Monitoring vendors for compliance is, obviously, a key to both good business and good business relationships. Relationships between retailers and vendors are, at best, complicated and difficult; at worst, as many buyers have painfully learned, the partnership can become chaotic and nearly impossible.
Most fall somewhere in the middle, and a key to success requires cultivating the best vendors while culling out those who fall below par. Keeping the best suppliers can be, at first, a simple matter: pay the right price, and be a good partner yourself. But making sure the top performers remain the top performers over time requires a time investment. Companies with smaller supply chains can accomplish this on their own by simply monitoring and assessing each supplier periodically.
Many retailers have traditionally used vendor scorecards to evaluate performance. For small and medium-size supply chains, these can work fairly well. Typically, the scorecards measure, in a shorthand fashion, how well the supplier has met the processes and procedures agreed upon at the outset of the partnership.
This approach is limited, however, in many ways. The benefits of a single, formal, standardized report belie some glaring shortcomings: scorecards are almost always too generalized, and too late, to be useful in resolving issues between retailers and suppliers.
Fortunately, other processes have been developed that enable buyers to indentify and fix problems before they show up in the vendor scorecard. Not surprisingly – because continuous monitoring is an enormous, complex task for most retailers – outsourced systems have developed to provide an efficient method of compliance monitoring.