7 Common metrics for evaluating suppliers: Different enterprises have different production scales and different raw materials supplied by suppliers. Therefore, the assessment requirements for supplier assessment are also different, and the corresponding assessment indicators are also set differently. Generally speaking, the easiest way is to measure the supplier’s delivery quality, timeliness, price and after-sales service. Next, will bring seven common indicators for supplier evaluation, hope it will helpful.
1. Price
Price refers to the price level of the supply. To assess the price level of suppliers, it can be compared with the average price and the lowest price of products of the same grade in the market, which are represented by the market average price ratio and the market lowest price ratio respectively.Average price ratio = (supplier’s supply price – market average price) / market average price * 100%The lowest price ratio = (supplier’s supply price – market lowest price) / market lowest price * 100%
2. Quality
Quality is the most important factor in supplier evaluation. During the initial period of time, it is mainly necessary to strengthen the inspection of product quality. The quality of the product can be described by the quality pass rate, average pass rate, approval rate and inspection exemption rate for incoming materials.a. Quality pass rateIf a total of N pieces of goods are sampled in one delivery, and M pieces are qualified, the quality pass rate is:Quality pass rate = M / N * 100%Obviously, the higher the quality pass rate, the better the product quality and the higher the score.b. Average pass rateAccording to the qualified rate of each delivery, the average value of the qualified rate within a certain period of time is calculated to determine whether the quality is good or not. The higher the qualified rate, the better the quality and the higher the score.c. Approval rateThat is, the ratio of the return batch to the purchase and purchase batch. The higher the rejection rate, the worse the quality and the lower the score.d. Inspection-free rate for incoming materialsIncoming material exemption rate = number of incoming materials exempted from inspection / total number of product typpes supplied by the supplier * 100%
3. Delivery time
Delivery time is also a very important assessment indicator. The inspection of the delivery period is mainly to inspect the on-time delivery rate and delivery cycle of the supplier. a. On-time delivery rateOn-time delivery rate can be measured by the ratio of the number of on-time deliveries to the total number of deliveries. b. Delivery cycleRefers to the length of time from the day the order is issued to the time of receipt, usually in days.
4. Service Level
Like other assessment indicators, the performance of suppliers in terms of support, cooperation and service is usually a qualitative assessment. The relevant indicators are: communication means, feedback time, performance of cooperation attitude, participation in the company’s improvement and development projects, after-sales service etc.
5. Credit
The credit rating mainly assesses the extent to which suppliers fulfill their commitments, treat people with sincerity, and do not deliberately delay or owe accounts. Credit can be described by the following formula:Credit rating = The number of untrustworthy times during the delivery period / The total number of contacts during the delivery period * 100%
6. Degree of cooperation
In the process of getting along with suppliers, it is often necessary to adjust and change work tasks due to changes in the environment or changes in specific circumstances. This change can lead to a change in the way the supplier works, or even a little sacrifice from the supplier. Based on this, it is possible to examine the extent to which suppliers actively cooperate in these aspects. In addition, if there are difficulties or problems in the work, sometimes the cooperation of suppliers is required to solve them. At these times, the level of cooperation of suppliers can be seen.
7. Capacity
Last but not least, A company’s capacity is undoubtedly one of the most important thing.Commonly speaking, the capacity is the one of key factors to decide if one supplier can ensure delivery time, specially for some big and urgent orders. Hisight Optical has been established for nearly 20 years, and has enough capacity of 6 production line to cover different products. In the past few years, we have successfully obtained cooperation with many well-known brands, chain stores and gained their trust.
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