Vendor Efficiency Program, sometimes also referred to as Supplier Efficiency Program is a process of observing and analyzing the performance, quality, and reliability of your vendors. Monitoring vendor efficiency allows your company to improve productivity and profits by reducing stock levels and inventory costs. A proper vendor efficiency program can also help in increasing customer satisfaction.

Being able to monitor all of the active vendors across the organization effectively is the real challenge. Doing so requires actual data about how the vendor is performing. Thanks to technology which helps to bridge the gap so that you can create a system that operates smoothly and also helps you in keeping an eye on how your vendors are affecting your business.

Vendor efficiency program is created with a series of key performance indicators (KPIs). These KPIs are agreed upon and outlined in advance between buyer and seller.
Some of the common KPIs include:

• Payment terms
• Prices
• Quality of products
• Frequency of price changes
• Delivery lead times
• Vendor financial stability
• Competitiveness with other vendors
• Communication lag times
• Breakages
• Under and over deliveries

When a company adopts a vendor efficiency program, they’ll find more than cost savings. Vendor efficiency program can generate strategies for the risk management by lowering overall risk exposure and improvement in terms of products and services. Streamlining administrative processes can save the company and the suppliers a company works with money. By identifying the root causes of problems to solve them quickly, it’s reasonable to expect higher levels of customer satisfaction.

When appropriately implemented, vendor efficiency program improves performance for both the purchaser and the supplier. By enhancing the quality, lead times, contract compliance, responsiveness, and other major KPIs, you’ll see higher profits and greater customers satisfaction.

Want to know how the vendor efficiency program can work for your company?
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