What businesses need to know about supplier scorecards

What does a supplier scorecard cover, and how can you maintain strong results? 

Major companies often use retailer scorecards to track the performance of their suppliers. 

But performing well is about more than just the quality of your products and your pricing — freight and delivery play a massive role too.

We’ll answer both questions in this guide for suppliers.

What are supplier scorecards?

Retailers use scorecards as a performance evaluation system for their suppliers. They have a direct impact on the supplier-retailer relationship, future orders, and long-term profitability.

Scorecards measure the service provided across various key criteria, including product quality, pricing, and compliance. But in this guide, we’ll focus on managing logistics and delivery performance — after all, that’s our area of expertise.

What do retailer scorecards measure?

Retailer scorecards often include the following freight and delivery metrics:

• On-time delivery: Shipments must arrive on time, every time.
• In-full deliveries: Orders must be complete and include the correct quantities. Some major retailers (including Walmart) combine on-time and in-full into one metric (OTIF). If one supplier fails to meet the company’s standards, Walmart may go with another supplier.
• Compliance with retailer requirements: Shipments must meet a retailer’s unique standards. For example, Costco requires that suppliers use CHEP pallets for deliveries.
• Damage-free shipments: If goods are damaged or otherwise unsuitable for sale, the supplier may be at fault rather than the carrier. In any case, the retailer is left without items to put on shelves.
• Communication and visibility: Accurate tracking updates and shipping documents ensure that retailers know when items will arrive as expected. Kroger and Home Depot will both penalize suppliers that use incorrect documentation. 

Why your supplier scorecard matters 

Here are four key reasons to care about your rating on a supplier performance scorecard:

• Impact on revenue: Consistently low ratings on your supplier scorecard can lead to a drop in orders or even delisting, losing you retail opportunities and damaging your company’s reputation.
• Penalties and chargebacks: Noncompliance fees can eat into your profit margins. Do your due diligence and follow a retailer’s compliance rules to save money.
• Healthy retailer relationships: Consistently performing well helps suppliers earn retailers’ trust and secure further orders. This can create long-term opportunities and reinforce a reputation for reliable service.
• Competitive advantage: Retailers have lots of suppliers to choose from, and strong retailer scorecard performance will help you stand out. Companies may also refer other retailers to your business, bringing new chances to succeed without marketing or lead-generation costs.

How to improve your retailer scorecard ratings

How can you improve your logistics performance and receive solid ratings on supplier scorecards? Here are five key ideas to consider:

Partner with a third-party logistics provider

A third-party logistics (3PL) provider will streamline your shipping process and help you navigate the freight delivery landscape. You won’t need to worry about finding trustworthy carriers, securing capacity, or managing compliance — they’ll handle it for you.

Use technology for shipment tracking and visibility

Leverage the latest real-time tracking tools to monitor your shipment’s location while in transit and stay updated on any delays.

Plan ahead for peak season and high-volume surges

Peak season shipping can be hectic for retail suppliers. In the run-up to the holidays, for example, demand for shipping spikes. 

Businesses need to pre-plan and secure capacity on trucks well in advance of the busy season. Plan ahead to avoid a poor rating on your supplier scorecard.

Standardize packaging and labeling to meet retailer requirements

Create a clear packaging and labeling policy for your shipping team. All items must be prepped and labeled to comply with the retailer’s requests. Otherwise, your supplier scorecard performance may suffer.

This is crucial whether dealing with small retailers or shipping to big-box companies. 

Conduct regular performance reviews

Regularly reviewing performance helps you identify and address issues that impact your ratings on retailer scorecards. Make them part of your regular routine, and let employees know what to expect.

Work with DTS to strengthen your supplier performance scorecard

A retailer’s scorecard says a lot about your work as a supplier. Meeting a company’s requirements is essential to maintain profitable relationships that last.

At DTS, we’ll help you meet those requirements again and again. 

We work with suppliers shipping goods to major retailers like Walmart, Costco, Kroger, Home Depot, and other big-box stores. We understand how daunting and complex working with such huge names can be, so we’ll make it easier than ever to ensure smooth deliveries.

For professional help aligning your logistics strategy with retailer expectations, get in touch with DTS today.