Supplier performance: how to measure and manage it

Why supplier performance matters for cost

A negotiated price is only a saving if the supplier delivers at that price. Late deliveries, quality failures and invoice errors all add cost that never appears on the rate card. Poor performance also erodes the savings logged at award, which is why we track realised savings, not only contracted ones.

The KPIs that matter

Keep it to four or five measures per supplier, chosen by what the category needs.

• On-time, in-full delivery
• Quality: defects, returns or service failures
• Price compliance: invoices matching contract rates
• Responsiveness: time to resolve issues
• Commercial: agreed improvement or cost-down commitments met

Segment before you measure

Not every supplier needs a quarterly review. Focus effort on strategic and high-risk suppliers, run light-touch checks on the middle, and manage the tail spend through catalogues and consolidation.

Running reviews that change behaviour

A good review is short, data-led and ends with actions and owners. Share the scorecard before the meeting. Discuss the trend, not one bad month. Agree what each side will do, and follow up. Where a supplier keeps missing, the contract should give you remedies to use.

Link performance to the contract

Build KPIs and service credits into the contract at award. It is far harder to add them later. Our category management and supplier consolidation guides show how performance feeds sourcing decisions.

Frequently asked questions