Value Proposition: The Supplier Evaluation loses its value when it turns into an “impression” or scores without data. The problem manifests in operations and finance: a supplier delays delivery causing stockouts, or repeatedly makes billing errors leading to exceptions piling up in AP, or fluctuates in quality resulting in increased returns/rejections. This Vendor Scorecard builds the evaluation as a reviewable file: specific indicators, clear data sources (PO/GRN/Invoice/Exceptions), and operational/financial impact that can be tracked—then produces an A B C supplier classification with an action plan (Maintain/Improve/Replace) instead of just “points.”

In 20 Seconds: What Will You Get?

• Vendor Scorecard ready: Indicators + Weights + Scores + Interpretation.
• Supplier Performance Evaluation over a period (month/quarter) with Trend comparison.
• Supplier Quality Measurement through Reject rate/returns/QC issues (based on your data) linked to orders/receipts.
• Delivery Commitment through On-time delivery % and Lead time variance from PO to GRN.
• Supplier Invoice Accuracy through 3‑Way match exceptions: price/qty/tax variance and Invoice holds.
• A B C Supplier Classification automatically based on score + spend/criticality (optional) rather than “gut feeling.”
• Action Plan: For each supplier “What will we do” (Maintain/Improve/Exit) + Owner + Follow-up date.

CTA related to outputs: You will receive Scorecard + KPI Weights + A/B/C Segmentation + Action Plan + Evidence Pack.

Suitable For

• Procurement + Finance Controller: Linking supplier performance to financial impact (delays/returns/invoice exceptions).
• AP / P2P: Reducing invoice exceptions by measuring Supplier Invoice Accuracy and linking it to the supplier.
• Operations / Supply Chain: Measuring Delivery Commitment and quality to make decisions on approvals and replacements.

Not Suitable For

• If you do not have extractable supply/receipt/invoice data (PO/GRN/Invoice) — the evaluation will become too manual.
• If your goal is an “SRM platform” with a supplier portal and tickets and correspondence — this is an evaluation and analysis model, not a communication system.

Without Scorecard / With Scorecard (Brief Comparison)

Before Use: 5 Symptoms That Supplier Evaluation is Unfeasible

• No clear definition: What does “good supplier” mean? Is it price? Commitment? Or invoice accuracy?
• Supply issues are resolved “every time” without recording KPIs or root cause.
• AP holds and 3‑Way match variances recur but are not attributed to the supplier in the report.
• Quality is mentioned as a complaint with no measurement (Reject/Return rate) linked to receiving processes.
• No fixed classification, leaving the supplier list “long” without focus on impactful suppliers.

How Does Supplier Evaluation Work Practically from PO/GRN/Invoice Data to A B C Classification?

The approach begins by defining KPIs and their definitions (what is counted and how), then uploading PO and delivery/receipt (GRN) data along with invoice data and exceptions. Next, indicators such as on-time delivery%, lead time variance, error rate in invoices (price/qty/tax variances), and quality indicators (rejects/returns) if available are calculated. Then weights are applied to produce the final Vendor Scorecard, followed by A B C supplier classification and issuing an action plan for each supplier with an Owner and review date.

Implementation Method (3 Steps)

Step 1: Preparation and Report Collection

• Identify suppliers within scope (Top spend/critical vendors or all suppliers).
• Extract data: PO (order date, promised date, price) + GRN (receipt date, qty accepted/rejected) + Invoice (invoice date, amounts) + AP exception/hold log.
• Define required KPIs and their weights (e.g., On-time 40%, Invoice accuracy 30%, Quality 20%, Responsiveness 10% — adjusted according to your activity).

Step 2: Measurement + Auditing + Exception Log

• Calculate Delivery Commitment:
  • On-time delivery% = deliveries on or before promised date ÷ total deliveries.
  • Lead time variance = actual lead time − expected lead time.
• Calculate Supplier Invoice Accuracy:
  • 3‑Way match exception rate = number of invoices with variance ÷ total invoices.
  • Invoice hold days = average days invoice held due to missing documents/variances.
• Calculate Supplier Quality Measurement (if data is available):
  • Reject rate = rejected qty ÷ received qty.
  • Return/claim count per period.
• Generate Evidence links: each KPI has a data source (PO/GRN/Invoice/Exception log) to ensure the score is traceable.

Step 3: Classification + Action Plan + Reporting Pack

• Produce the final Vendor Scorecard for each supplier + comparison with a previous period.
• Generate A B C Supplier Classification according to thresholds + considering criticality (optionally).
• Prepare Action plan: item/reason/action/Owner/follow-up date (e.g., improve invoice accuracy, adjust delivery terms, discontinue supplier).
• Prepare Reporting pack: KPIs + assumptions + evidence index + sign‑off (Prepared/Reviewed).

