How to Make the Most of Annual Vendor Evaluations
Vendor evaluations can be awkward and time-consuming. However, there are ways brands can ensure conversations are an efficient use of time and provide value to both parties. That said, there’s not a universal template because these conversations are not a one-size-fits-all concept. Below we explain more and provide additional insight and strategic recommendations.
How Often Should Brands Perform Vendor Evaluations?
Typically, vendor evaluations take place annually, either mid-year or in Q4. But, there are some instances where it makes sense to engage in these conversations twice a year.
What is the Purpose of Vendor Evaluations?
It’s standard for brands to use something referred to as a vendor scorecard. These serve as a cohesive and personalized way to measure vendor performance based on what’s important to a brand. Scorecards allow brands to remain transparent and unbiased. The formatting can usually prevent opinions or feelings from affecting a vendors’ score.
Suggestions for What to Include in a Vendor Scorecard
As mentioned, vendor scorecards can cover a variety of topics and are unique to each brand. Generally, scorecards include a review of on-time delivery rates, lead time versus real lead time, and quality control. These are common performance indicators that are important for vendors to meet. If vendors fall short, this format provides brands the opportunity to address areas of improvement.
Scorecards can also be used to focus on what brands value in the relationship. For example, communication, responsiveness, and speed to market. Additionally, brands could evaluate the cleanliness of the factory, whether they adhere to agreed-upon payment schedules, and how chargebacks are managed. The consensus on these issues will offer both the brand and vendor clear insight into how well the relationship is going.
Considerations to Ensure Vendor Evaluations are Productive
Once scorecards are completed, if there’s a concern, we encourage brands to offer vendors a window of opportunity to improve. When this is the case, it’s important to clearly outline what the next steps look like in the event improvements aren’t made.
Regardless of the results, reviews should be conversational, transparent, and professional. And it’s important for brands to remember evaluations can make a difference for vendors and how they manage their teams. It’s not uncommon for brands to ask vendors to complete their own self-review ahead of the formal evaluation. This approach offers a natural way to guide the conversation and address any discrepancies in realtime.
The quality of the review process and how it’s handled can set the stage for a long-lasting relationship. Although they’re time-consuming and can be stressful, if they’re done thoughtfully vendor evaluations can improve a brand’s relationships and overall business.