ITIL 4 Foundation Practice Exam

What should suppliers be evaluated on in supplier management?

1. Employee satisfaction

2. Performance and contract terms

3. Market trends

4. Work-life balance

The correct answer is: Performance and contract terms

In supplier management, evaluating suppliers primarily focuses on their performance and adherence to contract terms. This evaluation is crucial because it helps organizations ensure that suppliers are delivering the expected goods or services in a timely manner and to the required quality standards. By closely monitoring performance, organizations can assess whether suppliers are meeting the agreed-upon service levels and compliance with specifications outlined in contracts. Evaluating contract terms involves checking if the suppliers are fulfilling legal and financial obligations as specified in the agreement, which can also have implications for risk management and continuous improvement in the procurement process. Performance metrics might include reliability, responsiveness, and overall satisfaction from the users of the service or product supplied. While employee satisfaction, market trends, and work-life balance can be important aspects in a broader organizational context, they are not primary metrics for evaluating suppliers in the framework of supplier management. These factors may be of indirect relevance when considering a supplier's overall capability or culture, but they do not directly address the critical elements of supply chain performance and contractual compliance.