Model Components (Clear Inventory)

1. KPI Dictionary & Weights (Indicator Definitions and Weights)
   • Practical Purpose: Standardizing the meaning of each indicator and how it is calculated so that results do not change with different personnel.
   • When to Use: During initial setup + quarterly review.
   • Resulting Document: Reviewable definitions document.
2. PO/Delivery Dataset (Purchase Order and Delivery Data)
   • Practical Purpose: Basis for measuring Delivery Commitment and Lead time.
   • When to Use: Monthly/Quarterly.
   • Resulting Document: Documented dataset for supply sources.
3. GRN & QC Dataset (Receiving and Quality Data)
   • Practical Purpose: Measuring supplier quality through accepted/rejected and returns.
   • When to Use: As quality/returns data becomes available.
   • Resulting Document: Reject/return register linked to the supplier.
4. Invoice Accuracy Module (Supplier Invoice Accuracy)
   • Practical Purpose: Measuring invoice errors through 3‑Way match variances and AP holds.
   • When to Use: Monthly, especially for high-volume suppliers.
   • Resulting Document: Invoice exceptions report + hold days.
5. Vendor Scorecard Output (Vendor Scorecard)
   • Practical Purpose: Producing the final score with KPI breakdown and Trend.
   • When to Use: Monthly/Quarterly.
   • Resulting Document: Deliverable scorecard for management/purchasing.
6. A/B/C Segmentation (A B C Supplier Classification)
   • Practical Purpose: Turning results into decisions: Who do we maintain? Who do we improve? Who do we replace?
   • When to Use: After each evaluation cycle.
   • Resulting Document: Classification list + documented threshold criteria.
7. Action Plan Tracker (Action Plan)
   • Practical Purpose: Managing supplier improvements: actions, Owners, dates, and subsequent improvement measurement.
   • When to Use: Monthly for tracking B/C suppliers.
   • Resulting Document: Tracking register proving improvement implementation.
8. Evidence Index & Sign‑off Pack
   • Practical Purpose: Linking each KPI to its data source and producing a reviewable internal pack.
   • When to Use: When delivering evaluation results or within supplier governance.
   • Resulting Document: Evidence index + Prepared/Reviewed sign-off.

What Should Be Included in the Delivery?

• 01-Vendor-Scorecard-Model.xlsx: The main evaluation file (KPIs + Weights + Scores + Dashboards).
• 02-KPI-Dictionary-Weights.xlsx: Indicator definitions + weights + thresholds for classification.
• 03-PO-Delivery-Import.xlsx: Upload PO and delivery data (promised vs actual).
• 04-GRN-QC-Import.xlsx: Upload GRN/QC data (accepted/rejected/returns) if available.
• 05-Invoice-Exceptions-Import.xlsx: Supplier invoice accuracy (3‑Way match variances/holds).
• 06-Scorecard-Outputs.xlsx: Scorecards for each supplier + Trend + drilldowns.
• 07-ABC-Segmentation.xlsx: A B C supplier classification + spend/criticality (optional).
• 08-Action-Plan-Tracker.xlsx: Improvement plan for B/C suppliers + Owners + due dates.
• 09-Evidence-Index.xlsx: Evidence index (data sources/PO/GRN/Invoice reports) + links.
• 10-Reporting-Pack.xlsx: Summary of deliverables + sign‑off + executive notes.
• 11-Runbook.pdf: Practical operation (Data → KPIs → Score → A/B/C → Action plan) + control points.
• 12-Archiving-Map.docx: Archiving tree (Year/Quarter/Vendors/Scorecards/Evidence) + Naming convention.
• 13-Signoff-Page.docx: Prepared/Reviewed/Approved + period scope.

After Implementation (Two Points Only)

• Operational Outcome for the Team: Instead of repeating the same issues with suppliers, you have a report that clarifies where the problem lies (Delay? Quality? Invoices?) and an action plan with priorities, improving approval and negotiation decisions.
• Control/Audit Outcome: The evaluation transforms into a reviewable file: KPI definitions + data sources + evidence + sign‑off, allowing internal audit to trace why a supplier is classified as B/C or why a supplier continues despite poor performance (with documentation).

FAQ — Questions Before Purchase

Can the Vendor Scorecard be Applied Without an ERP System?

Yes, if you have PO/receipt/invoice data in Excel, but having an ERP makes data extraction easier and measurement more accurate and consistent.

What Are the Key Indicators Measured by the Model?

It focuses on: Delivery Commitment, Supplier Quality Measurement (if reject/returns data is available), and Supplier Invoice Accuracy through exceptions and holds, with the option to add a responsiveness indicator.

Are the Weights Fixed or Can They Be Adjusted?

The weights and thresholds can be adjusted based on the nature of your activity (e.g., raw materials: higher weight on commitment and quality; services: higher weight on invoice accuracy and responsiveness).

Does It Automatically Support A B C Supplier Classification?

Yes, according to documented thresholds (e.g., A ≥ 85, B between 70–84, C < 70 — an example that can be changed) with the option to consider criticality.

Does It Handle Low-Volume Suppliers?

Yes, and a minimum transaction threshold can be set before evaluation (Minimum sample) or classify them under “Monitor” instead of a final classification.

Can It Be Linked to P2P and AP Aging Packages?

Absolutely: The source of Supplier Invoice Accuracy often comes from the 3‑Way match exception log and AP holds, and the source of commitment comes from PO/GRN.

Is There a Delivery File for Internal Review?

Yes: Reporting pack + evidence index + sign‑off, showing the data source and calculation method for each KPI.

Is the Model a Substitute for the Final Supplier Approval Decision?

No. It is a data-supported decision tool. The final decision may consider strategic factors (single supplier/long-term contract) and is documented in the Action plan.

Ready to Evaluate Suppliers with Numbers and Transform Them into Classification and Action Plan?

Outputs: Vendor Scorecard + KPI breakdown + A/B/C Segmentation + Action plan + Evidence pack.