Four Ways to Improve Supplier Performance

Published on
5/8/2024
A woman talking to a supplier on the phone

Poor performing suppliers can be detrimental to the reputation and profitability of your business. Finding ways to improve the performance of your supplier will not only benefit your bottom line, but also keep your customers happy. 

Although some supply chain bottlenecks are unavoidable, there are measures you should take to avoid them. 

Let’s take a look at four ways to improve supplier performance. 

1. Evaluate Your Expectations and Strategize Accordingly

The first step is to get a clear understanding of how your supplier stacks up against your expectations. As you’re doing this, you should be getting a good idea of what areas can be improved. Some questions to consider during the evaluation are:

  • Are you getting the most out of your dollar in terms of quality and quantity?
  • What can you do to maximize the efficiency of your dollar?
  • How is your business affected both positively and negatively by your supplier?

After you evaluate your expectations, strategize how to improve the areas that are lacking. The goal of your strategy is to improve supplier relations and efficiency. The DMAIC strategy is a beneficial tool that helps businesses to improve in a lot of areas, including your supplier processes. 

The components of the DMAIC strategy are:

  • Define: define and identify the problems you wish to solve
  • Measure: collect data on the current status of your operations
  • Analyze: analyze the data to identify the root of the problems
  • Improve: come up with ideas that could fix the identified problems
  • Control: design a plan to make sure your new strategy can be put in place effectively

Developing an effective strategy will give you an edge over competition, keep your customers happy, and reduce expenses. 

2. Rate Your Supplier’s Performance

By implementing a quarterly performance evaluation, you can weed out poor performing suppliers and get direction towards improvement. An effective supplier performance review should include:

  • Supplier’s financial stability
  • Quality of services
  • Quality of products
  • Delivery times
  • Price evaluation
  • Customer service quality 

The more exhaustive your performance review is, the more insightful it will be. Ultimately, the goal of your supplier's performance evaluation is to identify risks, delays, and unnecessary expenses. After reviewing your supplier’s performance, you will know for sure if they are meeting your expectations and what areas should be improved.

3. Identify and Reduce Risks

There are various risks associated with each level of the supply chain that can affect your supplier’s performance. Identifying these risks will provide you insight into the effects they will have on you and your supplier, and what accommodations you should make to reduce them.  

Supplier Risks

There are many different risk factors that can be detrimental to a supplier’s performance. The first factor to consider is a bottleneck further up the supply chain. Your supplier is reliant on goods and materials from different sources and locations, so there are plenty of opportunities for an error to occur. From product delays to shipping and delivery issues, your supplier is also prone to these bottlenecks.

Another risk is the size of the supplier’s operation. Smaller operations often don’t have the manpower and technology needed for efficient automation. This could lead to poor inventory management, product shortages, and infrequent delivery dates. To account for these risks, you should diversify your suppliers. By diversifying your suppliers, you will be less prone to supply shortages if one of your suppliers can’t meet your needs.   

Check out our article on Middle Mile Delivery for a full in-depth look at what affects middle mile delivery and what that means for you. 

Buyer Risks

A disrupted supply chain can lead to unnecessary expenses, damaged reputation, and long wait times. As a buyer, it’s important to communicate properly with your suppliers to reduce these risks. Proper communication and planning can prevent a number of issues for both you and your supplier. 

Communicating efficiently involves using predictive analytics, scheduling regular deliveries, and ordering ahead of time. If your business requires special circumstances for delivery or order fulfillment, communicate them fully with your supplier’s management.

4. Collaborate With Your Supplier

The goal of collaborating with your suppliers is to build a lasting and mutually beneficial relationship. Collaboration allows you to accomplish your goals while making your suppliers’ lives easier. Be proactive in identifying your needs and supply chain risks. By searching for optimizations in scheduling and the supply chain, you can keep your costs low, boost efficiency, and build a working relationship with your suppliers. Using helpful technologies is a great way to optimize the supply chain for cost and efficiency. 

Assistive technologies like Transportation Management Systems can prove to be an invaluable resource for both buyers and suppliers.

Work Together, Improve Together

There are many different ways to improve supplier performance, and it requires effort from all parties involved. With the help of companies like Open Road, you can streamline the supply chain to boost efficiency, cut costs, and keep your business running smoothly.  

 

Open Road allows you to track your deliveries, circumvent bottlenecks, and get your supplies when you need it most. Sign up for free today, and see how Open Road is the shipping solution for when you’re in a pinch. 

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