February 23, 2015

Vendor Performance Review (VPR)

When you are employed at a company, you are usually subjected to an Annual Performance Review (APR). We've all been reviewed, many of us have reviewed hundreds or more individuals. 

The process isn't much fun, for either party. It's not fun to tell somebody that they are not performing well. We've all been on the receiving end of a bad review, justified or not. But the process serves a purpose. We accept the feedback, and we improve.

In 1995, when you led a department of 24 people, you evaluated 24 individuals. You rank-ordered them, you knew who to promote, you knew who to not keep around.

In 2015, when you lead a department of 8-10 individuals and 20 unique vendors, you have different challenges. You give annual performance reviews to your staff of 8-10 individuals. Do you give a vendor performance review to the 20 unique vendors?

In the upcoming days, I am going to talk about the Vendor Performance Review (VPR). More specifically, I am going to integrate three concepts.
  1. A Diagnostics Project, which is essentially similar to getting an annual physical. The Diagnostics Project outlines what your company needs to improve upon in order to be successful.
  2. A Vendor Summit, where you invite all of your key vendors in for a day-long discussion about your business, describing how you want your vendors to support your business in the upcoming year, based on the outcome of a Diagnostics Project.
  3. A Vendor Performance Review (VPR), where, on a monthly basis, you describe to each vendor, via a scorecard, where the vendor stands among all other vendors, in terms of performance.
I used this framework at Nordstrom, to great success. The approach I describe will build upon the Diagnostics Project and Partner Summit used at Nordstrom. I will explain, in much more detail, how my thinking regarding the Vendor Performance Review (VPR) has evolved since my time at Nordstrom.

It is my opinion that most of the folks I work with are really, really struggling to hold vendors accountable, in a framework outside of hiring/firing vendors. Progress doesn't happen from hiring/firing, progress honestly happens when a vendor knows exactly what needs to be done to create success in your organization, and then improves performance and delivers upon your goals.

If the co-ops knew that cataloger customer files were dying and rapidly aging, and the co-ops knew specifically what they had to do to be successful, we'd see better co-op performance. Those co-op folks want to please you, but without good information, they're not able to please you.

So, tomorrow, we talk about the Partner Summit. Be ready!