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Vendor Performance Review

A vendor performance review is a critical part of facilities management practices. Learn the importance of this evaluation and how it can benefit your company.

Jonathan Haney headhsot
Jonathan Haney

Senior Director, Marketplaces

What is a Vendor Performance Review?

A vendor performance review is a structured evaluation for assessing a vendor’s quality of service and a reliable way to manage vendor performance. Reviews for vendors provide key performance indicators (KPIs) in facilities management, aimed at maintaining and improving the performance of vendors. 

Vendor performance reviews are essential for ensuring vendors are meeting the standards of the organization they’re serving. They assess various aspects of a vendor’s performance, including work quality, delivery efficiency, and a vendor’s contract adherence. 

Vendor Performance Review Objectives

Companies perform vendor performance reviews at regular intervals or at a vendor’s completion of service. The review process serves a number of key purposes.

Evaluate Performance

Vendor reviews primarily serve as performance evaluations to ensure that third-party contractors are meeting or exceeding the performance metrics according to their contract terms. The results of a vendor performance evaluation can help make determinations regarding how to proceed with the vendor relationship going forward.

Find Areas for Improvement

A vendor evaluation enables organizations to identify areas where vendors may be lacking. By achieving or exceeding agreed-upon goals, third-party contractors often enjoy contract extensions, and organizations may want to consider them for other services or products they provide  Not meeting critical contractual obligations may prompt organizations to place vendors on probation or reevaluate the relationships.

Plan Development

Reviewing vendor performance metrics enables companies to work with their vendors to develop action plans to improve outcomes. Conducting a vendor assessment also informs plans to extend contracts or seek more products or services from the partnered vendor. 

Inform Decisions

Vendor performance reviews can provide a host of information that helps steer decisions regarding vendor relationships. If expectations partnering with a certain vendor aren’t being met, an organization may reconsider renewing their contract or seeking additional similar vendors to fill gaps.

Key Components of a Vendor Performance Review

The performance review process for vendors consists of several key performance indicators (KPIs), each offering a different data metric to help organizations make informed decisions that can maintain or enhance vendor relationships. A comprehensive vendor performance review typically includes the following specific metrics.

Quality of Service

This metric evaluates the quality of the services or supplies a vendor provides. It’s critical that facilities receive products and services that benefit their operations. Companies rely on vendor services for a variety of functions, and vendors that don’t deliver an acceptable product can cost an organization in time, money, and production output.


This performance indicator assesses whether vendors complete services or deliver products as agreed upon in their service level agreements. Working efficiently and meeting delivery schedules is a critical factor in vendor and supplier performance, as facilities often have to wait for vendors to finish their tasks or deliver their product in order to resume operations.

Cost Management

Comparing vendor expenses to services received gives a clear picture of whether or not an organization is getting value for their money. Vendors who can give partners clear expectations regarding their pricing structure and keep their costs at manageable levels are more likely to see a contract renewal if they’re also consistently delivering a quality service in a timely manner.


Adherence to industry standards and government regulations is critical for anyone that a company deals with. A regular assessment of vendor standards compliance ensures that partnered third parties are providing products and services that are acceptable to regulatory bodies and satisfy the terms of their contract. 

Relationships and Communication

Vendor performance reviews often assess vendor relationships. Communication is one of the most critical aspects of effective vendor management. Companies need to be able to trust their vendors to inform them of issues and exercise effective communication in working together to resolve any problems that arise and to respond constructively to feedback. 

Conducting Effective Vendor Performance Reviews

Productive vendor performance reviews are essential quality-control measures, performed to secure a positive working relationship and develop process improvements that benefit both parties. The following steps can help ensure an effective vendor performance review.

  • Agree on clear expectations that align with the goals of the organization and internal stakeholders.
  • From the outset of the relationship, inform vendors of the organization’s requirements and review processes.
  • Keep vendors informed of the organization’s overall satisfaction with their quality and timeliness.
  • Schedule review meetings and provide feedback in a timely and constructive manner.
  • Use a standardized review form or software platform such as ServiceChannel to ensure consistency and objectivity.
  • Involve relevant stakeholders in the review process to gather comprehensive insights.

Vendor Performance Management Challenges

Whether parts suppliers or third-party maintenance professionals, vendor performance reviews are essential for monitoring compliance and assessing a vendor’s ability to consistently provide quality products and services. However, performance reviews can present some challenges:

  • Subjectivity: Managers need to be careful to not let personal biases interfere with an objective assessment of a vendor’s performance.
  • Resistance: Vendors receiving a poor performance review may become defensive or resist criticism, which can make the review process difficult to conduct.
  • Resources: It takes time and resources to conduct a thorough performance review, which may be limited.

Vender Performance Review Best Practices

Organizations can employ strategies to mitigate performance review challenges. Facilities managers can adopt practices such as these to ensure a vendor review that’s fair and more pleasant to all parties involved.

  • Objectivity: Quantifiable metrics and data-driven analytics offer an unbiased look into the quality of a vendor’s services and products. 
  • Feedback: Offer observations and suggestions in a constructive manner, focusing on continuous improvement rather than criticism.
  • Collaboration: Let vendors know they’re partners in the review process. Consider their insights and suggestions to encourage their buy-in and cooperation.

Vendor Performance Reviews In Conclusion

Vendors are a crucial element of any organization’s supply chain. Managing vendor performance is vital to successful facilities management. Vendor performance reviews help hold third parties accountable for their performance and contribute to effective facility operations. 

Regular and thorough reviews enable facility managers to maintain high standards of service, foster positive vendor relationships, and support their company’s strategic objectives.

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