Supplier Evaluation with KPIs
Measuring supplier performance is something that is often done discontinuously, for example, whenever you think performance is lowering or you feel dissatisfied with the supplier.
However, a constant measurement of supplier performance is very important because it allows you to react to problems, prevent disasters, and set new goals. Measuring performance is not just a way to criticize or obtain cost reduction/refunds because of quality problems; it should also be a tool to help suppliers maintain service and build improvement plans.
Moreover, as discussed in the defining requirements post, a requirement can't be expressed just by feelings, because you need to justify what you are telling the supplier and avoid false alarms that can make the supplier judge you as unreliable. Because of these considerations, the starting point is that you and your suppliers need to speak a shared language, embodied in the key performance indicators, or KPIs.
A KPI is a numerical objective measurement that expresses performance from a single point of view. An example of a KPI might be “defects per thousand parts” or “percentage of delays per month”.
The Dimensions of Supplier Evaluation
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