Vendor Assessment and Evaluation Guide

 Vendor performance evaluation requires three elements: a vendor roster based on value to your organization; a system to track performance against metrics and service levels; and the utilization of a strategic ranking system.

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1. Organize Your Roster: Utilize descriptions of the goods or services a vendor supplies or rank them by their importance to your organization. Deploy colors, numbers, letters, or words to categorize them in charts or spreadsheets, assigning value based on investment, capability, or dollar amounts.

Use this scorecard as a selection or ongoing rating system template for your vendor roster. Once gathered, your data can be compiled into a spreadsheet to compare current vendors or evaluate a single supplier. Easily edit the criteria checklist to match your business needs.

 Download Vendor Assessment and Scorecard Template - Excel

To learn more about vendor management scorecards, refer to "The Ultimate Guide to Vendor Scorecards."

2. Establish Tracking and Performance: Select an auditor or a small team capable of promoting, demoting vendors, or highlighting unique evaluations. Track vendor value consistently or conduct surveys based on trigger metrics that identify issues like quality concerns, delivery delays, or damaged products.

Surveys can provide valuable input from purchasing or personnel closer to the situation than a manager. Ensure feedback guidelines are fact-based. Survey questions can follow a simple value scale from one to five, including:

• Performance: Did the supplier meet specfications?
• Delivery: Were deliveries timely?
• Invoicing: How did the final price compare to the budget?
• Customer Service: How well does the vendor handle questions or solve problems?
• Knowledge: How well does the vendor understand your company?

3. Maintain a Strategic Vendor Evaluation System: Apply your understanding of performance to strategically segment vendors. The Kraljic Matrix divides goods or services into four categories based on supply risk and profit impact, helping you define optimal purchasing strategies and avoiding bottlenecks.

Kraljic Vendor Segmentation Matrix Template

Use this template to maximize supply stability, reduce costs, and shift procurement from transactional to strategic. Recognize high supply risks when few suppliers exist or factors like natural disasters or logistics challenges affect availability. Profit impact is substantial when the item significantly boosts productivity or quality.

Classify services and products you purchase as strategic, leverage, bottleneck, or non-critical, based on their supply risk and profit potential. This helps you determine which vendors align best with business objectives.

Download Kraljic Vendor Segmentation Matrix Template

Word | PDF

Ongoing vendor reviews can highlight red flags when expectations are not met. Proper documentation and regular oversight simplify the process. When issues arise, inform the vendor immediately and have contingency plans in place. If there’s no remedy and the situation isn’t isolated, terminating the partnership might be necessary. Conduct post-mortems with your team and the vendor if you decide to end the relationship.