Vendor Rating: Improve Your Productivity

Suppliers Manual

Why a Vendor Rating System?

That is a relatively simple question: because it offers significant advantages. You can:

  • Find the bottlenecks in your buying process;
  • Compare your vendors and adjust your procurement policy accordingly;
  • Convince your vendors to perform better;
  • Reduce the costs caused by mistakes of your vendors;
  • Reduce your supplier base;
  • Reduce your stock, due to shorter lead times;
  • Improve your buying prices and conditions;
  • Meet ISO requirements;
  • Assess your purchasers;
  • In short: improve the productivity of your purchase department.

What is a Vendor Rating System?

A Vendor Rating System makes it possible to follow the performance of your suppliers on a continuous basis. This can be a relatively simple system, for instance based on delivery accuracy only, but it may also be a more comprehensive system with multiple subjective criteria. The more criteria you use, the more accurate the assessment will be and the better picture of you will have of your suppliers' performance. It is ideally used together with a supplier's manual.

What are the Possibilities of a Vendor Rating System?

You can rank the different criteria for each supplier, giving you the opportunity to group, rate, follow and compare them. By playing with the importance of each decisive factor, it is possible to adjust the focus from year to year, depending on the priorities of your organization. For example, you can first focus on reliability, the following year on product quality. You can use the results during negotiations by seeking compensation for past failures, or try to set ambitious targets for the future.

Do it yourself?

Many organisation try to set up their own vendor rating system, for instance in Excel. But often the project comes to a standstill, stuck on the complexity and the amount of data. Some ERP systems offer a vendor rating module, but their possibilities are often too limited and too rigid. Customisation is not seldom very expensive. Building your own system is an option, but one should be careful not aiming too high. There are many pitfalls!

Buynamics Can Help

It is better having no system, than a lousy system, that no one uses. It is therefore essential to seek the right advice. Buynamics can help you to:

  • Decide if a system would be useful;
  • Decide about the right requirements for the system;
  • Decide on which criteria you want to assess your vendors. Buynamics has an enormous collection of useful criteria to choose from;
  • Decide about the right IT solution: make your own system, use an online solution or use the possibilities of your ERP system?
  • Set up your own standards, so that you can see which suppliers over- and underperform;
  • Decide which weights correspond with your sourcing policy and targets;
  • Decide which rating process fits your organisation best;
  • Create acceptance within your own organisation, but also with your suppliers;
  • Get the maximum out your vendor rating system!


Curious? Please feel free to contact one of our advisors!