Factors to Consider When Creating a Supplier Scorecard

19th July 2018

Selecting a supplier of software is a complex process. Some sales organisations are very good at presenting themselves and less good at delivery. Some are good at delivery but you might not know it from their opening presentations. So you need a robust process when evaluating suppliers, which keeps emotion in check during the selection phase. Most companies achieve this by using a supplier balanced scorecard as part of their selection process (and it is only one part). But what factors should you include in your scorecard?

In this article we list 9 based on Martec’s experience. You can add others if needed, but don’t have too many.

Factors to Consider

  1. Understanding What You Are Aiming For
  2. What’s The Overall Fit to the Detailed Business Requirements?
  3. What Is Their Approach To Implementation?
  4. What Scale Of Customisation Is Required?
  5. How Relevant Is The Future Product Roadmap?
  6. How Does The Cost Compare?
  7. Do They Have Good References?
  8. Do You Have Faith In Their Ability to Deliver?
  9. Is the Supplier Financially Stable?

What to Do

Decide which of these factors are important to you. Then get a group of people from your company to individually allocate 100 points against each of these factors to reflect their relative importance from their own perspective. Include both IT people and senior management from the user functions most affected by the project. When each person has competed their allocation of points calculate the average result for the group. Then have a discussion with the group to consider any strange or surprising results. Allow people to change their scores after the discussion to get to a considered result. These numbers will then be used as weightings in each potential supplier’s scorecard.

Create a blank scorecard like the one below. This can be used at several stages, for example:

  • Once when written proposals have been received and reviewed
  • Once after formal presentations by shortlisted suppliers have been delivered
  • Again after final discussions with the shortlisted suppliers have been held.

In the example below, Fiona has reviewed 4 suppliers who have submitted written proposals.

 

 

Each person on the evaluation team completes such a scorecard and the average for the group is calculated. A meeting is then held to compare individual’s scores with the average for the group and a facilitator manages a discussion on the outlying scores. Individuals can then change their scores based on the group discussion and a final average score calculated.

This approach leads to better decisions. For example, in this person’s scorecard, suppliers A and C have the best scores. If everyone feels the same way, then these two can advance to the next stage. If other people’s scores differ a lot, a properly managed discussion can remove any emotion and lead to a consensus decision that everyone can support.


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