Conducting Better Vendor Assessments

Vendor performance reviews will allow you to assess how your vendors are executing their contractual responsibilities. Are they meeting or exceeding expectations or are there areas in which they’re falling short?

Your vendor reviews should aim to help each vendor improve its performance—so that your company and its customers benefit. Here’s where to start.

If your organization already has a system in place to track and evaluate vendor performance—follow it! It may include surveys, assessment forms and/or software monitoring systems. If you don’t have a system, create your own. 

For each performance review you should:

• Review your vendor contracts so that you’re aware of each vendor’s contractual obligations.
  
  
• Determine if the vendor is in contract compliance by reviewing if/how each vendor has:
  • Resolved problems and complaints
  • Offered customer service and technical support
  • Billed in a timely, accurate manner
  • Supplied quality products and services
  • Offered stable, competitive pricing
  • Delivered products and services on time
  • Supplied suitable packaging
  • Understood your business
  • Come through in a crisis
  • Kept mistakes that negatively impacted your business low or nonexistent.

Now that you have a “map” of how each vendor has carried out its responsibilities, you should ask yourself:  

• How does this vendor’s performance stack up against similar/previous vendors?
  
  
• How is the vendor doing since its last review? If there were issues that needed improvement, have they been resolved to your satisfaction?

Any vendor whose service record falls squarely into the “unacceptable” column may have to be let go.

That said, underperforming vendors should be given a chance to improve. Issue a warning, along with an action plan. If their service improves to an acceptable level within a specific timeframe, thank them and carry on. If not, make plans to end the relationship and find a replacement.

Remember that smart companies view vendors as partners in helping their businesses succeed. They aim for win-win relationships that assure them of fair pricing, quality service and mutual respect and satisfaction. You should, too!