How to Tell if Your Suppliers are Underperforming

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Not all suppliers are created equal: some are better at providing low-cost goods, while others are great at customisation. Some suppliers have optimised for fast-shipping times, and some suppliers focus on high-quality materials. Regardless of whether you make, manage or move products, suppliers are a vital part of your company’s success. Without reliable suppliers, you could be jeopardising with your business model.

It’s clear that suppliers are an important lifeline to a company. However, how do you make sure you’re working with the right suppliers? If certain suppliers are underperforming, this can have a domino effect on your supply chain. It’s easy to get caught up in the day-to-day aspects of work and forget to pause and look at the bigger picture. Reflecting on how your suppliers are performing is an important part of your company’s development. Check out these tips to see if your supplier is underperforming.

Does it feel like a one-way partnership?

Partnerships should feel like they are benefitting both sides. Your business is reliant on a supplier to provide you with the necessary inventory stock. But the supplier is also reliant on your business to purchase goods from them. Both sides should acknowledge that each other’s business is important to them. If this relationship feels one-sided and like you are always nagging at the supplier to get your inventory stock delivered, then it could be a sign that they are the wrong supplier for you.

Here’s how you can foster a win-win supplier relationship

Look at your performance indicators

Performance indicators are a streamlined way of tracking and comparing suppliers by characteristics that you value during business. With specific supplier performance criteria, you can record how they do on a regular basis. You can use this information to evaluate how they stack up in comparison to your other suppliers. A common performance indicator to track is the percentage of on-time deliveries or how quickly a supplier responded to a request for new materials.

You can document these statistics and over time it will show you how your suppliers are performing. Suppliers can be sorted into categories depending on what they sell, how big their company is, where they are located, complaint history and other important metrics. Look at your performance indicators on a regular basis, whether it be monthly, quarterly or yearly. Capture important information and let it highlight which suppliers are falling short. With low scores in numerous areas, it could be a sign that certain suppliers are underperforming.

A lack of transparency

When working closely with suppliers, it should be a relatively transparent interaction. You should know what you are ordering when it’s coming, the quality of the inventory stock and if there are any changes. One of the tell-tale signs of an underperforming supplier is excuses. Their story is always changing and they have lots of excuses about why they can’t deliver on time or to your expectations. First, they might blame it on a holdup in customs, then a backlog from another supplier. They might say they have lots of workers off sick or the weather is delaying delivery. Of course, issues come up, but if it’s a relationship riddled with excuses and a lack of transparency, then it might be time to look for a different supplier.

Here are 6 things to consider for your next supplier.

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Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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