You’re not sure how to evaluate your vendor relations. What should you be measuring?

1 Vendor performance

The most obvious metric to measure is how well your vendors perform according to the agreed terms and expectations. You can use various criteria to assess vendor performance, such as timeliness, accuracy, responsiveness, compliance, and innovation. You can also use feedback surveys, audits, reviews, or scorecards to rate your vendors and compare them with each other or with industry standards. Vendor performance metrics can help you identify strengths and weaknesses, reward excellence, and address issues.

2 Vendor satisfaction

Another important metric to measure is how satisfied your vendors are with your relationship. Vendor satisfaction can influence their motivation, loyalty, collaboration, and flexibility. You can measure vendor satisfaction by asking them directly about their experience, expectations, challenges, and suggestions. You can also monitor their behavior, such as their communication frequency, quality, and tone, their willingness to go the extra mile, and their openness to feedback and improvement. Vendor satisfaction metrics can help you build trust, rapport, and mutual benefit.

3 Vendor risk

A third metric to measure is how risky your vendors are for your business. Vendor risk can arise from various factors, such as financial instability, legal disputes, ethical violations, security breaches, or operational disruptions. You can measure vendor risk by conducting due diligence, background checks, risk assessments, and contingency plans. You can also track their performance history, reputation, and compliance records. Vendor risk metrics can help you mitigate threats, protect your interests, and ensure continuity.

4 Vendor value

A fourth metric to measure is how valuable your vendors are for your business. Vendor value can reflect their contribution to your strategic goals, competitive advantage, innovation, and growth. You can measure vendor value by calculating their return on investment, cost savings, quality improvements, customer satisfaction, and market share. You can also evaluate their alignment with your vision, values, and culture. Vendor value metrics can help you optimize your spending, leverage your partnerships, and create synergies.

5 Vendor development

A fifth metric to measure is how much your vendors develop and improve over time. Vendor development can indicate their potential, commitment, and adaptability. You can measure vendor development by setting goals, benchmarks, and milestones for their performance, satisfaction, risk, and value. You can also provide them with feedback, coaching, training, and recognition. Vendor development metrics can help you foster learning, growth, and innovation.

6 Vendor relations

A sixth metric to measure is how strong your vendor relations are overall. Vendor relations can encompass all the aspects of your interaction, cooperation, and integration with your vendors. You can measure vendor relations by analyzing the frequency, quality, and outcome of your communication, negotiation, and collaboration. You can also assess the level of trust, respect, and partnership that you share with your vendors. Vendor relations metrics can help you enhance your efficiency, effectiveness, and sustainability.

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?