A collaborative approach to vendor scorecarding

by | Oct 1, 2019 | Data Management, Retailers, Vendor Management

Vendor scorecarding brings to mind an image of penalties imposed by retailers or grocers onto their supplier community. Scorecards are often associated with chargebacks for noncompliance in areas such as late shipments, incomplete shipments or even improperly placed shipping labels.

Of course, compliance is an important part of managing supplier performance, but it’s more important to consider the strategic purpose of a vendor scorecard. A scorecarding effort with insightful supplier metrics can help both the retailer and its suppliers perform better, together.

Using vendor scorecards to drive positive change

Scorecards can foster collaboration that helps all trading partners make positive changes in their supply chain performance instead of being used as a punitive measure.

For example, if a retailer wants to improve vendor metrics such as fill rate (or the amount of product shipped as a percentage of the total order), they can work collaboratively with suppliers to make improvements. This can involve activities such as making sure suppliers acknowledge orders and communicate any changes in what they plan to ship versus the original order.

By doing so, the retailer knows what to expect from vendors, and can send additional purchase orders at a later date for the remaining quantity.

Vendor scorecarding has significant benefits for suppliers as well. If suppliers have ready access to tangible metrics on performance, they gain more insight into what to improve.

For example, SPS Commerce worked with a supplier who was not consistently sending required advance ship notices (ASNs) to a retail customer. As a result, the supplier’s product got stuck on the receiving dock and was delayed getting onto store shelves, causing both the retailer and the supplier to lose sales. For reasons like this, SPS is seeing more vendors develop scorecards themselves and proactively bring them to retailers so that they can have a joint discussion on what’s going well and what changes are needed to improve their vendor metrics.

Full-service providers go beyond scorecarding to improve vendor performance

Starting a conversation around vendor scorecarding isn’t always easy. Full-service providers like SPS Commerce not only provide a vendor scorecarding solution but also an expert team that can help retailers and suppliers interpret the information and formulate a plan to collaboratively improve supply chain performance. Contact an SPS Commerce representative today to get started.

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Brandon Pierre