Suppliers (often called vendors) are individuals or companies that supply raw materials, finished products or services to another company or business. To maintain effective purchasing procedures, procurement officers and business owners must periodically review their list of active suppliers to make sure the company is getting the right price and the right service. The information contained in a supplier performance review may be used as a standard of measure to evaluate new potential vendors or may be used as a business case to change suppliers. A review may also be shared with a vendor for the purposes of improving performance or as a recommendation to the supplier’s other potential clients.
Identify the supplier by name, company address and phone number. This may be listed as a header or may simply be contained in the first paragraph. If the company has more than one office or department, be sure to identify the specific department that supplies your company. Also provide information on your account manager or other contact within the organization. If there is more than one contact, list all important contacts as well as their functions.
Explain the relationship between your companies. List the products or services the vendor sells to your company. State when the relationship began. List pricing for regularly purchased items and services. Explain all guarantees and state billing terms. Quantify the vendor's importance to your purchasing department in terms of how much you buy from it versus other companies. State how much you spend with the vendor on an annual basis and, for products, state how many units of product you purchase every year. For continuing relationships, you may compare the purchase volume for this period with the purchase volume for prior periods.
Evaluate the supplier’s performance. Include information on delivery time, delivery quality, issue management, responsiveness of supplier staff, terms, warranties and price. Compare the vendor’s actual performance against its promised performance. Also, compare actual performance for your vendor versus industry standard performance (if you can find this information.) If you are evaluating a supplier for the first time, and the supplier replaced a previous vendor, evaluate the new supplier against the old one.
State your opinion, backed by the facts included above, about whether to continue the relationship or find a new supplier. Include pros and cons of each course of action.
Tip
Cite specific examples of good or poor service whenever possible.
Always date your document and sign it so that you (or future employees) will know when the evaluation occurred and who did it.
Use specific, provable data wherever possible. "Company X is cheaper than Company C" is less informative than "Company X charges 10 percent less than Company C for a four-pronged widget."
Warning
Never consider personal rewards (like gifts, event tickets or meals) when evaluating a vendor’s performance.
