A Plan to Measure Contract Performance With the KPI/Scorecard for Supplier Management- kpi scorecard

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KPI guides

When you contract to have work done for your company, you need a way to monitor and evaluate how well your contractors perform. A plan that includes measurable key performance indicators can keep you focused on real-world metrics that allow you to objectively evaluate contract work. KPI measurements in your plan can include checklists, guidelines and scorecards that rate the performance of people you pay to provide you with goods and services.

Rating Materials and Supplies

Your plan can include a method for evaluating the goods you receive under contracts. Include a checklist of criteria that must be met for all supplies. For example, rate materials based on whether they conform to your specifications, note the percentage of materials or supplies that arrive damaged and record any malfunctioning parts. A plan that includes these checklists will provide you with hard data you can use as part of your KPI scorecard.

Measuring Order Cycle Times

One of the KPI measurements in your plan can focus on the ordering cycle. Your plan should establish acceptable time frames from ordering to delivery and provide a rating system for contractors based on those time frames. For example, if you expect products to be delivered within two weeks of ordering, a contractor who meets this standard could receive a rating of 1. Contractors who delay delivery by 2, 3, 4 and 5 days past your deadline could receive ratings of 2, 3, 4 and 5 respectively. This indicator can help you readily identify contracts that cost you time and money due to delays.

Evaluating Work in Progress

For contracts that involve manufactured products, your KPI plan can evaluate the transparency of your contractors. For example, you should receive an accurate and timely answer from the contractor when you inquire about progress. Your indicator can rate contractors on how quickly they respond to your inquiries and how detailed their reports are. Contractors with the highest rating will be those who return phone calls the same day they are received and give specific quantities or percentages when explaining how much manufacturing has been done. Your plan can include a bonus rating for contractors who invite you to inspect work in progress.

Verifying Prices

The KPI plan should establish procedures for comparing the prices you actually paid to the prices your agreed to in the contract. This plan can make some allowance for slight variations due to unforeseen circumstances, such as weather delays that cause a hike in prices for raw materials for the contractor. In general, however, your plan should show how you will reconcile prices paid with prices agreed to and list any remedies for discrepancies, such as withholding of final payment or asking for a written explanation.

What is a Key Performance Indicator (KPI)
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