Supplier ( Vendor )  Management


Purchasing or procurement plays a very pivtol role in manufacturing organisation , Providing
seamless flow of quality raw material for the production . Big companies have large vendor
base and these vendors have to regularly evaluated on their performance,

In recent developments of purchasing tools supplier or vendor management has acquired
importance .Vendors are supposed to be the part of companies supply chain and any weak
link can effect the entire chain .Vendor management is the process of defining the structure
for how relationships with suppliers will be developed and maintained. It involves defining
certain standards and making sure these are consistently met.

What is vendor evaluation ?

All vendors are subjected to quantitative ratings for different areas of competencies such as
delivery compliance , rejection or quality , price , responsiveness, facility , technical
competency . etc

Vendors could be the contract manufacturers or offshore suppliers . Now days we can find
Vendor evaluation software's which generates accurate reports on the vendor performance on
pre set parameters .Evaluation is normally done prior  to registration of supplier/vendor  into
company  vendor data with  vendor code .

Vendor Ratings

After initial registration and on site inspections of vendor facility and few deliveries vendors are
monitored for parameters and are ranked on the scale of 1 to 5 or any other scale . After
continuosly ranking these vendors the best performers are awarded with more orders and the
worst performers are phased out with new vendors hence these ratings improves the plant or
production efficiency indirectly .

Vendor Rating is a system used by buying organizations or industry analysts to record,
analyze, rank and report the performance of a supplier in terms of a range of predefined
criteria, which may include such things as:

  • Quality of the product or service

  • Delivery performance and reliability

  • Cost, price

  • Capabilities

  • Service

  • Financial continuity of the firm

The method includes defining the criteria and the weight each criterion receives in the overall
result, development of the questions and questionnaires, actually carrying out the
measurements, and finally interpreting the results. If vendor ratings are carried out periodically
or even ongoing, the results (per vendor) can be analyzed and compared over time.

Benefits of Vendor Rating
  • Clear and objective overview of performance of suppliers

  • Enables better vendor management

  • Incidents and escalations can be monitored earlier

  • Suppliers are stimulated to improve their performance

  • In the case of periodical vendor rating: analyze trends in vendor performance

If vendor rating is carried out before the placement of an order, it is also known as Supplier
Evaluation. When undertaken after order fulfillment, it is also referred to as Supplier Rating



Vendor relationship s

Vendor are awarded with more orders on annual contact based on their performance Or else
can be acknowledged with some for of certificate of appreciations in public .further buyer could
send its technical team to assist vendors team in finding out innovative methods which can
result in savings .Relationships with vendors are based on trust ,reciprocality ,transparency
and mutual agreement on terms and conditions which is a win win situation for both.
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