Why bothering making a supplier scorecard?
- Make analysis and rational decisions
- Improve your supplier base
- Generate savings and value for your organization
- Get internal recognition of management: implement an efficient and transparent system
But above all, once you start using it, you wonder why you did not do it earlier…
What is a supplier scorecard?
As usual, we should trust our Wikipedia to give good insights. But it seems it is poorly structured on this aspect. You have to pick from Performance indicator and from SRM. You can even read Supplier Risk Management. However, none of them are really 1st in class Wikipedia articles by the time I am writing this post.
But in a way, the articles’ titles describe what this is about, and would support my definition:
A Supplier Scorecard is a structured overview of indicators of supplier performance. Those indicators are both qualitative and quantitative, displayed as an overview mixing graphics and figures. They offer a 360 degree view of the supplier performance over a period of time. Supplier Scorecard purpose is to manage the supplier, mitigate risks and optimize spend and profit.
A supplier scorecard in Excel is a graphical view of supplier performance along different criteria. You give score for all criteria defined. Then you report them onto a dashboard: the scorecard.
A supplier scorecard spreadsheet is defined by categories of criteria (Logistics, Financial,…), criteria (OTIF, Payment terms,…) and weights (Payment terms weight = 1, Currency USD weight = 2,…). This is an objective way of measuring performance of a supplier based on commonly accepted and transparent indicators. And this is valid across supplier categories.
Where to download the template:
Go directly at the bottom section of this article.
Vendor vs Supplier
By the way, you will note I use indifferently vendor or supplier, as this is kind of branch specific or regional which one you use. Vendor has a higher Supply Chain background, while Supplier is tending more towards strategic procurement and trading. Anyway what I am going to share with you, is all but branch specific. You may look here for more details.
I personally tend to prefer using the word supplier to the word vendor. However since I am not native speaker and since I have a long track record in trading, it may have no meaning and I can be wrong… Above all, this does not impact the supplier performance scorecard template excel I am sharing with you.
What is SRM – Supplier Relationship Management?
We have a post on it. In a nut shell: the purpose of SRM is to organize, track, plan, analyze and support the processes between an enterprise and its suppliers on all levels (strategy and operations).
Supplier Relationship Management (SRM) is the systematic method to evaluating suppliers, defining their contribution to company’s strategy and implementing actions plan to improve their performance.
- Systematic: this is a process
- Comprehensive: all suppliers, all categories, all segmentations
- Engaging: planning and executing of all interactions with suppliers
- Coordinated: involving all departments
So this supplier scoring template is part of SRM, but only a part of it. Let’s go and see how you will soon be managing suppliers in Excel.
Evaluating your suppliers is a Key Process of Supplier Relationship Management
If you do not have a clean supplier database, this article is maybe too early for you. You better have a look at this one: How to clean your supplier base in 5 steps?
For now, let’s assume you have a clean supplier database. Or at least you are close to having it. How to evaluate them? This is what we’ll discuss here. As for any spreadsheet, the vendor management spreadsheet is working with the principle: shxt in shxt out!
This article will not a be a generic one, but based on a real-life Excel template. You’ll learn about my Supplier Relationship Management Excel Template. It’s a template that helps you build a supplier scoring system from scratch. Even better, not from scratch, but just in adapting a few parameters of my vendor evaluation scorecard…
Once we are done, you will be best armed to talk to supplier, and probably will never have to shoot…
This tool highly contributes to improve your vendor base. Thus your business as whole. Thanks to 360° analysis, you will conduct continuous improvement across all departments of your company. And become their hero.
The supplier Scorecard template as heart of Vendor Relationship Management
The Vendor Relationship Management Excel Template is a complete solution
- Evaluate suppliers in Excel
- Manage supplier base in Excel
- Show supplier Scorecard in Excel
- Benchmark suppliers graphically in Excel
Some years ago, my trading company merged with another one. In short: overnight I had twice as many vendors to manage. Back then I was a Business Unit Manager, I built this template together with a colleague. I needed an efficient process of benchmarking vendors and a valid decision base for spend rationalization.
The procurement scorecard spreadsheet delivered me exactly that. And as good things does not come alone, it improved massively my supplier relationships management and negotiation power.
By deploying a vendor scoring approach in xls format, I successfully:
- Decrease my supplier count by a 1/3. These are massive savings: stocks, transactions,…
- Renegotiate many contracts and generated above 3% savings. Imagine how my CPO was happy!
The supplier relationship management xls template is built around the vendor scorecard
What is the main outcome of the supplier report card template:
- Prepare meetings with vendors: in a couple of clicks, a complete overview of your supplier, shows weaknesses. A valuable asset for your negotiations and focusing on what matters. You steer your supplier in the right direction, they have no way out..
- Enable fact-based decisions: forget your gut feeling and start acting fact based. All your colleagues have shared their insights in this scorecard. You sit on top of a huge amount of knowledge. Taking decision is now a matter of tactics, not of luck.
- 360°-degree analysis of your spend: always wondered what you really spend your money on? Full picture of each and every supplier’s performance. All areas are covered: business, financial, supply chain and quality.
Where to download the template:
Go directly at the bottom section of this article.
SRM Features
The Supplier Score Card Excel Template is a tool of the more global SRM approach. That is why, beyond the scorecard itself, the template offers additional and flexible features:
- Scorecard graph: This one is generated automatically. It displays the scores of every supplier for each and single one criteria you have defined, that best suits your business.
