How Do Your Vendor Relationships Rate
Use our free vendor scorecard to discover your supply chain inefficiencies
Posted September 16, 2019
When a mis-ordered product shows up on the job site, the tendency on the part of most construction companies is to blame the vendor, but perhaps you should consider taking a note from Toyota’s manufacturing playbook. If an order ever shows up and it's not exactly what was ordered, if it's not 100% high quality, if it's not there on time, Toyota is the one that assumes the responsibility. Why? Because selecting the vendor, its products and ultimately planning that shipment from the supplier was their responsibility. It isn’t your vendor’s job to make sure you’re getting the most out of your relationship — it is your responsibility, and your digital toolset makes it easier than ever before to leverage the data that you have at your disposal to create better, more efficient relationships with your suppliers.
The Vendor Scorecard
We highly recommend utilizing a vendor scorecard to help you rate the quality and effectiveness of your relationships with your vendors. We’ve created a template you can download for free at this link which will help you rate your vendor in key KPIs across five areas:
- Quality: The goods delivered are compliant to your specifications and for the job.
- Delivery: Good are delivered in full, on time, and undamaged.
- Cost: The goods are invoiced at the contracted rate or less and are price competitive in the market
- Customer Service: Issues are resolved quickly, customer service personnel is friendly and helpful, account management accommodates rush orders and change orders.
- Innovation: Senior management demonstrates an understanding of the business and suggests creative solutions to increase efficiencies for your business.
Reporting from your ERP should make filling out this scorecard on a monthly basis a reasonably objective exercise. This exercise will help you gain control of your supply chain by giving you visibility into the number vendors that you have, the quality of your relationships, and will help consolidate your business to your best vendors.
You should meet with your largest supply chain vendors on a quarterly basis to walk through your report card results to develop an action plan to increase performance across these key metrics. Your most innovative vendors will appreciate the conversation and the opportunity to use digital tools to collaborate more efficiently and effectively.
You'll likely start seeing your vendors give you discounts on points when you show up to the table more organized armed with data from your systems and the results of our vendor scorecard assessment.
Take the example scenario of working with a supplier to adopt vendor managed inventory. This would allow you to execute a blanket purchase order and the job foreman could release material from the field in real-time with the vendor issuing you a guarantee that they'll get it delivered to the site on the same day.
A scenario like this will allow that vendor to run a more efficient business on their end of things, and they're going to be willing to give you a few more points if you work together to develop mutually beneficial technologically enabled vendor relationship.
Missed the link above? Download the Vendor Scorecard now to unlock the efficiencies in your supply chain today!