The Hidden Supplier Drain

✓Late deliveries cost $500+ each (refund + expedited shipping + lost customer)

✓80% OTD supplier: 2,000 late orders/year = $1M annual loss

✓Vendor scorecard identifies "silent killers" (suppliers costing $500K+)

✓Delhi fashion brand: $1.17M recovered by replacing 1 supplier

✓4 core metrics: OTD (40%), Quality (25%), Cost (20%), SLA (15%)

You're Paying $500+ for Every Late Delivery. And You Don't Even Know Which Supplier Is Costing You the Most.

Your warehouse runs out of a bestselling product. Customer wants it. You can't fulfill. You refund. Customer is angry. Leaves a bad review.

You think: "Why did we run out? Was it a demand spike we didn't forecast?"

Real answer: Your supplier delivered 2 weeks late. You didn't have visibility into it until the damage was done.

That single late delivery cost you:

$200 in refund to customer
$150 in expedited shipping to source replacement (at 5x normal cost)
$100 in lost customer lifetime value (she never buys again)
$50 in customer service labor (handling her complaint)
Total: $500 in damage from one late order

You have 10,000 orders/year. One supplier is 80% on-time. That means 2,000 late orders/year. If 50% of those result in the $500 cascade, that's $500K in annual hidden costs.

But you don't know this is happening because you don't have vendor performance scoring.

You don't track which supplier is late most often. You just see: "customers angry, inventory low, margins bad." You don't see the root: your supplier.

Result: You switch couriers. You increase safety stock (costs more). You hire more customer service people. None of these fixes the real problem: your supplier is unreliable, and you're flying blind.

The Invisible Cost: Why Late Suppliers Are Killing Your Margin

Let's quantify what late suppliers actually cost.

Scenario: $2M brand, 10,000 orders/year

Supplier A: 95% On-Time Delivery

→ Late orders: 500/year

→ Cost per late order: $500

→ Annual cost: $250,000

Supplier B: 80% On-Time Delivery

→ Late orders: 2,000/year

→ Cost per late order: $500

→ Annual cost: $1,000,000

Difference: $750,000 in annual hidden costs

Between a good supplier and a bad one

For a $2M brand with 40% gross margin ($800K), that $750K loss represents 94% of gross profit

You're not making profit on this supplier. You're losing money every single order they fulfill.

What happens with a late delivery:

Customer wants product. You check inventory. "In stock."
Customer orders. You attempt to fulfill.
Warehouse discovers stock is out. (Because supplier was late, and you didn't know yet.)
You have 4 options:
- Refund ($20-50 loss)
- Expedite replacement shipping (5x normal cost = $50-150 loss)
- Both (refund + expedite = $70-200 loss)
- Cancel (customer churn, lost lifetime value = $100-300 loss)
Customer experience is damaged. They leave a bad review. Friends don't buy from you.
Your margins compress. You're spending more on logistics (expedited shipping) to cover supplier failures.

The Math on One Late Supplier

10,000 orders × 80% OTD = 2,000 late = $1M in hidden costs

If you can identify this supplier and either negotiate better performance or switch to a 95% OTD supplier, you recover $750K annually. That's 93% of your annual profit.

Why You Don't Know Which Supplier Is Failing: The Visibility Problem

60% of organizations have poor vendor visibility into supplier performance. Here's why:

Problem #1: Manual Tracking (Spreadsheets)

Your procurement person tracks supplier performance in a spreadsheet. They update it monthly. Or weekly. Or "whenever they remember." Data looks like: "Supplier A: On time mostly" or "Supplier B: Good quality, sometimes late." This is subjective, not data-driven.

Problem #2: Delayed Information

Order placed on Jan 1. Supplier delivers on Jan 20 (target: Jan 15). You don't know about the delay until Jan 20. By then, inventory is already low. You're scrambling. Real-time visibility would tell you on Jan 18.

Problem #3: No Standard Scorecard

Different teams score suppliers differently: Procurement focuses on price. Operations focuses on delivery. Quality focuses on defect rates. Nobody has a unified view. Result: You keep a "cheap but late" supplier.

Problem #4: Tier-2/3 Supplier Invisibility

You track Tier-1 suppliers (your direct suppliers). But what if their supplier is late? You only see the impact when your Tier-1 supplier tells you "we're running late." By then, it's too late to do anything.

The Solution: Vendor Performance Scorecard (The Right Metrics)

A vendor performance scorecard is a standardized, data-driven way to track supplier performance across key metrics.

Instead of "Supplier A delivers on time mostly," you get: "Supplier A delivers on time 93% of the time. Target is 95%. Risk level: Yellow (monitor)."

