Developing a Measurement System to Evaluate Supplier’s Performance

Abstract

This study focuses on the development of a supplier evaluation scorecard, aimed at creating a systematic and measurable method for managing supplier relationships. This study investigates which key performance indicators (KPIs) are most effective for evaluating supplier performance within the context of the case organization. The study also involves the development of the scorecard tool designed to assess supplier performance and enable its ongoing monitoring and improvement. The need for the study arose when the case organization identified a gap in its supplier performance evaluation, which impacted decision making and supplier management.

This study used an action research approach, combining qualitative methods such as semi-structured interviews with key stakeholders, analysis of internal documents and participant observations. Data was also collected from various company systems, and at the end of the study, new metrics were proposed to create a comprehensive supplier evaluation scorecard. To guide the development, the theoretical framework focused on the topics of supplier performance measurement, supplier relationship management, and supplier evaluation.

The practical outcome of the study is the development of a supplier scorecard that consolidates the data from multiple systems and evaluates suppliers based on key performance metrics such as delivery accuracy, quality, and contract adherence. The study indicates that a structured approach to supplier evaluation can improve visibility of supplier performance and help the case company to identify the strengths and weaknesses of their suppliers. The case company expects that the scorecard developed in the study can strengthen supplier relationships, streamline procurement processes, and improve its overall operational performance.