Vendor selection process

Vendor Selection and Vendor Evaluation Process in supply chain management

1. VENDOR
SELECTION
PROCESS
Presented by Mili Juneja
MCED TRAINING 19TH NOV

2. Vendor means a person (or company) who sells and supplies his
(or its) products.
An intelligent purchasing involves the rational selection of
sources from which materials can be obtained. Considerable
efforts are needed in identifying, developing and evaluating
the prospective suppliers. It is also essential to continuously
appraise the performance of the current suppliers
WHAT IS VENDOR

3. How much quantity is required to be purchased?
How much time is available for making such purchases?
Will the material be required repeatedly or occasionally?
What is the volume of purchase of the required materials?
Which is the industry producing the required materials?
What is commercial viability of the materials?
A few questions are to be answered before
attempting to develop vendors

4. First Stage survey stage
Second Stage enquiry stage
Third Stage negotiation & selection stage
Fourth Stage experience & evaluation stage
VENDOR DEVELOPMENT INVOLVES
FOUR STAGES:-

5. Survey Stage, Source of information on potential vendor
Trade directories
Telephone directories
Trade journals
Supplier catalogs
Salesman

6. Inquiry Stage
Accreditation, Certifications & License
Technological competition
Service Competition
Price Competition
Time Based Competition
Internal Facilities of Vendor
Modern equipment, quality of inputs, maintenance, size and capacity, layout
,housekeeping and cleanliness are inspected
Financial adequacy and stability
Reputation of Vendor
Location of Vendor
Industrial relations
Performance history,Warranties & Claim policies

7. Vendor Rating
For determining Supplier’s performance.
May take the form of a hierarchical ranking from poor to
excellent.
Helps in providing feedback to suppliers with low rating
Encourage improvement in their performance
Vendors are rated on the basis of various characteristics:
Delivery
Quality
Price
Other Factors (mkt info, emergency support)
Process of evaluating and approving potential vendor
by quantitative assessment.

8. METHODS OF VENDOR RATING

A few ways by which a vendor can be evaluated are
listed below:-

1) Categorical method
2)Weighted point method
3) Cost ratio method

9. This is a very subjective method.
Buyer makes out a list of factors important from their view.
At periodic intervals, say once in three- months , prepares a
performance report.
Each of the major supplier is evaluated against each
evaluator’s list of factors .
Evaluation is done in the terms of
1.CATEGORICAL PLAN

1.Good
2. Satisfactory
3. Poor

10. Sample format for such evaluation

11. Each supplier is evaluated and a number-score is calculated.
Then, it is converted into word rating. The conversion of scores
is as follows:

20. Summary of Evaluation process