Vendor Performance Analysis is an extensive process. It requires businesses to have a well-established plan ensuring all the essential parameters. Following are some of the best practices for Vendor Performance Analysis.
- Define Business Goals – Business goals should be clearly defined and communicated across cross-functional teams. Understanding business requirements will help respective stakeholders to avoid errors in selecting new vendors or negotiating deals.
- Develop a Process – Once the business goals are defined, the businesses need to create a robust process to evaluate the performance of suppliers. The process should be able to recognize the better performing suppliers and help in disengaging the low-performing suppliers.
- Communication – Supplier performance will improve only after taking corrective action on the low-performing areas. Therefore, it is essential to communicate the results of Vendor Performance Analysis with each supplier.
- Internal Benchmarking – Setting improvement goals and a clear, written plan will help to set internal standards for vendor performance analysis. Internal benchmarking will help to establish clear criteria to assess the performance of approved vendors.
- Monitor – Vendor Performance Analysis requires regular reviews and improvements suggestions. Performance data can be gathered and analyzed periodically to streamline the vendor performance analysis process.
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