainable and the full benefit of the process will not be realized without a focused communications component.

- Sherry Gordon

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