Supplier Performance Evaluation
A binding corporate procurement policy that establishes a standardized, data-driven framework for evaluating vendor performance across all spend categories. This policy governs supplier scorecards, corrective actions, and disqualification criteria to protect supply chain continuity and financial exposure.
This policy mandates a uniform, objective methodology for evaluating all active suppliers with annual spend exceeding $50,000 CAD. Every supplier is scored monthly across four weighted pillars — Quality (40%), Delivery (30%), Cost Performance (20%), and Responsiveness (10%) — generating a composite score (0–100) that drives procurement decisions. Suppliers scoring below 70% trigger a mandatory 30-day corrective action plan (CAP). Repeated non-compliance or a critical quality failure results in probation and potential disqualification. The policy applies to all direct materials, indirect goods, and service contracts, and is enforced by the VP of Supply Chain.
This policy applies to all Tier 1 and Tier 2 suppliers with an active purchase order or contract that exceeds $50,000 in annual spend. It covers all procurement categories including raw materials, MRO supplies, capital equipment, IT services, logistics, and professional services. The policy excludes one-time purchases under $10,000 and suppliers with fewer than three transactions in the review period. All new suppliers must acknowledge this evaluation framework during onboarding. Existing suppliers are subject to a phased rollout over two quarters, with full compliance required within 180 days of policy issuance.
- Monthly Scorecard Mandate: Every qualifying supplier must receive a weighted scorecard by the 10th business day of the following month. Scores are calculated from ERP data, incoming inspection results, on-time delivery records, and documented responsiveness to RFQs.
- 30-Day Corrective Action Plan: Any supplier scoring below 70% must submit a CAP within 7 business days of notification. The CAP must detail root cause analysis, corrective actions, and a measurable timeline for improvement. Failure to submit or execute results in automatic probation.
- Quarterly Business Reviews (QBRs): All strategic suppliers (annual spend > $500K or sole-source) must participate in a formal QBR each quarter. Reviews include scorecard trends, innovation pipeline, capacity planning, and risk mitigation.
- Zero-Tolerance Clause: Counterfeit materials, ethical violations (bribery, forced labour), or deliberate misrepresentation of quality data results in immediate disqualification and referral to legal for contract termination and recovery of damages.
- Probation & Disqualification Ladder: Two consecutive CAP failures OR a single critical quality incident (Class I defect, safety recall) places the supplier on 90-day probation. Failure to achieve a score of 75% or higher by the end of probation results in removal from the approved supplier list for 12 months.
- VP of Supply Chain: Owns the policy framework, approves all probation and disqualification decisions, and chairs the monthly Supplier Review Board meeting.
- Procurement Manager: Manages scorecard generation, coordinates CAP issuance and tracking, and maintains the approved supplier master list.
- Supplier Quality Engineer (SQE): Conducts on-site audits, validates quality data, and assesses corrective action effectiveness. Must sign off on any CAP closure.
- Category Leads: Enter operational data (on-time delivery, defect rates, responsiveness) into the sourcing platform by the 3rd business day of each month.
- Finance: Provides cost performance data, including price variance, rebate realization, and total cost of ownership (TCO) metrics for scorecard input.