Spend Matters welcomes this guest post from Andy Kohm, CEO and founder of VendOp.
When I think of supplier scorecards, I think of having to be prodded, reminded and occasionally begged to carve out a large chunk of my time to fill out question after question on suppliers I’ve used since who knows when. I cringe when I see the first email comes in knowing that more are to follow.
In my entire career, I cannot recall a single business outcome or strategy changing from a supplier scorecard. In theory, scorecards are perfectly sound tools to measure the effectiveness of key business relationships. But in reality, they’re hideous instruments for the collection of insight into supplier relationships. So most often, they collect dust. Let’s examine why.
They’re Too Long
The first question we all ask ourselves when opening a link to a vendor scorecard is “how long is this going to take?” When people see a survey instrument longer than 20 questions, it gets labeled mentally as a task vs. a quick ask. So it goes on a list of other things they probably would do, could do, but likely won’t.
Vendor scorecard school teaches that the more questions we ask, the more information we’ll gain. That becomes untrue when the length of the scoring instrument turns people off from completing it. It’s common to hear of completion rates under 10% in large enterprises. As they’re typically constructed, vendor scorecards sacrifice completeness of information over response rates. And that decreases their value.
They’re Too Infrequent
Because they’re so long and onerous, scorecards aren’t issued and collected as often as they should. (Good gets more, bad gets less.) You can’t increase the frequency of long scorecards that fewer than 10% of people are filing out without diminishing returns.
There are two big hazards with the typical annual schedule of supplier evaluations. One is that the product and market-facing contributors filing them out can’t recall and analyze a year’s worth of interaction with each vendor. Try recounting 100 visits to your local coffee shop. You’re going to recall most vividly what was most recent.
So that leads to the second hazard: procurement and sourcing teams are often looking at scorecard data skewed heavily to the recent past. Many large buyers compound the problem by issuing scorecards at the same time of the year. Welcome to Scorecard Season, where the scores only go up.
They’re Too limited
If you’ve ever been in a group review of scorecard results from an important customer, you know that there is an 90% chance that at some point, someone in the room will ask in frustration, “Why didn’t they just tell us that?!” Even the best of business relationships will suffer from the rigidity of the typical scorecard format. Point and click Q&A can deliver unintended messages, especially with low response rates.
No One Uses Them
If your company is anything like the ones I’ve worked at, after you fill out the scorecard for a supplier, that is it. You never see the scores of the vendors you use. Where do they go? How do you see them if you want to? If this happens at all, it often requires an email chain asking to the see the scorecard for a particular vendor. Good luck asking the right people and getting the right information back. This highly valuable and material data effectively sits in a black hole.
Collecting objective and subjective intelligence are not mutually exclusive but scorecards squeeze the humanity out of evaluation. We should not grade vital business relationships without the color, context and additional meaning that stories, anecdotes and language provide. You can’t measure everything through checkboxes.
Vendor scorecards often feel like a census of one. No one wants to make critical decisions based on data like that. Yet too often, when the question of how companies collect institutional knowledge and judge performance about their suppliers arises, scorecards are the only answer.