What is the importance of managing Supplier performance?

supplier performance directly affects the performance of the procurement department,its effect is  the same as clean healthy water to our body's health.

Schelussel. The key to success. The dead, inefficient, poor performers will be highlighted and the new quality companies will be given chance. What more?

This is one of the key responsibilities of a Purchaser.
A purchaser should have a good view of the Supplier performance, to keep Supplier on toes.
Non performing Supplier eventually hurts the organization

 

Vendor rating considering following factor –

01)    Quality supply

02)    Delivery- On time

03)    Price – competitive

 

Impact –

 

01) Vendor rating helps to decide the future course of action which is decided based on performance of the supplier though out 

02) Supplier performance enhance efficiency and its effectiveness of procurement team which leads to organization performance 

03) By analysing the performance of the supplier , we will come to know the strengh and weekness of the supplier which will help you while negotiaing of price  

05) By analysing the supplier, we can target his weakness and try to develop him as good as a associates 

04) Helping to improve the market position due to product high quality, cost 

Managing Supplier Performance enhances efficiency and effectiveness of the procurement team and ultimatly enhances organisational performance, improved market position due to its efficiency and effectiveness, products and service of high quality, cost reduction, significatly increase organisational profitability.
In additions as one carries out supplier performance, he / she is forced to ascertain the the suppliers to concerntrate more effort on, thus those with high impact on operations, hence the implimentation of the Pareto Principle, the80:20 rule.

Suppliers performance might effect your internal process directly or indirectly which will lead to lack of customer retention and it will further effect your strategic goal (Finance etc).

 

Management of supplier's performance would help the company deliver product(s) to end users faster and smoother (reduce the delay time from suppliers). Also, supplier's management is essential for quality control and reduction of bottle-necks. Most importantly, is the reduction of overhead costs from suppliers (i.e. errors in shipment, inventory...etc.)

·         Contract management

·         Compliance with delivery schedule  

·         Completeness of the task

·         Encouragement for the supplier to dispatch his duty faithfully and not to default on his obligations