- Adapted scoring criteria and weights: you set your own evaluation criteria that matters to you and to your CEO. The template is flexible and can be adapted with any topic you need. You can set individually all weights of the criteria to best fit your company.
- Supplier scoring: Once criteria and weights are defined, you can start scoring each supplier. This is better done in collaboration with co-workers.
- Flexible: Add as many vendors as you like, adapt your own scoring criteria and weighting factors as many times as you want. Change colors and font or whatever: no restrictions in Excel, no password, no macro.
Making changes on your own:
If you are a seasoned excel user, you will easily extend the functions, adapt the categories and change the layout. There are no hidden functions, just plain Excel Formulas. No big deal.
Making changes on request:
You feel like you can’t do it on your own? Just contact me, I will let you know what is possible.
What template structure is best adapted?
Distinguish between internal and external documents
There are 2 mirroring scorecards. One for you with internal insights, and one for the suppliers with less information. Don’t mix up!
The internal supplier performance scorecard tab is internal and internal only: do not share with anybody from outside your organization. This is the view you use to prepare your supplier meetings.
Upon printing (or .pdf), they will fit perfectly on a Letter or A4 printout. The idea behind it: use it directly as reporting or as minutes of meetings.
How to select the right supplier from the SRM database
In the header top rows of the supplier scorecard spreadsheet, there is a supplier selection cell, which will automatically update all relevant fields of the scorecard. You click and scroll down or directly type in the supplier name.
You have a couple of free text fields to define ToDos and take notes. This ensures that actions will be communicated and implemented.
Where to download the template:
Go directly at the bottom section of this article.
How to approach suppliers with your scorecard template
First of all, make sure you use the internal supplier evaluation scorecard and to share only the external supplier scorecard. This way, you benefit from the comments and have just the right level of transparency with your supplier.
Before the supplier meeting
I suggest you share a .pdf before meeting:
- you prove that you prepared the meeting and work in a trustful way
- you show mercy in letting him prepare some aspects (you avoid losing time with “I have to check internally” answers)
- you can keep track and ownership of your communication
Take the time necessary to explain both the structure of this supplier report card and the meaning of each scorecard criteria to your contact. Once this is done, the meeting will be much more efficient. Explain as well that this is not specific to him, but that all suppliers undergo the same approach.
During the supplier meeting
Share a hand-out or your screen. Key is to :
- be transparent
- lead the discussions around your document. Be sure you avoid your supplier taking back the lead in the meeting
Afterwards, show the notes you are writing, seek for alignment: “Do you agree on this action and timeline?”
After the supplier meeting
Simply use the template as a .pdf export from the .xls supplier scorecard, this time with notes and action plan agreed during the meeting. This is a great features for minutes of meeting without additional work.
The backbone: a clean supplier database
The supplier database is basically a list of all your suppliers with individual scores.
If you do not have a clean supplier database, this article is maybe too early for you. You better have a look at this one: How to clean your supplier base in 5 steps?
General supplier information (Supplier name, identification number,…) are obviously the identification key of each vendor. But the true purpose is scoring, giving a note from 1 to 5. Five is the best note and one the weakest. We created 4 categories:
- Business score: the one you usually keep in mind. A common mistake is to reduce scorecard to those aspects.
- Quality score: can be the product itself, but as well services around such as data,…
- Logistics: all about the OTIF (on time in full) and similar KPIs
- Financial: cash impact or any other relevant topics
Define what parameters matter to you
What is relevant for you may not be relevant to me. That is why you can customize the Supplier Relationship Management Excel Template.
There is a specific tab with full parameter overview. Most of the time, you do it once and for all. But this can be changed anytime you want. For example next time you change company and take this supplier management system in excel with you :-)…
Customizing:
- Product Category
- Vendor segmentation and typology
- Scoring criteria and their weights. The supplier scorecard criteria are the architecture of the graphs.
- Weighting factors
Top 4 benefits you instantly achieve by building a vendor evaluation system
The truth is: negotiation is fine. But the powerful negotiation is only possible with powerful insights. Hence a supplier evaluation system.
1st Benefit: Opening negotiation without blindspot
Negotiations based on only a couple of hard facts (prices,…) are not enough to leverage your full potential. Many other soft facts will be revealed by the SRM Excel template. You get a kind of 360 supplier score. Luckily, the vendor scorecard template gives you ammo to shoot where it makes sense.
2nd Benefit: continuous improvement
Imagine that you tell your baker that his bread would be better if he changed his packaging from plastic to paper. And that from the baker point of view, this is cost neutral. He will probably change on his own account.
3rd Benefit: Commitment and backing-up of colleagues
Since you do not only work with suppliers and probably have a boss, the next question is: what’s in it for me internally?
Honestly this business tool is so powerful that it gives you commitment of your colleagues. There were involved, they gave judgment. They built the supplier relationship management template with you. So when your boss ask any of them: “if what I see on this chart the truth?” You get a massive supporting yes.
4th Benefit: Internal Saved-my-day
Last but not least, the save my day benefit of this vendor performance scorecard template. On a single click, you can answer the Friday 5:00 p.m. question of your CEO. “Oh by the way, I may meet tonight supplier ABC for dinner: can you send me in the next hour an overview please?”
Enjoy your week-end…
Where to get supplier scorecard template excel?
The vendor management excel template is hosted by Partner Blog of Adrian. You can access to the product here directly: Template (Note that you will be redirected to Adrian’s blog)
