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How can you ensure a vendor is prepared for a performance review?

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Vendor relations are crucial for any business that relies on external partners to deliver products or services. However, managing vendor performance can be challenging, especially when you need to conduct regular reviews and provide feedback. How can you ensure that your vendors are prepared for a performance review and understand your expectations and goals? Here are some tips to help you plan and conduct effective vendor performance reviews.

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Devaki Nandan Agarwal

Vice President - RM procurement @ KEC International Ltd. | Supply Chain Management| Strategic Vendor Management…
Olugbenga Odunlami, MCIPS (Chartered)

Procurement & Supply Chain Management Professional
Danilo Tolentino

Especialista em Compras de Varejo | Análise de Mercado | Precifica??o e Gest?o de Fornecedores

1 Set clear objectives

Before you schedule a performance review with a vendor, you should have a clear idea of what you want to achieve from the meeting. Do you want to assess their quality, timeliness, cost, or customer satisfaction? Do you want to address any issues or concerns that have arisen during the project? Do you want to explore new opportunities or areas for improvement? Having clear objectives will help you focus the review on the most relevant and important aspects of the vendor's performance and avoid wasting time on irrelevant or minor details.

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Devaki Nandan Agarwal

Vice President - RM procurement @ KEC International Ltd. | Supply Chain Management| Strategic Vendor Management, Sustainable Procurement and Sourcing | Ex-CEAT | Ex-JKTYRES
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Preset templates with KPI is useful tool and Part of communication to clearly set the expectation. This helps to avoid wasting time on minor details and to remain focus on what is important for both partners.

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Olugbenga Odunlami, MCIPS (Chartered)

Procurement & Supply Chain Management Professional
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You can put together like a checklist for the review and share before hand. Performance review is not intended to witch-hunt a vendor, it is basically a continuous improvement process that is beneficial to both parties. Vendor will see area where they are not meeting up the agreed SLA, and work on the set KPI to ensure that ball is not dropped off again. This will make them better and produce better service delivery for the buying organisation. So win-win for both parties.

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Danilo Tolentino

Especialista em Compras de Varejo | Análise de Mercado | Precifica??o e Gest?o de Fornecedores
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Com objetivos claros, a análise de desempenho se torna mais direcionada e produtiva. Foco nos pontos relevantes (qualidade, pontualidade, custo, etc.) garante uma avalia??o eficaz e otimiza o tempo. Abordar quest?es específicas, explorar novas oportunidades e áreas de melhoria contribuem para um diálogo proveitoso.

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2 Communicate expectations

Once you have defined your objectives, you should communicate them to the vendor in advance. This will help them prepare for the review and gather any relevant data or information that they need to present. You should also share your performance criteria and standards, such as key performance indicators (KPIs), service level agreements (SLAs), or benchmarks, so that the vendor knows how you will measure and evaluate their performance. By communicating your expectations clearly and transparently, you will avoid any confusion or misunderstanding during the review and ensure that both parties are on the same page.

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Danilo Tolentino

Especialista em Compras de Varejo | Análise de Mercado | Precifica??o e Gest?o de Fornecedores
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A comunica??o clara e transparente das expectativas é fundamental para uma análise de desempenho eficaz. Informar o fornecedor dos objetivos, critérios e padr?es de avalia??o com antecedência garante que ambas as partes estejam na mesma página e evita mal-entendidos. Compartilhar KPIs, SLAs e benchmarks facilita a medi??o e avalia??o do desempenho, tornando a revis?o mais produtiva e focada em resultados.

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3 Provide feedback

During the review, you should provide constructive and honest feedback to the vendor based on your performance criteria and standards. You should highlight their strengths and achievements, as well as their weaknesses and challenges. You should also acknowledge any external factors that may have affected their performance, such as market conditions, customer demand, or supply chain disruptions. You should avoid being too harsh or too lenient, and instead aim for a balanced and objective approach that recognizes the vendor's efforts and contributions, as well as their areas for improvement.

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Danilo Tolentino

Especialista em Compras de Varejo | Análise de Mercado | Precifica??o e Gest?o de Fornecedores
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Na revis?o, dê um feedback honesto e justo ao fornecedor, baseado nos critérios combinados. Elogie os pontos fortes, aponte áreas de melhoria, reconhe?a fatores externos e incentive o crescimento.

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4 Listen and learn

A performance review is not a one-way conversation, but a two-way dialogue. You should also listen to the vendor's feedback, opinions, and suggestions. You should ask open-ended questions that encourage them to share their perspective and insights on the project, the relationship, and the performance. You should also be open to learning from the vendor and discovering new ways to improve your collaboration and outcomes. By listening and learning from the vendor, you will show them that you value their input and expertise, and that you are willing to grow and adapt with them.

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Danilo Tolentino

Especialista em Compras de Varejo | Análise de Mercado | Precifica??o e Gest?o de Fornecedores
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A avalia??o de desempenho é uma via de m?o dupla: dê feedback e ou?a o que o fornecedor tem a dizer. Fa?a perguntas, aprenda com ele e fortale?am a parceria.

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5 Set goals and action plans

After you have discussed the vendor's performance and feedback, you should set realistic and specific goals and action plans for the next period. You should agree on what the vendor needs to do to maintain or improve their performance, such as implementing best practices, resolving issues, or investing in new resources. You should also define how you will support and monitor the vendor's progress, such as providing regular feedback, conducting follow-up meetings, or reviewing reports. You should document the goals and action plans and share them with the vendor, so that both parties have a clear and shared vision of the future.

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6 Follow up and review

The performance review is not the end of the vendor relations process, but the beginning of a continuous cycle of improvement and growth. You should follow up with the vendor regularly and review their performance against the goals and action plans that you have agreed on. You should also provide ongoing feedback and recognition, as well as address any issues or concerns that may arise along the way. By following up and reviewing the vendor's performance, you will ensure that they are accountable and motivated, and that they are aligned with your expectations and goals.

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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?

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Vishwanath Reddy

Team Lead at GEP Worldwide, /B2B,B2C, /Project procurement specialist/ Civil Engineer /supply chain management
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I recommend using performance reviews preferably through a vendor management support by feedback process. Performance reviews may capture following points Scorecards Incident reports Action plans Internal business owner(s) Customer surveys Prior performance reviews Performance reviews from similar vendors Monitoring compliance of contractually agreed upon KPI’s and SLA’s Identifying areas where the vendor is not performing to expectations Partnering with the vendor to resolve low vendor performance Benchmarking the vendor’s performance against similar vendors Resolving poor performance trends before they impact productivity Partnering with the business owner(s) to ensure they are engaged with and utilizing the vendor’s services

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Shankar G

Chartered Accountant, Insurance Surveyor, Insolvency Professional
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Build confidence in vendor that he is partner in progress and it is team effort. Not show a big brother attitude however big,famous you are.

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How can you ensure a vendor is prepared for a performance review?

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1 Set clear objectives

2 Communicate expectations

3 Provide feedback

4 Listen and learn

5 Set goals and action plans

6 Follow up and review

7 Here’s what else to consider

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