The point is not the score itself. It is replacing "we have always used them" and "they are the cheapest" with evidence, so the buyer can explain why volume moves from one supplier to another, and the supplier knows what to fix.
This guide covers the criteria and how to measure each one, how to weight them, a worked scorecard for three carton suppliers to a Sharjah manufacturer, how to vet new suppliers before the first order, what to do with the scores, and an FAQ.
Which criteria should you use to evaluate suppliers?
Use criteria you can measure from data you already have. Opinions belong in the service score, and even there, write down what each point means.
| Criterion | Measure | Formula | Where the data comes from |
|---|---|---|---|
| Price | Price index against the best comparable offer | Lowest price ÷ supplier's price × 100 | Purchase orders, RFQ responses |
| Delivery | On time in full (OTIF) | Order lines delivered complete by the agreed date ÷ order lines due | Purchase orders and goods receipts |
| Quality | Rejection rate | Quantity rejected ÷ quantity received | Goods receipts and inspection records |
| Service | Responsiveness, documents, problem solving | Points against a written checklist | Buyer and quality team review |
| Compliance | Valid licence, TRN and certificates | Pass or fail, or points | Supplier master file |
Three points make these measures reliable.
Define "on time" once. Most companies count delivery on or before the agreed date, sometimes with one day's grace. Measure against the date the supplier confirmed, not the date the buyer hoped for.
Count partial deliveries as failures. A delivery of 900 out of 1,000 units on time is not on time in full. It still stops a production line or leaves a gap on the shelf.
Measure price against something. A price on its own says nothing. Compare it with the lowest comparable quote, the last price paid or a market index for commodities such as steel or resin.
How should you weight the criteria?
Weights depend on what a failure costs you. Use different weights for different purchase categories, not one set for every supplier.
| Category | Price | Delivery | Quality | Service and compliance |
|---|---|---|---|---|
| Standard or commodity items | 40% | 30% | 20% | 10% |
| Production materials and packaging | 30% | 30% | 30% | 10% |
| Critical components or food ingredients | 20% | 30% | 40% | 10% |
| Services and contractors | 25% | 25% | 30% | 20% |
Turn each measure into a score out of 100 before weighting. Price index and OTIF are already percentages. For quality, use bands so that small differences do not swing the result. One set of bands that works for many manufacturers:
| Rejection rate | Quality score |
|---|---|
| 0.5% or less | 100 |
| Above 0.5% to 1% | 80 |
| Above 1% to 2% | 60 |
| Above 2% to 5% | 30 |
| Above 5% | 0 |
Review weights once a year. If quality problems are hurting the business, increase quality's weight for a period and tell suppliers why.
What does a supplier scorecard look like? A worked example
A Sharjah food manufacturer buys printed cartons from three suppliers. It uses the production materials weighting: 30% price, 30% delivery, 30% quality and 10% service and compliance. These are the third-quarter figures, with prices per carton in AED before VAT:
| Measure | Supplier 1 | Supplier 2 | Supplier 3 |
|---|---|---|---|
| Price per carton | 3.10 | 2.85 | 2.95 |
| Order lines due | 24 | 20 | 18 |
| Delivered on time in full | 22 | 15 | 17 |
| Cartons received | 120,000 | 100,000 | 80,000 |
| Cartons rejected | 360 | 1,800 | 640 |
| Service and compliance points | 100 | 75 | 75 |
Step 1: score each measure.
| Score | Supplier 1 | Supplier 2 | Supplier 3 |
|---|---|---|---|
| Price (2.85 ÷ price × 100) | 91.9 | 100.0 | 96.6 |
| Delivery (OTIF %) | 91.7 | 75.0 | 94.4 |
| Quality (rejection rate, banded) | 100 (0.30%) | 60 (1.80%) | 80 (0.80%) |
| Service and compliance | 100 | 75 | 75 |
| Weighted score | 95.1 | 78.0 | 88.8 |
Supplier 1's weighted score: 0.3 × 91.9 + 0.3 × 91.7 + 0.3 × 100 + 0.1 × 100 = 95.1.
Step 2: check the real cost. The cheapest price is not the cheapest supply. The company divides spend by accepted cartons, then adds AED 1,500 for each delivery that was late or short, its average cost of overtime, expediting and line changeovers.
| Per accepted carton | Supplier 1 | Supplier 2 | Supplier 3 |
|---|---|---|---|
| Price paid ÷ accepted cartons | 3.109 | 2.902 | 2.974 |
| Cost of failed deliveries | 0.025 | 0.076 | 0.019 |
| Effective cost | 3.134 | 2.979 | 2.993 |
Supplier 2 is AED 0.10 cheaper per carton than Supplier 3 on the price list, but less than AED 0.02 cheaper once rejections and failed deliveries are counted, and that is before the cost of the stock-outs.
Step 3: decide. The company keeps Supplier 1 for its main product lines, moves part of Supplier 2's volume to Supplier 3, and gives Supplier 2 an improvement plan with targets of 90% OTIF and rejection below 1% by the end of the next quarter. The supplier gets its scorecard and the evidence behind each number.
How do you evaluate a new supplier before the first order?
Past performance does not exist yet, so check capability and compliance instead.
Commercial and capability checks. Trade licence covering the goods or services, tax registration number, references from two or three customers, capacity and lead times, a quality certificate where relevant, and a sample or trial order for critical items.
Quality systems. ISO 9001, the quality management standard, requires certified companies to set criteria to evaluate, select, monitor and re-evaluate their external providers, and to keep records. A new edition, ISO 9001:2026, was published in September 2026. If you are certified, your supplier scorecard is part of that evidence.
VAT registration. Check that a new supplier's VAT registration details are valid before you book its first invoice, and keep them up to date in the supplier master file.
In-Country Value. Some UAE buyers, including partners of the National ICV Programme such as ADNOC, use a supplier's ICV certificate in tender evaluation. If your customers ask for it, add it to your own supplier criteria.
What should you do with the scores?
Sort suppliers into bands, and attach an action to each band.
| Band | Score | Action |
|---|---|---|
| A: Preferred | 85 and above | First choice for new orders and RFQs; consider longer agreements |
| B: Approved | 70 to 84 | Keep using; agree an improvement plan with targets and a date |
| C: Under review | Below 70 | No new items; review meeting; replace if no improvement in two quarters |
Share the scorecard with the supplier every quarter. Most suppliers improve once they see the numbers, especially OTIF, because many do not measure it themselves.
Link quality failures to non-conformance reports. A rejection that leads to an NCR should show on the supplier's quality score and in the review meeting, with the corrective action and its due date.
What should a quarterly supplier review cover?
What does HYP see at purchasing teams?
At manufacturers, distributors and contractors across the Gulf, our implementation team usually finds supplier evaluation done once a year, on a form, from the buyer's memory. The form is filed for the ISO audit and rarely changes a decision. Delivery and quality problems are well known on the shop floor but never reach the scores, because goods receipts do not record the confirmed date or the rejected quantity.
The purchasing teams that evaluate suppliers well measure from transactions. Every goods receipt records the delivery date against the confirmed date, and every rejection is recorded with a reason. The scorecard then calculates itself, and the quarterly review is about decisions, not about assembling data.
In HYP, supplier records, purchase orders, goods receipts and quality inspections sit in the procurement module, so supplier performance on price, delivery and quality can be measured from real transactions and reviewed alongside each supplier's documents.
Related reading: Three-Way Matching: Checking Purchase Orders, Goods Receipts and Supplier Invoices, and Quality Inspections and Non-Conformance Reports: A Simple Process for Factories.