How to Manage Suppliers: Records, Ratings and Performance

Quick answer: To manage suppliers without a big system, keep one supplier register with a few fields (legal name, contact, category, payment terms and status), and track three measures for your main suppliers: on-time delivery, quality accepted first time, and price charged versus price agreed. Make sure every agreed price lives on a written quote or purchase order, not in someone's memory or inbox. Then score your main suppliers once a quarter and decide what to do about the weak ones.

Why supplier management falls apart

In a small or growing business, what the company knows about its suppliers is spread across people. The stores officer knows the cleaning company is always late on Fridays. The office manager knows the printer agreed a lower price a few months ago. Finance has the bank details in last year's payment file. The supplier's phone number is in someone's WhatsApp.

Price changes are the worst case. A supplier emails or calls to say prices have gone up from next month. The buyer agrees, but nothing changes on paper. Three weeks later an invoice arrives at the new price, and the person checking it has no way of knowing whether the increase was agreed, when, or by whom.

For an owner, that means paying more than you agreed and putting up with the same problems again and again, because nobody can show the pattern. For a finance officer, it means invoices that cannot be checked against anything and a supplier file an auditor cannot follow.

The Chartered Institute of Procurement and Supply (CIPS) calls monitoring supplier performance a fundamental part of contract management, and notes that simple, easy-to-use approaches work better than elaborate ones. Supplier management for a small business is not a project. It is four habits.

The four habits of supplier management

1. Keep one supplier register

A supplier register is a single list of every supplier you buy from, with the same basic facts for each, kept in one place that finance and purchasing both use.

Nigeria's federal government works the same way on a much larger scale. The Public Procurement Act 2007 requires the Bureau of Public Procurement (BPP) to maintain a national database of the particulars, classification and categorisation of federal contractors and service providers. A 2014 circular from the Secretary to the Government of the Federation told ministries, departments and agencies not to do business with federal contractors who are not registered on that database. Those rules apply to federal public bodies, not to private businesses, but the idea carries over: one list, with suppliers grouped by category, that everyone works from.

The register below is deliberately short. Add fields only when someone will actually use them.

Who may add a supplier, and what checks happen before the first payment, are controls in their own right. They are covered in who should create vendors, so this article stays with the day-to-day management.

2. Pick three measures, and define them before you start

You cannot manage what nobody measures, but measuring twenty things is how scorecards get abandoned. The United Nations Procurement Manual defines vendor performance evaluation as checking whether the vendor met the contract on quality, delivery and timeliness, among other indicators, and says the measurement criteria should be agreed up front and appear in the contract. CIPS similarly suggests gathering objective information such as lead times, whether quality standards were met and pricing compliance, and notes that no standard set of measures fits every industry.

For most small businesses, three measures are enough:

• On-time delivery: orders delivered on or before the agreed date, as a share of all orders in the period. Decide in advance what counts as late.
• Quality accepted first time: orders accepted without a return, rework or complaint, as a share of all orders.
• Price versus agreed: invoices that matched the agreed price, as a share of all invoices, plus the naira amount charged above it.

Take each measure from a record someone already keeps: delivery notes or the stores book for dates and quality, invoices against purchase orders for price. A measure that needs separate effort to collect rarely survives a busy month.

3. Record agreed prices on the quote and the purchase order

An agreed price should exist in writing before goods are delivered, and the person checking the invoice should be able to find it. In practice that means:

• the price comes from a written quote, and the quote is kept with the request it supports;
• the purchase order (PO) states the agreed price, and the invoice is checked against the PO;
• a price change is not accepted by phone or chat: ask for a revised written quote, get it approved like any other change in cost, and issue or amend the PO before the supplier delivers.

Nigeria's Public Procurement Act takes the same line for federal public bodies: communications on public procurement must be in writing (or another form the BPP stipulates), and records of procurement proceedings must be kept for ten years. Your business is not bound by those rules, but the reasoning holds. If the change is not written down on a document you can find, you cannot prove what you agreed.

If a price rise is large, it may be time to ask other suppliers for quotes; how to compare supplier quotes covers how to do that fairly.

