In many organisations, supplier performance scorecards are built on a standard template. On-time delivery, quality, cost reduction, and compliance metrics often dominate. These KPIs are familiar, measurable, and seemingly uncontroversial.

Yet, I am working on a project while I write this, where I challenged the project team to stop to ask a simple question, what business outcome does this KPI support? the silence on some of the KPIs were telling. I have been fortunate to work with both private sector organisations which often do have some of the approaches shared below, and public-sector where change like the Procurement Act, or CIPS approach, can lead to quite narrow thinking. Typically, if you do google Supplier KPI's, you get a rinse and repeat transactional approach, like this one from SAP.

The alignment of supplier Key Performance Indicators (KPIs) to genuine business and commercial outcomes is not just best practice. It is essential. Without it, your supplier performance management risks becoming a tick-box exercise, rich in data but poor in direction.

Challenging the Scorecard (Supplier KPIs)

One of the most valuable things you can do as a supplier relationship manager is challenge what’s on the performance scorecard. It is easy to inherit KPIs from past contracts or from a central procurement policy. But the real question is: Are these KPIs driving the behaviour we want, and are they helping us deliver our strategic goals?

Also, many of our readers I know are working on agreements that may have been live for 2, 3, 5, 10, 15+ years. Ask if you are still conducting the business processes the same way. Does the language need to change?

In my own experience managing supplier performance across complex portfolios, I’ve often come across KPIs that measure what’s easy, not what matters. A classic example is reporting on the percentage of invoices paid within 30 days. Yes, it's important for good governance, but does it tell us anything about the supplier’s ability to innovate, collaborate, or support our growth? I am not saying you shouldn't do this, for example, but where can we take the relationship further? Of course, with one eye on better commercial relationships alongside some of the softer, less tangible items.

Start by revisiting your business/ project strategy. If you're in Construction for example. Does the KPI's drive what we need to get there on time, compliantly and safely?

Once you have clarity on that, work backwards and ask: What supplier behaviours will enable these outcomes? Only then can you begin to design a performance framework that is truly aligned.

Using the Data Strategically

Collecting KPI data is only the start. Too often, I see dashboards that are reviewed in isolation, discussed once a quarter, and then filed away until the next review. That’s not performance management. That’s performance observation.

To use the data strategically, organisations should treat KPI reviews as a forward-looking exercise. Patterns in the data should drive action: escalation, intervention, or in some cases, collaboration. Are we seeing early signs of fatigue in delivery timelines? Are quality issues recurring in one product line? Are there correlations between supplier satisfaction and their performance?

Moreover, the data should feed into cross-functional conversations. Procurement should not be the sole audience for these insights. Finance, operations, marketing and even customer service can benefit from understanding supplier performance trends, especially where suppliers have a direct impact on the customer experience.

In high-performing SRM programmes, the performance scorecard becomes a conversation starter, not a conclusion. It prompts honest discussion about how both sides are contributing to shared success and where adjustments need to be made. It also helps identify where commercial levers, such as incentives or contract variations, might support better outcomes.

Making KPIs Meaningful

One way I like to test whether a KPI is meaningful is to ask: If this number changed by 20%, would we do something differently? If the answer is no, it may not be a useful metric. Another test is to imagine presenting the KPI to a senior stakeholder. Would they immediately understand the relevance? If not, it might be worth reconsidering its inclusion.

Ultimately, performance measurement should not be a retrospective exercise. It should be a tool for influencing behaviour and shaping outcomes. That means constantly refining the scorecard to ensure it stays relevant, dynamic, and aligned to the evolving goals of the business.

Working With SRM Tribe

At SRM Tribe, we work with organisations to move beyond template scorecards and create performance frameworks that genuinely support strategic outcomes. We help you ask the right questions, challenge inherited assumptions, and use supplier data as a catalyst for value creation. If your current KPIs feel more like a formality than a force for change, let’s talk.