Recall that measurements are used to motivate certain behaviors. Supplier scorecards can be used to provide feedback on performance, as well as make comparisons between suppliers. Four types of results can occur based on performance against standards:
Depending on what is defined in the contract, the buying organization can reserve the right to require corrective measures for evaluation results less than expected or deemed necessary. Failure or inability to address the issues can result in termination of the supply agreement.
Audits
Supplier audits are one means of monitoring suppliers and ensuring compliance with agreed-upon performance. Audits can be conducted by purchasing staff, or externally by a third party. Having a pre-defined set of questions for the audit can help ensure that the process is efficient and effective. Types of audits include: