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-Richa Yaduvanshi

MBA-Agribusiness

Vendor Rating

AndSources of Supply

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Assessment of existing or new suppliers on thebasis of their delivery, price, productioncapacity, quality of management, technicalcapabilities, and service.

Vendor Rating

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Th ere are 4 stages of evaluation:1 ] Survey stage - It is based on preliminary information. All the possible

source are used to explore vendor capabilities.

2] Enquiry of stage- This stage consist detailed analysis of the vendors

performance with other consumers.3] Negotiation and Selection stage - the vendors who pass the selection

stage are called for the negotiation. In this stage buyer and vendornegotiate on all aspects and the list of approved vendors are drawn.

These three stages are considered as apart of source development and

source registration process.4] Experience Stage -this is the stage when supplier start sending the

material after trial orders. The parameters used here are quality,price, delivery, sc h edule, service.

STAG ES OF EVALUATI ON

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Methods of Rating

A large number of methods, using quality, price, deliveryschedule, and service are used for vendor rating.

1 . Income material rating plan:This method was developed by General Electric Company. In

this scheme the quality control department complies a list of troublesome items may be because of price or quality. fromlist a single item is selected and total of 100 points are

allocated as follows:40 points for quality35 points for price25 points for service.

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2. C ategorial met h od

This method depends on experience and judgment of buyerand therefore it may be subjective.

The buyer makes out a list of all parameters and performancereport is prepared.

3. C ost-ratio met h od

This method involves computing the actual costs incurred inprocurement , chasing , transport, packaging, receivingmaterials, etc.

The unit cost incurred by the buyer on the material, whenactually received is then computed.

Higher is the cost, lower is the supplier s relative rating.

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4. Key Questions A pproac h

Many questions are asked from supplier about the item inthis method.These questions include issues on management, labour,finance, technology, development, service aspects.At the end balanced perspective of supplier emerges.

5. M atrix M et h od:W hen there are more number of suppliers and more factorsbeing considered, the matrix approximate of comparisons is

useful.The vendors are listed horizontally and the factors vertically.Individual marks are entered for each factor and the total iscomputed.

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SOU RCE OF SUPPLY

The buyer has to locate, develop and preserve source of supply. The scientific purchasing requires at least two sourcesof supply.

The efficiency of source depends on its capacity to match the

user s high tech, narrow tolerance, quality requirement, etc.

SOU RC E LOC ATI ON

Buyer builds a directory of purchases, which has to be

updated periodically.This directory can be catalogue of items, with full descriptionalong with up to date prices.

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D irectory can be built from the followinginformation:

I. Information received from marketing department.II. Periodic visit to industrial units.III. The buyers guide published by the Indian Standard Institute lists

a large number of items by the manufacturer who are licensed touse ISI certification mark. the D irectory catalogue of themember s products published by industrial associations like theAll India Manufacturers Organisation.

Other information leading to source identification includes thefollowing:

a) The hand outs of the D GTD -D irectorate General of TechnicalD evelopment.

b) The supplier D irectory of the D GS&D -D irectorate General of Supplies and D isposal.

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c) Visiting cards of salesmen.

d) Advertisement in trade journals.e) Announcement of new products in newspapers.

f) Technical magazines.