One topic I am often asked to speak about is supplier evaluation.
A question that I am virtually guaranteed to hear during my presentation is “How many metrics should I use when evaluating supplier performance?” The number I like to recommend is four. I feel that by using four metrics, you can address the most important categories of supplier performance and can create a four-quadrant dashboard.
If you use less than four metrics, you’re probably going to miss an important aspect of supplier performance in the evaluation. If you use many more (around 8 or more), you are going to dilute the value of each metric. It will be more difficult for the supplier to understand its overall performance and the priority of each metric becomes unclear.
Recommended Reading
- Leveraging SWOT Analysis for Procurement Strategies
- Managing Supplier Performance
- Assess Supplier Financial Risk
- Best Cost Reduction and Performance Management Strategies
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