Successfully monitoring the performance of all suppliers can seem like an impossibility for many procurement departments. This is especially true of larger corporations, where the number of vendor contracts running at any one time can run into the thousands, or even higher.
In order to keep abreast of supplier performance, it is critical that your business is equipped to recognize the warning signs of impending supplier problems and foresee trouble ahead of time. If you notice these issues creeping into your supplier relationships, it may be time to address them and nip them in the bud or start looking elsewhere.
Late or Missing Orders
Things can, and do, go wrong in business all the time, and some glitches in otherwise mutually beneficial relationships do not always signify an issue. However, if there is a pattern of missing or late orders it can be a sign that all is not well with a supplier, particularly if they are not proactive about offering an explanation or how they are going to prevent it from happening again.
Breakdowns in Communications
Good contract negotiation will outline the expectations and obligations of both parties very clearly. Ensuring all contact information is correct and up-to-date falls under the remit of the procurement team, and if a supplier is not forthcoming in ensuring you have easy access to the right people, alarm bells should ring. Whether the supplier is merely disorganized, or whether there are deeper issues at fault, gaps in communication lead to gaps in order fulfillment, and there is no excuse.
Big Price Hikes
Of course, market prices fluctuate, and there is no guarantee that a price once agreed will always represent a fair deal for the supplier, but that doesn’t mean that once a contract has been negotiated that suppliers have the right to change their prices as they see fit.
No supplier should raise a price without prior discussion, and opportunity for negotiation. If price hikes are leaving a bitter taste in your mouth, then it may be time to see if a competitor can offer a more attractive deal.
Poor Customer Service Performance
Nobody expects everything to run smoothly in business, and actually, the measure of a supplier is often seen in how they respond when things do not go to plan. Exceptional problem-solving and customer service can actually end up enhancing the customer experience beyond the ordinary and should be looked at as a gift and an opportunity to shine. A good supplier will be proactive about resolving problems, often intervening before it becomes an issue for you. The pathway for complaints or problems should be smooth, timely and littered with empathy.
Lengthening Delivery Times
If a supplier is continually offering excuses or making requests for extensions to delivery deadlines, setting a precedent of accepting delays can lead to further delays. Your own lead times and order delivery targets can be hugely impacted by late suppliers, and though there are often valid reasons for delays, if the supplier’s issues are not well explained by circumstances that will affect the market universally, it might be time to see what the rest of the market has to offer. The lowest price does not always represent the best value.
Your supplier’s obligation is to get your order to you in full, on time and in working order – and damaged goods are as good as no goods. If your supplier has warehousing issues, quality control problems or their freight supplier is careless, they need to take ownership of the problem and make assurances that it won’t be happening again. If it happens regularly, you should consider the supplier in the same way as one who fails to supply goods at all and start considering sourcing from elsewhere.
If alarm bells are ringing, and you find your business in the position of needing to reevaluate your contracts, consider ProcurePort’s range of strategic sourcing tools to help you establish who your next vendor will be.