What are the best metrics to use when evaluating vendor performance?

1 Quality metrics

Quality metrics are indicators of how well your vendor delivers the products or services that you need. They can include measures such as defect rate, accuracy, completeness, compliance, and customer satisfaction. Quality metrics help you to evaluate whether your vendor is meeting your quality standards and specifications, and whether they are delivering consistent and reliable results. Quality metrics can also help you to identify and resolve any quality issues or problems that may arise during the vendor relationship.

2 Cost metrics

Cost metrics are indicators of how much your vendor charges you for the products or services that they provide. They can include measures such as price, total cost of ownership, savings, discounts, and return on investment. Cost metrics help you to evaluate whether your vendor is offering you a fair and competitive price, and whether they are helping you to achieve your cost reduction and optimization goals. Cost metrics can also help you to negotiate better terms and conditions with your vendor, and to monitor and control your vendor spending.

3 Service metrics

Service metrics are indicators of how well your vendor supports and interacts with you throughout the vendor relationship. They can include measures such as responsiveness, availability, communication, professionalism, and flexibility. Service metrics help you to evaluate whether your vendor is providing you with the level of service and support that you need and expect, and whether they are building a strong and positive relationship with you. Service metrics can also help you to address any service issues or concerns that may affect your vendor performance or satisfaction.

4 Performance metrics

Performance metrics are indicators of how well your vendor achieves the objectives and outcomes that you have agreed upon with them. They can include measures such as delivery time, scope, milestones, quality standards, and customer feedback. Performance metrics help you to evaluate whether your vendor is fulfilling their contractual obligations and commitments, and whether they are delivering the expected value and benefits to you. Performance metrics can also help you to track and evaluate your vendor's progress and performance over time, and to provide feedback and recognition to your vendor.

5 Risk metrics

Risk metrics are indicators of how much risk your vendor poses to your organization, project, or process. They can include measures such as compliance, security, reliability, contingency, and reputation. Risk metrics help you to evaluate whether your vendor is adhering to the relevant laws, regulations, policies, and standards, and whether they are protecting your data, assets, and interests. Risk metrics can also help you to identify and mitigate any potential or actual risks or threats that may arise from your vendor relationship.

6 Innovation metrics

Innovation metrics are indicators of how much your vendor contributes to your innovation and improvement efforts. They can include measures such as new ideas, solutions, products, or services, as well as collaboration, creativity, and learning. Innovation metrics help you to evaluate whether your vendor is adding value and differentiation to your organization, project, or process, and whether they are helping you to achieve your innovation and growth goals. Innovation metrics can also help you to encourage and reward your vendor for their innovation and improvement initiatives.

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?