Core Metrics to Track:

Metric #1: On-Time Delivery (OTD) - Weight: 40%

→ Target: 95%+ for optimal operations

→ Measure: % of orders delivered by agreed date

→ Real impact: 80% OTD = 1,500 late orders/year = $750K loss

Metric #2: Quality/Defect Rate - Weight: 25%

→ Target: <1% defective units

→ Measure: % of units received with defects

→ Real impact: 5% defect rate = 500 bad units per 10K orders = $25K replacement cost

Metric #3: Cost Competitiveness - Weight: 20%

→ Target: <5% above market rate

→ Measure: Price per unit vs market average + any extra fees

→ Real impact: 10% price premium = $20K extra annual cost for $2M brand

Metric #4: SLA Compliance - Weight: 15%

→ Target: 98%+ compliance

→ Measure: % of POs fulfilled per agreed terms (right quantity, specs, documentation)

→ Real impact: Poor SLA = 3% of orders with issues = 300 errors/year = $15K in rework

Scorecard Scoring System:

🟢 Green (90-100%): Excellent

Reward with larger orders, longer contracts, premium status

🟡 Yellow (70-89%): Acceptable but needs improvement

Schedule performance review. Create improvement plan. Consider 50/50 split with backup supplier

🔴 Red (<70%): Unacceptable

Start replacement plan. Renegotiate terms. Consider dropping entirely

Real Example Scorecard:

Supplier	OTD (40%)	Quality (25%)	Cost (20%)	SLA (15%)	Overall Score	Status
Supplier A	95%	98%	5% above market	97%	96%	🟢 Green
Supplier B	82%	94%	At market	92%	89%	🟡 Yellow
Supplier C	75%	88%	8% above market	85%	81%	🟡 Yellow
Supplier D	65%	80%	15% above market	70%	72%	🔴 Red

What This Tells You:

→ Supplier A: Keep relationship. Could increase orders

→ Supplier B: 13-point gap from Supplier A. Schedule performance review. Set target: 93% OTD within 90 days

→ Supplier C: 15-point gap. Red alert on cost. Renegotiate or find alternative

→ Supplier D: Unacceptable. 6-month replacement plan

The 30-Day Implementation Roadmap

Week 1: Define Metrics & Gather Historical Data

→ Meet with procurement, operations, finance

→ Define which metrics matter most (usually OTD #1)

→ Set scoring weights (OTD 40%, Quality 25%, Cost 20%, SLA 15%)

→ Gather last 12 months of data: Delivery dates, defect rates, invoice prices, PO accuracy

Week 2: Baseline Score All Suppliers

→ Calculate historical performance for each supplier

→ Assign Green/Yellow/Red status based on scores

→ Identify your worst performers (Red/Yellow suppliers)

→ Calculate cost of poor performance (how much are they costing you?)

Week 3: Implement Scorecard System

→ Option A (Simple): Excel-based tracking. Update monthly manually. Labor-intensive but low cost

→ Option B (Better): Software solution (Zapro, Zycus, SAP Ariba). Real-time data. Automated alerts. Cost: $500-1,500/month

→ Input historical data into system

→ Set up automated alerts (notify when OTD drops below 90%)

→ Create performance review template (monthly for Red/Yellow, quarterly for Green)

Week 4: Communicate with Suppliers & Monitor

→ Share scorecard results with each supplier (transparency)

→ Set clear performance targets ("Your OTD is 82%. Target: 95% within 90 days")

→ Tie incentives/penalties to scorecard

→ Schedule monthly 1-on-1 reviews with Red/Yellow suppliers

→ Monitor weekly: Track movement toward targets

Real Impact: Brand Case Study (90 Days)

Brand Profile

→ Delhi-based fashion D2C

→ Revenue: $2M/year

→ Suppliers: 8 (3 fabric, 2 trim, 2 logistics, 1 logistics backup)

→ Orders: 10,000/year

Before (No Scorecard):

→ Supplier management: Gut feel ("Supplier A is good, Supplier B is sketchy")

→ On-time delivery: Unknown (no tracking)

→ Stockouts: 2-3/month (unknown root cause)

→ Expedited shipping: $1,500/month (used frequently for emergencies)

→ Customer satisfaction: 78% (returns due to late arrivals, out-of-stocks)

Problem Discovery (Week 1-2):

Implemented vendor scorecard. Analyzed 12 months of data. Discovered:

→ Supplier A (fabric): 94% OTD, 98% quality, 2% above market = 95% score (Green)

→ Supplier B (fabric): 71% OTD, 85% quality, 18% above market = 76% score (Red)

→ Supplier C (trim): 88% OTD, 92% quality, 3% above market = 88% score (Yellow)

The Numbers

→ Supplier B delivering late = 2,900 late orders/year (29% of 10K orders)

→ Cost per late order: $500 (stockout, expedited shipping, customer loss)

Supplier B alone costing: $1.45M annually

(vs $2M revenue = 72% of revenue!)

