Vendor Rating: Evaluating supplier performance effectively

Vendor Rating refers to the periodic assessment of suppliers based on predefined criteria. It goes beyond traditional supplier evaluation, which is often reactive. A vendor rating system includes both quantitative data such as delivery reliability, pricing accuracy and invoice-order matching, and qualitative criteria such as communication, problem-solving ability and service quality.

“Through digital modules such as Vendor Rating within the Vendor Management solution, assessments are centrally captured. Internal feedback and performance data are combined to provide full visibility into how well a supplier meets contractual obligations,” Dirk Jan says.

Vendor Rating replaces subjective opinions with objective data that can be directly linked to contract agreements, KPIs and supplier performance.

Vendor Rating offers multiple strategic benefits:

• Transparent performance insight
  Objective and repeatable assessments create a shared understanding of quality and reliability.
• Stronger basis for evaluation and relationship management
  Periodic, well-supported evaluations provide solid input for supplier conversations.
• Risk reduction
  Issues such as delivery failures, quality problems or financial risks become visible earlier and are addressed faster.
• Professionalisation of procurement
  The procurement function works data-driven and gains a stronger position towards leadership and internal stakeholders.

Dirk Jan also sees the value increasing in practice: “Vendor Rating gives you control over performance and builds strong supplier relationships.” Rating is therefore not merely a method of assessing suppliers but a strategic instrument for steering relationships.

Supplier performance is measured using both objective KPIs and subjective experiences. Commonly used metrics include:

• Delivery reliability
• Product or service quality
• Price and price stability
• Invoice and order matching
• Communication and responsiveness
• Innovation capability and willingness to improve
• Sustainability criteria (where applicable)

With Vendor Management you can easily create surveys, select question types (scales, numerical scores, comment fields), assign respondents and monitor progress. This creates a consistent supplier rating that can be compared across periods, suppliers and categories.

A strong vendor rating system includes the following components:

1. Clear assessment criteria
   Define the performance indicators relevant to your organisation and per supplier category.

2. Involving stakeholders
   Collect feedback from employees who work directly with the supplier. Their experience complements hard data.

3. Digital support through tooling
   Using the Vendor Management solution from ISPnext, including Vendor Rating and the Supplier Portal, supplier assessments are fully digital, including survey management, dashboards and reporting.

4. Dashboards and reporting
   Performance is visualised through scorecards, category matrices and KPI dashboards. These insights can be shared with colleagues and suppliers via the Supplier Portal.

Vendor Rating not only measures performance but also strengthens collaboration with suppliers. With clear insights into strengths and improvement areas you can:

• Improve communication
• Increase transparency
• Adjust contract agreements
• Set targeted improvement actions
• Monitor KPIs over time
• Steer on long-term partnership goals

This creates a more balanced, professional relationship that benefits both sides.