HIDA Members Take Lead In Developing New Scorecarding Guide

Distributors and manufacturers collaborate to produce a resource for facilitating meaningful trading partner conversations

Scorecarding is an essential component to a good relationship between trading partners. It’s a process that trading partners use to grade each other on how effectively they move products through the supply chain.

Council develops industry reference guide

A prickly part of the process is that partners are all scorecarding each other, but on different things. Even when they scorecard on the same metrics, they can each define those metrics in different ways.

HIDA’s Channel Partnership Council spent two years working to streamline and standardize these scorecard metrics. The council, which includes executives from both manufacturers and distributors, has now finalized its new reference guide “Scorecarding Best Practices: Commonly-Used Metrics For Trading Partners Performance.”

This new resource provides a common language — increasing effectiveness, and saving time.

“While every manufacturer and distributor will have their own special needs, this gives each party the framework for a common language,” said Don Lovre, Director of Distribution at B. Braun Medical. “If adopted, all parties should be speaking with about 80% to 90% of the same terms.” Lovre alongside Russ Hicks, Cardinal Health’s VP of Strategic Sourcing, co-chaired the council and directed efforts to develop the resource.

Scorecarding enhances customer focus and planning

Many council members report they regularly use scorecarding conversations to review how current relationships affect their ability to service customers. With this data, trading partners gain insight into each other’s experience and satisfaction. The conversations foster discussions about upcoming events and make plans around demand surges. Scorecarding conversations between distributors and manufacturers occur on a semiannual or monthly basis. Council member Irfan Buddha, Senior Director of Strategic Initiatives for Healthcare Services at Henry Schein, said his organization provides an interactive portal that’s updated monthly for manufacturers’ use. Monthly calls go beyond traditional reviews, and include business tactics and improvement plans. Some partners forego calls and just supply the scorecarding data.

Conversations help trading partners meet an important need

Assembling data ahead of a scorecarding conversation requires a significant time investment, Hicks noted. The time investment is exacerbated if it needs to be done multiple times for different trading partners. HIDA’s Vendor Relations ShareGroup identified on-time delivery of shipments and fill rates as information that is essential, but often missing from or inaccurately reported on a manufacturer scorecard.

These measures are included in HIDA’s scorecarding resource. Taking a longer-term focus on scorecarding conversations encourages more strategic discussions, council members said. With a common understanding of the metrics employed, trading partners are closer to a shared vision of reality. This means they are more able to work together to solve problems.

4 Tips For Having A Great Scorecarding Conversation

Supply Chain Leaders From HIDA’s Channel Partnership Council Offer Their Advice

Scorecarding shapes conversations between distributors and manufacturers. They affect important financial decisions by both parties, and inform how they understand their customers. Here is some actionable advice on having a meaningful conversation around scorecarding from distribution and manufacturer leaders.

  1. Be transparent. Transparency is essential to effective scorecarding conversations, according to Russ Hicks, Cardinal Health. The conversation is only useful if both parties have a clear understanding of the data they are discussing, and a common understanding of which metrics each trading partner considers important.
  2. Enter the conversation with clear action items. It is not enough for one party to bring in a set of numbers and expect the conclusion to be obvious. Identify potential issues or weaknesses that need to be addressed, and bring the data to support these concerns.
  3. Focus on the customer. Distributors and manufacturers may track different components of their customer interactions, but both depend on providers purchasing supplies and being satisfied with their suppliers. Keeping the focus on customer experience is essential to success, Cardinal’s Hicks advises.
  4. Be proactive. If distributors and manufacturers achieve a common understanding of key terms and each other’s concerns, they can make plans and consider contingencies. Both trading partners should review the data supplied and look for areas of improvement and potential issues to address. Scorecarding conversations offer both parties the opportunity to improve, according to Henry Schein’s Irfan Buddha.

The most important part of the scorecarding process? Transparency

Transparency enables the identification of systemic problems and the steps to resolve them. Reaching a common understanding about an issue and developing a plan is easier than invoking financial penalties.

Vendor Relations ShareGroup members remarked that some challenges to adoption come out of concerns around transparency.

Partners may see certain information, such as sales tracings, as competitive intelligence they would prefer not to share. Trading partners can overcome this objection by being clear about what they need, why they need it, and identifying the problem it can solve.

Executive Briefing | January/February 2020

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