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Supplier evaluation: definition & important aspects
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What is a supplier evaluation?
A supplier evaluation is a systematic process for assessing the performance and reliability of suppliers based on defined criteria. The central evaluation factors are typically quality, delivery reliability, price level and service quality. This structured evaluation enables purchasing to manage supplier relationships based on facts and forms the basis for strategic procurement decisions.
Contents
Supplier evaluations: The most common problems
At the touchdown:
- Defining meaningful and measurable evaluation criteria often proves to be difficult, especially when different product groups and services are to be compared. The chosen criteria are often too complex or impractical to measure.
- The lack of a clear responsibility and process structure leads to inconsistent evaluation approaches between different departments. Without defined process owners, the initiative often fizzles out in the implementation phase.
- The lack of involvement of important stakeholders (quality, logistics, production) during the conception phase results in evaluation systems that are far removed from practice and are not accepted later.
During implementation:
- Manual data entry is time-consuming and error-prone. Many companies struggle with isolated Excel lists and a lack of system integration.
- Inconsistent or incomplete data input by different assessors leads to distorted results. Particularly in the case of subjective criteria, there is often a lack of uniform understanding of the evaluation standards.
- Regular updating of valuations is often neglected in day-to-day business, which means that the data quickly becomes outdated and loses its informative value.
During use:
- The results of the assessments are not systematically incorporated into supplier discussions and negotiations. The potential for concrete improvement measures remains untapped.
- The lack of integration of evaluation results into strategic procurement decisions means that decisions continue to be based primarily on price rather than overall performance.
In addition to the guide "The most important criteria and methods for successful supplier evaluation", you can also use our Excel template for supplier evaluation.
The optimal setup, implementation and use of supplier evaluations
1. development of a basic criteria hierarchy
- Define basic main categories: Quality, delivery reliability, costs, service/communication
- Add cross-group subcategories such as complaint rate, adherence to delivery dates, price structure
- Make sure that all criteria:
- are objectively measurable (e.g. number of complaints instead of "quality impression")
- Can be recorded by existing systems (ERP, QM system)
- Have a clear reference period (per quarter, per year)
2. standardization of the measured values
- Develop a standardized 100-point scale for each criterion
- Example delivery reliability:
- 100 points = 100% on time
- 75 points = max. 5% delay
- 50 points = max. 10% delay
- 0 points = over 20% delay
- Define clear threshold values and gradations for each criterion
3. develop a weighting system
- Set base weighting for main categories:
- Quality: 40%
- Delivery reliability: 30%
- Costs: 20%
- Service: 10%
- Create product group-specific weighting profiles
- Higher quality weighting for critical components
- Higher cost weighting for C-parts
- Higher service weighting for services
4. create product group templates
- Group similar product groups into clusters (e.g. raw materials, electronics, services)
- Create customized evaluation templates for each cluster:
- Select relevant subcategories
- Determine specific weightings
- Adapt measured variables to product group
5. ensure practical implementation
- Implement automated data collection where possible
- Delivery reliability from ERP system
- Quality data from QM system
- Price development from purchasing system (SRM and analytic systems for purchasing)
- Limit manual assessments to what is necessary
- Reduce complexity through:
- Maximum of 10 evaluation criteria per supplier
- Quarterly valuation instead of monthly
- Focus on top 80% suppliers
6. establish comparability
- Standardize all ratings on a 100-point scale
- Divide suppliers into comparison groups:
- According to product groups
- By sales volume
- According to strategic importance
- Create ranking only within comparable groups
7. monitoring and adaptation
- Check the practicability of the criteria on a quarterly basis
- Collect feedback from users and specialist departments
- Adjust weightings and threshold values as required
- Document all changes transparently
This systematic approach enables a practicable yet meaningful supplier evaluation across different product groups. The key lies in the balance between standardization and product group-specific adaptation, as well as the consistent automation of data collection.
Supplier evaluation: from manual assessment to supplier relationship management
Supplier evaluation is becoming increasingly important in the globalized economy. Companies are faced with the challenge of supplier management efficiently in order to ensure quality, reliability and innovative strength from a base of hundreds or thousands of suppliers. Traditional manual evaluation is reaching its limits, which is why a transition to modern, integrated approaches is required.
Traditional approach: Manual supplier evaluation
In traditional supplier evaluation, suppliers were usually evaluated annually using static criteria. This process was time-consuming and was often based on Excel spreadsheets and subjective assessments. Communication between purchasing organization between the purchasing organization and suppliers was mostly by email or telephone, which could lead to delays and loss of information. The lack of up-to-date data made it difficult to react quickly to changes in supplier behavior and risk analysis to recognize risks at an early stage.
New: Supplier Relationship Management (SRM)
The modern approach uses digital platforms and real-time data to enable continuous and proactive supplier evaluation. By integrating ERP systems and data analytics, companies can measure performance criteria such as delivery punctuality, quality inspection and sustainability on an ongoing basis. SRM promotes closer collaboration with suppliers through transparent information sharing and joint innovation management. This leads to improved supply chains, cost savings and greater adaptability to market changes.
Conclusion
Supplier evaluation is a key instrument of modern strategic purchasing that creates the basis for fact-based procurement decisions by systematically evaluating supplier performance. While traditional, manual evaluation systems reach their limits, modern SRM and analytics systems enable real-time monitoring of key performance indicators and the proactive identification of risks and optimization potential. The integration of these digital solutions demonstrably leads to measurable improvements in quality, costs and delivery reliability as well as to more intensive, partnership-based collaboration with strategic suppliers. Effective supplier evaluation is therefore not just a control instrument, but a strategic lever for the continuous optimization of the entire supply chain.
