How can you use data to evaluate supplier performance?

1 Define your goals

Before you start collecting data, you need to define your goals for the evaluation. What are the key performance indicators (KPIs) that matter most to you and your stakeholders? How will you measure them and compare them to your contract terms and industry benchmarks? How will you communicate your findings and feedback to your suppliers? By clarifying your goals, you can focus on the data that will help you achieve them.

2 Choose your data sources

Next, you need to choose your data sources. Depending on your goals and KPIs, you may need to use different types of data, such as quantitative or qualitative, internal or external, historical or current, etc. For example, you may want to use quantitative data from your inventory system to track delivery times, qualitative data from customer surveys to assess satisfaction, external data from market research to benchmark prices, and historical data from previous contracts to evaluate trends.

3 Collect and organize your data

Once you have chosen your data sources, you need to collect and organize your data. This may involve using various tools and methods, such as spreadsheets, databases, software, surveys, interviews, etc. You need to ensure that your data is accurate, complete, consistent, and relevant. You also need to organize your data in a way that makes it easy to access, analyze, and share.

4 Analyze and interpret your data

The next step is to analyze and interpret your data. This means applying statistical techniques, visualizations, models, and frameworks to extract meaningful insights from your data. You need to look for patterns, trends, outliers, gaps, and correlations that can help you understand how your suppliers are performing and why. You also need to interpret your data in the context of your goals, contract terms, and industry standards.

5 Communicate and share your data

After you have analyzed and interpreted your data, you need to communicate and share your data with your suppliers and other stakeholders. This may involve creating reports, dashboards, presentations, or other formats that can convey your findings and feedback clearly and effectively. You need to highlight the strengths and weaknesses of your suppliers, the impact of their performance on your business, and the areas of improvement or opportunity.

6 Use your data for negotiation

The final step is to use your data for negotiation. By using data to evaluate supplier performance, you can gain a competitive edge in your contract negotiations. You can use your data to justify your requests, demands, or offers, to support your arguments or claims, and to negotiate better terms, prices, or conditions. You can also use your data to build trust, rapport, and collaboration with your suppliers, and to foster long-term relationships.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?