Question

Why is the tracking of supplier performance so important? Why rank suppliers? What is the value of ranking suppliers? How does it help the project, the procurement and the future?

Answer 1

Tracking of supplier performance is very important as suppliers are the primary contact of raw materials and many other services which is required for the organization. Tracking their performance helps in estabkishing proper communication channel, building relationship, evaluating their performance, quality of service, business ethics and values and credibility to do business with them on trust. Ranking suppliers helps in classifying the supplier based on different evaluation criterias such as their cost, quality, performance, capacity and overall trust factors. This gives directional aspects on how much volume which can be assigned to a particular supplier and how much dependency can be created with the suppliers.

Ranking and proper evaluation of suppliers reduce the risk in project and create a trustability index so that those suppliers can be given more business based on their performance, quality, cost , ease of doing business etc. This helps a smooth relationship with the supplier by estimating their performance and capabilities and also to set the realistic expectations.