VENDOR DEVELOPMENT

1. LOCATION TAP DIFFERENT SOURCES CONDUCT VENDOR CAPABILITY SURVEY CREATION OF NE SOURCES

VENDOR DEVELOPMENT
CONTD.. 2. (I) SELECTION ESTABLISHMENT OF THE CRITERIA FOR SUPPLIER EVALUATION TECHNICAL OR ENGG. STRENGTH MANF. & TESTING FACILITIES FINANCIAL POSITION MANAGEMENT CALIBRE./ORGANISATION QUALITY PRICE SERVICE LEAD TIME

VENDOR DEVELOPMENT
CONTD.. 2. (II) 3. 4. SELECTION DEVELOP FORMAL VENDOR RATING SYSTEMS FOR PROPER SELECTION THE CATEGORICAL PLAN THE COST RATIO PLAN THE WEIGHTED POINT PLAN NEGO TIATIONS HELP SUPPLIER MEET YOUR REQUIREMENTS, PROVIDING REQUISITE INPUTS VENDORS CLINIC

5.

WEIGHTED POINT PLAN

1. 2. QUALITY : PERCENT LOTS ACCEPTED X WEIGHTAGE MINIMUM NET PRICE PRICE : POINTS = --------------------------------- % X WEIGHTAGE ACTUAL PRICE PROMISES HONOURED SERVICE : POINTS = --------------------------------- % X WEIGHTAGE PROMISES MADE SHORTEST LEAD TIME LEAD TIME : POINTS = --------------------------------- % X WEIGHTAGE ACTUAL LEAD TIME

3.

4.

WEIGHTED POINT PLAN

CONTD..

FACTOR
QUALTIY SERVICE PRICE LEAD TIME TOTAL

WEIGHTAGE (%)
40 25 20 15 -----------100 ------------

VENDOR RATING
I. QUALITY RATING
SUPPLI ER NAME A B C LOTS RECD. LOTS ACCPT. LOTS REJEC TED 6 4 4 % ACCEP TED 90 93.3 80 WEIGH TAGE QUALITY RATING

60 60 20

54 56 16

40 40 40

36 37.3 32

QUALITY PRICE SERVICE LEAD TIME

: : : :

50% 10% 25% 15%

VENDOR RATING
CONTD..
II. PART A : PRICE RATING

SUPPLIER

UNIT PRICE

DISCOUNT

TRANSPOR T CHARGE

NET PRICE

A B C

1.00 1.25 1.50

10% 15% 20%

Rs.0.03 Rs.0.06 Rs.0.03

Rs.0.93 Rs.1.12 Rs.1.13

VENDOR RATING
CONTD..
II. PART B : PRICE RATING

SUPPLIER

NET PRICE

% FACTOR

WEIGHTAG E

PRICE RATING

A B C

0.93 1.12 1.23

100 83 76

35 35 35

35 29.1 26.6

VENDOR RATING
CONTD..
III. SERVICE RATING
SUPPLIER PROMISES KEPT SERVICE FACTOR WEIGHTAGE SERVICE RATING

A B C

90% 95% 100%

25 25 25

22.5 23.8 25.0

VENDOR RATING
CONTD..
IV. COMPOSITE RATING
FACTORS SUPPLIER A SUPPLIER B SUPPLIER C

QUALITY PRICE SERVICE TOTAL

36.0 35.0 22.5 93.5

37.3 29.1 23.8 90.2

32.0 26.6 25.0 83.6

VENDOR AND VENDEE RELATIONS CONTD..

MUTUAL GOODWILL ESSENTIAL ANY TERMS OF SALES SHOULD BE SATISFACTORY TO BOTH PARTIES NEED FOR HONOURING THE COMMITMENTS HETHER AS BUYER OR SELLER IT IS ADVANTAGEOUS TO PRODUCE RIGHT THINGS IN THE FIRST ATTEMPT ITSELF SPECIFICATIONS SHOULD BE CLEARCUT INSPECTION PLANS SHOULD BE CLEAR TO THE SUPPLIER & MUTUALLY AGREED UPON JOINT INSPECTION AT ORKS PREFERABLE HELP SUPPLIERS BUILD QUALITY INTO THE PRODUCT VENDOR DEVELOPMENT

VENDOR AND VENDEE RELATIONS CONTD..

QUANTITATIVE ANALYSIS OF VENDORS PERFORMANCE APPRISE VENDORS OF THEIR PERFORMANCE PROPER SELECTION OF VENDORS AFTER THOROUGH EVALUATION IS A MUST VENDORS QUALITY IMPROVEMENT PROGRAMME MAKE REQUIREMENTS CLEAR PROVIDE REQUISITE INPUTS SUCH AS : i. TECHNICAL KNO HO ii. PRODUCTION FACILITIES iii. TESTING FACILITIES iv. FINANCIAL BACK UP v. MANAGERIAL / ORGANISATIONAL / SYSTEMS vi. TRAINING OF STAFF

COMPOSITE RATING
FACTORS EXCELLENT GOOD FAIR QUESTIONABLE UNACCEPTABLE

QUALITY DELIVERY
PRICE TOTAL SPREAD

100
50

97
48.50

92
46.00

87
43.50

82
41.00

100
35 100

85
29.75 100

70
24.50 100

55
19.25 100

40
14.00 100

15
100

15.00
93.25 99 TO 92.25

15.00
85.50 92.24 TO 84.50

15.00
77.75 84.49 TO 76.75

15.00
70.00 76.74 TO 69.00