Contracting: Evaluate, then rate

Q. What are areas of importance for rating vendors?
Friday, May 24, 2013

A. Vendors play an essential role in a provider’s success at contracting. Any great business has performance standards and guidelines for their vendors. If you are only looking for low pricing, keep in mind that sometimes the lowest price comes with the lowest service. What does your vendor provide as value-added service to your organization?    

evaluate and rate your vendor

Begin by deciding the system of classification. A good place to start is sorting vendors on how critical verse non-critical they are to your business. Decide the classification that is best for your organization and evaluate the vendor’s importance according to the effect they have on your overall business.

Establish performance indicators

There are common performance indicators, as well as system metrics. You can draft surveys where you ask your employees to rate your vendors. How many customer complaints have you encountered; or how many corrective actions have you issued? Are your returns up, and/or your part failures higher than normal or in an acceptable range?

Evaluation method

Create a user group to evaluate your vendor partners and select who will be responsible for reviewing the data. Along with management, include clinicians and/or delivery technicians, as they have different perspectives and may have issues that can be addressed and support your overall objectives.  

Maintain good relationships

Communicate often and openly. Don’t overlook the opportunity to make a personal call when a vendor has jumped through hoops to meet one of your business needs. Avoid conflicts by paying invoices per your agreed terms or at least honestly addressing late payment issues as they arise.

Martha Bowers is a business consultant and owner of The Bowers Group.  She can be reached at 714-470-3541 or