What are the best ways to ensure vendor performance benchmarks are realistic and achievable?

1 Align benchmarks with business goals and vendor capabilities

The first step to ensure realistic and achievable benchmarks is to align them with your business goals and the vendor's capabilities. You should define the scope, objectives, and expected outcomes of the procurement project, and communicate them clearly to the vendor. You should also assess the vendor's strengths, weaknesses, and track record, and verify their references and credentials. By doing so, you can set benchmarks that are relevant, realistic, and mutually beneficial for both parties.

2 Use SMART criteria

The second step to ensure realistic and achievable benchmarks is to use SMART criteria. SMART stands for Specific, Measurable, Achievable, Relevant, and Time-bound. These criteria help you to define clear, quantifiable, and meaningful benchmarks that can be easily tracked and evaluated. For example, instead of setting a vague benchmark such as "improve customer satisfaction", you can use SMART criteria to make it more specific, such as "increase customer satisfaction score by 10% within six months".

3 Involve vendors in the benchmarking process

The third step to ensure realistic and achievable benchmarks is to involve vendors in the benchmarking process. You should not impose benchmarks on vendors without their input or consent, as this can create resentment, mistrust, and resistance. Instead, you should collaborate with vendors to co-create benchmarks that reflect their expertise, experience, and feedback. You should also negotiate the terms and conditions of the benchmarks, such as the frequency, method, and criteria of evaluation, and the rewards and penalties for meeting or missing them.

4 Monitor and review benchmarks regularly

The fourth step to ensure realistic and achievable benchmarks is to monitor and review them regularly. You should not set and forget benchmarks, as this can lead to complacency, inconsistency, and missed opportunities. Instead, you should track and measure the vendor's performance against the benchmarks using appropriate tools and metrics, such as dashboards, reports, surveys, or audits. You should also review the benchmarks periodically to ensure they are still relevant, realistic, and achievable, and make adjustments if necessary.

5 Provide feedback and recognition

The fifth step to ensure realistic and achievable benchmarks is to provide feedback and recognition. You should not only focus on the negative aspects of the vendor's performance, such as gaps, errors, or delays, but also acknowledge and appreciate the positive aspects, such as achievements, improvements, or innovations. You should provide constructive feedback that is timely, specific, and actionable, and that helps the vendor to improve and grow. You should also recognize and reward the vendor for meeting or exceeding the benchmarks, such as by giving praise, incentives, or referrals.

6 Manage expectations and risks

The sixth step to ensure realistic and achievable benchmarks is to manage expectations and risks. You should not expect perfection or guarantee success from the vendor, as this can create unrealistic pressure and unrealistic expectations. Instead, you should be realistic and flexible about the vendor's performance, and acknowledge the potential challenges, uncertainties, and changes that may affect the benchmarks. You should also plan for contingencies and mitigate risks, such as by having backup plans, alternative vendors, or dispute resolution mechanisms.

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?