Most small companies pick a supplier carefully and then never look at the relationship again. Problems are remembered as irritation, not as facts, and the contract renews because nobody had time to ask whether it still makes sense.
A yearly review fixes this without a heavy process. For each important supplier you fill in one page, discuss it for thirty minutes and write down one decision.
Which suppliers to review
Do not review everyone. Start with suppliers that meet at least one condition:
- Your work stops or slows down when they fail.
- You pay them more than a set amount per year, for example the top ten by cost.
- They hold your data or have access to your systems.
- Their contract renews automatically.
For a typical small company this is five to twelve suppliers. Smaller ones can be checked in a shared list once a year.
The five checks
Give each check a simple mark: good, acceptable or poor, plus one sentence of evidence.
- Delivery. Did they deliver on time and in the agreed scope? Count late deliveries or missed deadlines from your own records.
- Quality. How many errors, returns or reworks did you have? Link them to real cases, not impressions.
- Communication. How fast do they answer? Is there a named contact, and do you get the same answer twice?
- Cost. What did you pay in total, including extras and price changes? Compare it with the last year and with what you were promised.
- Risk. Do you depend on one person at the supplier, one product or one contract term? What would you do if they stopped tomorrow?
If a check cannot be filled in because you have no records, write that down. It is a finding too, and a reason to start a simple log.
One page per supplier
Keep the same layout every year so you can compare. The page contains:
- Supplier, what they provide, internal owner.
- Contract end date and notice period.
- The five checks with marks and evidence.
- Open issues and what was promised to fix them.
- The decision and the date by which it will be done.
A shared document or one sheet per supplier is enough. The internal owner fills it in before the meeting, so the meeting itself is short.
Take the facts from your records
Memory favours the latest incident. Before the review, collect:
- Invoices and any price changes from the last twelve months.
- Support tickets or emails about problems.
- Delivery dates against the agreed ones.
- Notes from regular calls.
If you already keep a customer complaint log or a one-page monthly operations review, part of this evidence is ready. Supplier problems that were logged during the year are much easier to judge than those you try to recall.
Decide: keep, renegotiate or leave
Every review ends with one of three decisions:
- Keep. The supplier works. Note what you value so you notice if it changes.
- Renegotiate. The supplier is useful but something is wrong: price, response time, scope or contract terms. Write down exactly what you will ask for.
- Leave. The problems repeat or the risk is too high. Plan the transition, including the date by which you must give notice.
Include the owner and a date for every decision. For "leave", start with a shortlist and use eight questions for the first meeting with a replacement.
Time it before the contract
A review after the notice period has passed has little power. Put it into the calendar at least ninety days before the contract can be ended. The article on a contract renewal calendar shows how to track those dates. The yearly review then becomes the decision point that the calendar leads to.
Share the result with the supplier
Good suppliers want feedback. Send a short summary of what works, what does not and what you need next year. This is often enough to fix small issues without a formal negotiation, and it makes a harder conversation easier if you later need one.
Common mistakes
- Reviewing only when something breaks. You get anger, not a balanced view.
- Scoring without evidence. Marks without a sentence of proof cannot be defended.
- Too many suppliers. The review gets skipped. Limit it to the ones that matter.
- No decision. A review that ends with "we will see" repeats next year.
- Missing the notice period. The best decision is worth little if you can no longer act on it.
How to start this quarter
- List suppliers that stop your work, cost the most or hold your data.
- Name an internal owner for each.
- Copy the one-page layout and fill in the contract dates.
- Collect invoices, problems and delivery dates from the last year.
- Hold a thirty-minute review per supplier and record one decision.
- Add the follow-up dates to your calendar.
Summary
A yearly supplier review is a small routine: five checks, one page, facts from your own records and a decision before the notice period. It protects you from silent renewals and weak suppliers without needing a special system.
Sources
- Our related articles linked above.
- The approach described here is common practice for small and mid-sized companies, used as a practical guide. No client results or market figures are claimed in this article.