Intervention (Week 3-4):

→ Scheduled performance review with Supplier B

→ Gave them 90-day improvement plan: "Achieve 95% OTD within 90 days or we replace you"

→ Cut their order volume by 50% (forced backup supplier for 50% of orders)

→ Negotiated 15% price reduction to compensate for volume loss (they agreed because losing contract was worse)

After (Day 90):

→ Supplier B: 89% OTD (improvement, but not yet at 95% target)

→ Backup supplier (Supplier E): 96% OTD, 95% quality, 5% above market = 95% score (Green)

→ Decision: Shift 70% of Supplier B orders to Supplier E

→ Supplier B: Now supplies 30% (down from 100%), month-to-month contract (at risk)

Metric	Before	After	Change
Expedited shipping/month	$1,500	$300	-$1,200/month
Stockouts/month	2-3	0-1	Reduced 70%
Supplier B OTD	71%	89%	+18 points
Suppliers achieving 95%+ OTD	1/8	4/8	+3 suppliers
Customer satisfaction	78%	91%	+13 points
Annual cost of poor supplier performance	$1.45M	$280K	-$1.17M

Total Year 1 Savings

→ Expedited shipping: $1,200 × 12 = $14,400/year

→ Reduced stockouts: ~$50K/year (fewer lost sales, returns, expedited restocking)

→ Better customer satisfaction: ~$30K/year (fewer refunds, higher repeat rates)

→ Cost reduction from Supplier B: $18K (15% price reduction on their 30% of orders)

Total: ~$112,400

System cost: $1,500 (setup) + $600/month = $8,700 year 1

Net profit Year 1: $103,700

Why Braincuber Focuses on Vendor Scoring (When Most Brands Don't)

Most brands treat supplier management as a procurement function. Boring. Not revenue-driving. So they punt it to a junior procurement person who uses spreadsheets and gut feel.

Here's what we know: Poor supplier visibility is costing you 5-10% of revenue annually. And you have no idea.

1. It's the hidden drain on margin

A single late supplier costs $500K-$1.5M annually. But you don't see it because the costs are spread across: Stockouts (lost sales), Expedited shipping (5x normal cost), Customer refunds (no visible cause), Lost customer lifetime value (churned customers). None of these show up on your "supplier performance" dashboard because you don't have one.

2. Fixing it is high-ROI

Implementing a vendor scorecard costs $10K-20K year 1. The payback is 3-6 months. The ongoing benefit is $100K-$300K annually.

3. It scales

As you grow from 5 suppliers to 50, manual spreadsheets break. Real-time scoring systems save 20+ hours/month in labor plus 15-30% improvement in supplier performance.

Braincuber Track Record

We've implemented vendor scorecards for 30+ Indian D2C brands.

Result is always the same:

→ Identify 1-2 "silent killers" (suppliers costing $500K+ annually that nobody knew)

→ Cut ties or negotiate hard: Recover $100K-$300K annually

→ Shift to better suppliers: Reduce expedited shipping, stockouts, customer churn

→ Improve overall vendor base: Average supplier OTD improves from 82% to 92% within 90 days

Frequently Asked Questions

How do I know if I have a vendor performance problem?

Ask yourself: "Why do we have frequent stockouts?" If you don't have a clear answer, it's likely supplier-related. Run a 3-month analysis: Track which orders you lose to out-of-stocks, then track which supplier was responsible for the missing inventory. If pattern emerges, you have a problem.

Should I track all 8-10 suppliers or just the big ones?

Start with top 5-6 (by volume). Once you have scorecard working, expand. Focusing on top suppliers first captures 80% of the impact with 20% of the effort.

What if supplier gets red score? Do I just replace them?

No. Give 90-day improvement plan first. Most suppliers improve dramatically when they see they're about to lose your business. Only replace if they don't hit targets in 90 days. Switching suppliers has its own costs (new supplier ramp-up, learning curve, etc.).

Who should own the scorecard? Procurement or Operations?

Procurement collects the data. Operations (warehouse/fulfillment) provides input on delivery reliability. Finance tracks cost impact. Ownership can be procurement, but cross-functional team should review monthly.

Should I share scorecard with supplier?

Yes. Transparency motivates improvement. When suppliers see they're Yellow/Red with clear targets, they improve. Keeping it secret prevents them from knowing what to fix.

You're Paying $500 Per Late Delivery. Let's Stop.

A single poor supplier is costing you $500K-$1.5M annually. You don't see it because the costs are hidden across stockouts, expedited shipping, and lost customers.

Vendor performance scorecard fixes this. 90 days to implement. $100K-$300K annually recovered.

Schedule Your Free Vendor Performance Audit

We'll analyze your supplier data from the last 12 months, calculate cost of poor performers ("silent killers"), model improvement if you switch to better suppliers, and map 30-day scorecard implementation roadmap.

No guesses. Just your data, your suppliers, your cost.

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