Supplier Performance Evaluation Checklist Template

What the Supplier Performance Evaluation Checklist Covers

1. 1
   Phase 1

   Performance Framework Setup

   5 tasks

   Supplier performance frameworks should be established at onboarding — not after the first performance issue. Introducing KPIs after a supplier relationship is established creates the impression that the requirements are a response to poor performance rather than an established standard.

   • Define the KPIs for this supplier — from the QCDR framework; relevant to this category and commercial relationship; agreed with the supplier at onboarding
   • Set target performance levels — for each KPI; what is “good”, what is “needs improvement”, what is “at risk”?
   • Define the data collection method — where does performance data come from? ERP system, quality system, manual tracking?
   • Confirm the review frequency — quarterly for strategic and preferred suppliers; annually for approved; ad hoc for transactional
   • Document and share the framework with the supplier — the supplier should know how they will be measured
2. 2
   Phase 2

   Performance Data Collection

   5 tasks

   • Collect on-time delivery data — for the review period; from the procurement system or ERP; confirmed delivery dates vs committed delivery dates; by order and in aggregate
   • Collect quality data — defect reports raised, quantities returned or rejected, CAPA closure rates; from the quality management system
   • Collect cost data — invoices received vs contracted rates; any surcharges or price increases; any cost savings achieved
   • Collect responsiveness data — open issues log; time to acknowledge, time to resolve; subjective assessment from buyers and quality team
   • Collect innovation and value-add data (where relevant) — for strategic suppliers; any cost-saving suggestions, process improvements, or capability developments the supplier has brought to the relationship
3. 3
   Phase 3

   Scorecard Calculation

   5 tasks

   • Calculate each KPI score — for the review period; using the defined formulas (OTD% = on-time deliveries / total deliveries × 100; defect rate = defective units / total received × 1,000,000 for PPM; etc.)
   • Assign performance ratings — against the defined targets; green (at target or better), amber (within 5% of target), red (below acceptable threshold)
   • Calculate the overall weighted score — if a composite scorecard is used; weights reflecting the relative importance of each dimension for this category
   • Compare to prior period — is performance improving, stable, or declining?
   • Identify the most significant performance issues — the specific incidents or patterns that most affected the score; these are the items for the performance conversation
4. 4
   Phase 4

   Supplier Performance Review Meeting

   5 tasks

   The scorecard is a data document; the review meeting is where the improvement happens. A well-run supplier performance review is a direct, professional, data-driven conversation about what needs to change — not a general discussion or a courtesy call.

   • Send the scorecard in advance — minimum 5 business days before the meeting; the supplier should have time to review the data and prepare
   • Attend at the right level — for strategic suppliers, the meeting should be at an account management level on both sides
   • Review performance against each KPI — with the data; for underperforming areas, the supplier provides their explanation and root cause analysis
   • Agree specific improvement actions — not “we will try harder”; specific actions, responsible person, measurable target, and completion date
   • Recognise strong performance — suppliers that consistently perform well deserve acknowledgement; the relationship dynamic should not be purely deficit-focused
5. 5
   Phase 5

   Performance Improvement Plan Tracking

   4 tasks

   • Document all agreed improvement actions — from the review meeting; in writing; shared with the supplier
   • Track progress between reviews — at the agreed intervals; is the supplier implementing the agreed actions? Are the metrics moving in the right direction?
   • Escalate where agreed actions are not being implemented — to the supplier’s account manager or senior management; documented
   • Review the improvement plan at the next quarterly scorecard — were the actions completed? Has performance improved to target?
6. 6
   Phase 6

   Contract Renewal, Expansion, or Exit Decision

   4 tasks

   • Assess cumulative performance trend — across the review history; a supplier that has been consistently amber or red despite agreed improvement actions is a supplier with a structural performance problem
   • Make the strategic decision — renew (performance is satisfactory, relationship is valuable), develop (performance has upside potential with investment), reduce (reduce spend and dependency while an alternative is developed), or exit (performance is consistently below acceptable; replacement is the right decision)
   • Initiate alternative sourcing if exiting — supplier onboarding for the replacement should begin well before the exit is executed; do not exit before a replacement is operational
   • Document the renewal or exit decision — with rationale; the performance record supports the decision