Vendor Evaluation:

The process of evaluating vendors is an ongoing task which every purchasing department should be performing at regular intervals. In this process, you are inviting dialogue or communication with your vendors, which is always good.

What types of questions should you ask your vendors? Ask questions directly related to areas which require improvement and do not neglect to mention areas which the vendor is excelling or performing well at.

Remember, the goal is to help your vendor improve their service levels and how they do business with your company. In return, the vendor might even offer something which will make both your organizations more efficient!

In Part A, we have provided a verbal question you might ask during your interview. In Part B, we have some examples of questions which are asked internally and completed prior to the actual vendor interview. See Delivery issue in Part B.

Part A

1. Do you have a recognized Quality Assurance program implemented?

Is system in effect?_________ Is procedure written? __________

Other questions can be related to the internal review. Example:

1. Out of XXX shipments this year we have identified a poor performance rating in the Delivery category because you have used an incorrect carrier. Have the vendor explain why.

Maybe, the carrier you are requesting on your purchase order does not service that region or possibly the message is not getting to the vendor’s shipping department. In the latter, our experience is if you refuse to pay freight charges  because the vendor did not ship as instructed, they quickly get the message and future shipments will be as instructed.

Part B

1.	DELIVERY	Points	Weight	Total
	On time arrival or service	90	.18	16.2
	Conformance to packaging specifications	89	.10	8.9
	Correct carrier used	59	.02	1.12
	SUB TOTAL		.30	26.3
2.	QUALITY
	Conformance to specifications	90	.15	13.5
	Commitment to improve quality	90	.12	10.8
	Quality of information (documentation)	90	.03	2.7
	Claims and credit returns	87	.02	1.74
	Environmental	92	.08	7.36
	SUB TOTAL		.40	36.1

Rating Points

0 – 19	Not Applicable
20 – 39	Not Acceptable / No Compliance
40 – 59	Poor Performance
60 – 79	Good / Minimum Expectation
80 – 89	Very Good
90 – 100	Excellent Performance

Any good vendor performance evaluation will have a performance weighting system and rating scheme which reviews Price, Delivery, Quality, Quantity and Service objectives. The weighting can only be determined by the owner as they best understand what product classes are most critical to their operations viability. The weight I may put on quality or delivery might be different than what you might use and it will differ from vendor to vendor.

Open and honest dialogue should be completed annually with your primary or key vendors and should be documented to allow for review and accountability. If you are interested in a comprehensive Vendor Performance Template you may wish to review RFQ30 which is in our Premium, Vendor and Mega packs.