How do you rate suppliers

Assess your supplier evaluation regularly!

Finally, we want to deal with the question of what conclusions you as an entrepreneur should actually draw from the results of the supplier evaluation. After all, this practice is for a specific purpose, not a pastime. Basically, it can be said that an objective assessment always provides valuable support when it comes to placing orders, negotiating conditions or concluding contracts. A look at the stored data allows the person responsible to immediately get an overview of all facets of the previous collaboration.

Another important area of ​​application for supplier evaluation is the development of so-called rankings. These are lists of suppliers that are fundamentally suitable for a specific purchasing project. The order of the list now shows exactly which manufacturers or wholesalers are particularly recommended. The further down in the ranking a supplier ends up, the less advisable it is to work with this company.

This brings us to another important area of ​​application of supplier evaluation. This is based on the Pareto principle. This is a widespread thought model that goes back to the Italian engineer, sociologist and economist Vilfredo Federico Pareto. The Pareto principle describes a statistical phenomenon according to which in many areas 80 percent of the results can be achieved with just 20 percent of the total effort. The scientist's observations originally assumed that around 20 percent of the population owned around 80 percent of the land.

This fits in with the knowledge, which was obtained much later, that around 20 percent of the world's population have around 80 percent of the world's wealth. If the Pareto principle is transferred to other areas, it can be deduced from this that many tasks can be carried out with a budget of only 20 percent so that 80 percent of all problems can be solved. Applied to your supplier base, this would mean that you could handle almost all requirements with just 20 percent of your suppliers. A corresponding concentration on fewer companies would significantly reduce the amount of work and support and ensure that you would have a lot more capacities available.