4. Review your main suppliers every quarter

Once a quarter, spend an hour with the people who use each main supplier. Update the scorecard, agree a rating, and decide what happens next: keep going, raise a problem with the supplier, put them on hold or start looking for an alternative. Write the decision down with the date.

Public bodies set a minimum for this. Under UK guidance for the Procurement Act 2023, contracts above £5 million generally need at least three key performance indicators (KPIs, the measures a supplier is judged against), assessed at least once every twelve months, using ratings such as Good, Approaching target, Requires improvement and Inadequate. A small business can review more often with less ceremony. The UN manual also expects a copy of each performance rating to be kept on the vendor's registration file, which is a good habit: keep the scorecard next to the register so the history travels with the supplier.

Tell suppliers how they scored. Most will fix a problem once it is shown to them with dates and invoice numbers, and CIPS suggests including the supplier's own experience of working with you in the evaluation, because they may be facing unnecessary obstacles on your side. Unclear orders or late payment from you, for example, can show up as late deliveries from them.

A simple supplier scorecard (illustrative)

Copy this into a spreadsheet. The suppliers, counts and naira amounts are illustrative. The score weights on-time delivery and quality at 40% each and price at 20%:

Score = on-time % × 0.4 + quality % × 0.4 + price-match % × 0.2

Agree the bands before you score: for example 90 and above, keep; 75 to 89, discuss with the supplier; below 75, agree an improvement plan or start looking for an alternative.

Reading the example: Supplier A is fine. Supplier C scores 90 but had one rejected print job out of four, so raise it before it becomes a habit. Supplier B is late on three orders in eight and has charged ₦60,000 more than the agreed prices across two invoices. That needs a meeting, a written answer on the price difference, and a decision on whether to request fresh quotes next quarter.

Score only the suppliers that matter: the ones you spend most with and the ones you cannot easily replace. A supplier you use once a year needs a register entry, not a scorecard.

How RequisitionPro helps

You can run all four habits in a spreadsheet. Where teams struggle is keeping the register current and connecting suppliers to what was actually ordered.

Difficulty: supplier details live in different places. RequisitionPro has a Vendors page that lists each vendor with its code, category, contact, status and whether it is verified. A vendor's own page holds its legal name, tax ID and registration number, contact information and business terms, including payment terms. In the app, Company Admins and Department Heads add vendors, and each can edit only the vendors they created. Each vendor shows a status (new vendors start as Active) and whether a Company Admin has marked it Verified; the controls around adding and verifying vendors are covered in the vendor setup article linked above.

Difficulty: nobody can see what was ordered from whom. Vendors are linked to requisitions and purchase orders, so the agreed items and prices sit on the PO rather than in an email. On paid plans, Request for Quotation (RFQ) collects written quotes from vendors; awarding one creates a draft requisition, not a PO, which then goes through your normal approval.

What it does not do, so you know where your spreadsheet still fits. RequisitionPro does not rate or score vendors, does not keep a history of a vendor's prices, and has no goods-receipt or invoice-matching step. Its audit log covers requisition and user activity, not changes to vendor records, and the vendor screens do not offer a way to put a vendor on hold. Keep the scorecard, its quarterly decisions and any on-hold list in your own sheet, and take on-time and quality figures from your delivery records.

Related questions

A supplier has put up prices mid-year. What do we do? Ask for the new prices in a revised written quote, check whether your agreement allows the change, and get it approved before you accept it. Update or reissue the PO before the next delivery, and consider asking other suppliers to quote.

Should we stop using a supplier after one bad quarter? Usually not. Show them the scorecard, agree what must improve and by when, and review again next quarter. Repeated low scores, or a serious problem such as overcharging without explanation, justify putting the supplier on hold.

Do we still need a register if we only have twenty suppliers? Yes. A short register is quick to keep, and it is the first thing an auditor, a new finance officer or a stand-in buyer will ask for.

Next step

Watch the "Vendor Management" video (2:05) on our tutorials page to see how vendors are added and managed in RequisitionPro.