How to Respond to Poor Supplier Performance
What should you do when a you encounter poor supplier performance? It’s crucial to be able to swiftly identify poor performance and step in to mitigate any associated risks. Consider the following to guide you:
Increase the Frequency of Supplier Performance Reviews
For an underperforming supplier, you may want to increase the frequency of performance reviews. But make sure to allow enough time between reviews for the supplier to make the required changes. Performance reviews keep you informed about your partners’ performance and let them know you’re watching closely.
As you hold regular performance reviews, you can work with your supplier to better identify and track areas where improvement is needed. These reviews aren’t held to micromanage your supplier, but rather to find ways to work with the supplier and assist them in meeting performance standards. Not only will these reviews ensure that your supplier performance improves, but they can also strengthen relationships with your supplier, which can prove to be incredibly valuable in the long run.
Create a Remediation Plan
Include hard metrics to measure against, so you can specify exactly which areas need improvement, whether meeting SLAs, reducing response time, or improving customer support—and how much improvement is necessary before terminating the contract. When a supplier isn’t performing, remediation plans should be built into your regular meeting schedule. It’s useful to have remediation plans prepared in advance, so you can quickly address and resolve issues with suppliers.
If a supplier continues to underperform, it may be time for you to discontinue the relationship. It’s never a happy ending when a partnership doesn’t work out, and it can be frustrating to have to find a new supplier quickly to prevent slowdowns in your own business. But if you have a standard process in place for an underperforming supplier, things will be much smoother in the long run.
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