e-Procurement Optimization through Advanced Vendor Rating

Supplier performance evaluation is a key activity in Vendor Management. Let’s find out together the bottom line of the process and which useful tools we can use to optimize it.

Vendor Rating is the process that allows you to accurately assess the suitability of a company to provide certain goods or services to the Buyer, while also ensuring the suppliers’ ability to offer valuable supplies.

During this process, scores are assigned to suppliers, based on their actual performance and the goals achieved. The score is assigned based on different performance evaluation parameters using mainly metrics such as price, quality, timing, service. All this information is processed and transformed into useful instructions for the Buyer able to guide purchases and future collaborations.

If on the one hand, the supplier management strategy defines the weight of these metrics in building the Rating (based on the supplier hierarchy), in turn the Rating aims to verify the strategy itself and guide decisions in a way that is both reactive and proactive, monitoring performance, but also orienting the supplier towards the key elements for success.

Through the application of a digital and unified Vendor Management evaluation system, you can manage the purchasing processes by increasing the advantages of the buyer on all fronts, for example by better managing the risk and identifying the suppliers with the best performances.

Digitizing the evaluation process is what is expected from a Vendor Management software, which should be able to offer a timely and efficient evaluation focused on getting concrete advantages for buyers.

Thanks to the introduction in the company of a software such as Online Procurement, you can reduce the subjectivity of the judgment. The latter in fact features procedures in which the Vendor Rating is completely lacking or in which the evaluation system is partial and inconsistent.

Specifically, the Rating system, an integral part of the Supplier Management module of Online Procurement, becomes a useful tool for combining strategic planning and operational control, directing the buyer to collaborate only with suppliers with the best performance, i.e. those who are capable of ensure the best quality / cost ratio.

This global assessment approach makes it possible to overcome a subjective approach to decisions, choosing rather to rely on KPIs and objective data able to inform a centralized and shared method, manageable by different operators and executives involved in purchasing management, from CPOs to Contract Managers.