Through supplier performance appraisal, e-commerce companies can achieve the following goals: Continuously improve supplier performance, achieve improvements in procurement costs, product quality, delivery, after-sales service, etc.; strengthen communication with suppliers, establish a sharing mechanism and a win-win strategic partnership. So, how should e-commerce companies conduct performance appraisals on suppliers? Specifically, the following five steps need to be followed.
(1) Determine the appraisal strategy and divide the appraisal levels
E-commerce companies need to clarify the standards for monthly, quarterly, and annual appraisals and clarify the suppliers involved in each appraisal. Monthly appraisals generally involve core suppliers, and the appraisal factors are mainly product quality and delivery time; quarterly and annual appraisals involve all suppliers, and the appraisal factors include delivery time, cost, service, etc.
The purpose of conducting hierarchical appraisals is to discover and solve problems as early as possible. Quarterly and annual appraisals can conduct a more comprehensive evaluation of suppliers by expanding the appraisal factors.
(2) Establish supplier classification and evaluation criteria
After determining the appraisal strategy and appraisal levels, e-commerce companies need to classify suppliers and establish evaluation criteria. The focus of this stage is to classify suppliers according to the product categories they supply and to establish different evaluation criteria based on this, including different evaluation indicators and different weights of the indicators.
(3) Classify performance levels
After evaluating suppliers according to the evaluation strategy and evaluation criteria, e-commerce companies must also classify suppliers’ performance scores. For example, suppliers can be divided into four levels: A, B, C, and D according to the evaluation scores. By classifying suppliers, e-commerce companies can more clearly measure the performance of suppliers.
(4) Positioning new procurement strategies
After analyzing the performance of suppliers, e-commerce companies need to reclassify them according to their performance and reasonably adjust their procurement strategies. Based on performance and the purchase amount at this stage, e-commerce companies can classify suppliers into the following four types:
Good performance and low purchase amount at this stage;
Good performance and high purchase amount at this stage;
Poor performance and high purchase amount at this stage;
Poor performance and low purchase amount at this stage
The first two types of suppliers have good performance, so e-commerce companies can temporarily not pay too much attention to them. The third type of suppliers is the one that e-commerce companies need to study the most. For these suppliers, e-commerce companies should make decisions as soon as possible based on the actual situation, whether to help them improve their performance or find better suppliers. The fourth type of suppliers has poor performance, and the e-commerce company’s purchase volume is not large. For these suppliers, e-commerce companies should replace them in time and introduce better suppliers.
(5) Urge suppliers to improve
For suppliers who want to continue cooperation but whose performance is not good enough, e-commerce companies should help them develop performance improvement plans. E-commerce companies should feedback the performance evaluation results to suppliers so that they can understand their shortcomings and determine performance improvement goals. In the process of implementing the performance improvement plan, e-commerce companies should maintain communication with suppliers.
Tips
Some e-commerce companies end the performance management of suppliers after the performance appraisal, which is incorrect. The focus of performance appraisal is performance management. E-commerce companies need to communicate with suppliers based on their performance and assist them in making improvements.