Code PUR-1-07

Establishment
01-12-2017 Director
Date Procedure for Vendor Responsible
(Production)
Rating Class 2
Last Updated
30/04/2019 Department
On Purchase
in charge

00. OBJECTIVE
The objective of this procedure is to provide a system for evaluation of vendors on monthly basis
based on the quantitative data. This performance data shall be used for continuous improvement
of vendors.

01. SCOPE OF APPLICATION

This procedure is applicable to OE parts supplied by Indian vendors to SMG.

02. CONTROLLING DEPARTMENT

The controlling department for Vendor rating shall be SMG-PUR department.

3.0 EVALUATION PARAMETERS & WEIGHTAGE

Total Marks = 1000

3.1 Quality Rating = 700

Defects rating = 150
QPCR rating = 50
Line Rejection rating = 100
Record Management (4M, SMIR) = 50
Warranty = 350
*No. of claims/10,000 = 175
*Warranty cost/Part Supplied = 175

Note: For non-warranty vendors quality marks should be doubled

3.2 Delivery Rating = 300

E-Nagare Quantity defaults = 75
E-Nagare Time defaults = 150
Spares Default = 75

Note: In case of spares not supplied, the marks shall be divided as Quantity Default (25)
and Time default (50)
4.0 VENDOR RATING CALCULATION

4.1 INCOMING QUALITY RATING

The Incoming Quality Rating shall comprise of below 4 parameters
a) Defect Rating
b) QPCR Rating
b) Total Line Rejection rating
c) Record Management (4M, SMIR)

a) DEFECT RATING

The following debit system shall be followed for each defect raised by vendor

Defect Rating= 150-[ A*75-F*30-G*10- R*25]*K

No. of defect / Total no. of parts supplied K

<0.25 0.85
0.25 ≤ 0.5 0.90
0.5 ≤ 0.75 0.95
0.75 ≤ 1.0 1

A - No. of Maru A Defects

F - No. of Functional Defects
G - No. of General Defects
R - No. of Repeat Defects

b) LINE REJECTION RATING

The following debit system shall be followed for rejections due to vendor fault.

Line Rejection Rating= 100-P, P-Line Rejection (Parts Quality) PPM

If Rejection PPM > 100, then marks will be zero.

c) QPCR RATING

The following debit system shall be followed for each QPCR raised on vendor:

No. of QPCR raised for GCA =G

No. of QPCR raised for Receipt Inspection = RI
No. of QPCR raised for Spares =S
No. of QPCR raised for KDO =K

QPCR rating = 50 -[G*50+RI*50+S*50 +K*50]

d) RECORD MANAGEMENT

The following debit system shall be followed

Conditions 4M Change SMIR

(Report Submission Date) (25 Marks) (25 Marks)
Submitted by 7th of Month 25 25
Submitted between 7th to 15th of Month 12.5 12.5
Submitted after 15th of Month Zero Zero

 Rating shall be processed on the basis of all the parts report received from a vendor
 Last report submission date will be considered for rating calculation
 In case SMIR is not applicable for any particular vendor, 4M marks will get doubled
4M : Man, Machine, Material, Method
SMIR : Summary of Monthly Inspection Report

e) WARRANTY RATING

Top 80 warranty vendors of previous year shall be considered for warranty rating.

The number of claims per 10000 parts supplied & warranty cost per part supplied shall be
considered for calculating the warranty rating.

The warranty rating shall consist of two components-

a) Number of claims per 10000 parts supplied - 175 marks

b) Warranty cost per part supplied - 175 marks

The following debit system shall be followed for calculating warranty rating:

a) Number of claims per 10000 parts supplied

Deduction Scheme : 8.75 points to be deducted for every claim per 10000 parts supplied by
vendor.

Formula to be used:

175 – Nos of claims received in „Nth‟ month *8.75*10000

Average number of parts supplied in last 12 months

b) Warranty cost per part supplied

Deduction scheme: 17.5 points to be deducted for every claim of 10 paisa per part supplied

Formula to be used:

175 - Warranty claim cost for „Nth‟ month *17.5*10

Average number of parts supplied in last 12 months
 Note: For Non Top 80 vendors, warranty rating of 350 shall be taken same as the rating secured
in the head of “Incoming Quality”. (Subsequent appropriation shall be done in the sub heads)

f) Negative Marking System

Penalty (Marks Deduction) on Quality Rating obtained by the vendor:

(N- month of occurrence)

i. For Recall / Service Campaings 100%(N), 75% (N+1), 50% (N+2), 25% (N+3)
ii. For Dispatch suspension / Unapproved changes 50% (N)
If more than 2 events are applicable in the same month, higher debit shall apply. There is no
debit addition.

4.2 DELIVERY RATING

The Delivery Rating shall comprise of the below 3 parameters
a) E-Nagare Quantity default rating
b) E-Nagare Time default rating
c) Spares Defaults made by vendors

a) E-NAGARE QUANTITY DEFAULT RATING

Formula =75 - (n*18.75*100)
Where n=% Qty default in 'Nth' month

%Qty Deafult = (Total E-Nagare Qty Default+Total DI Default / Total Nagares+Total DI)

If % Qty Default > 0.03%, then marks will be zero

b) E-NAGAGRE TIME DEFAULT RATING

Formula = 150-(n*1.5*10)

Where n=% Time default in 'Nth' month

% Time Defaults = Total no. of time defaults (>2 hours)

Total E-Nagares

When the time default is more than 7.5% , the marks will become zero.

c) SPARES DEFAULTS MADE BY VENDOR

The following debit system shall be followed for calculating Spares default made by
vendor rating:

Formula = 75 - (n X 3.75) “n” is default %

When the spares default increases by more than 15%, the marks will be considered as zero
 Nagare Schedule DI Schedule

Qty received in a month / mean of demand Qty received in a month / Quantity

of past 3 months scheduled for a month

n = net percentage on vendor level

*Note In case of Line stoppage (LS) or Line run without components (LRWC) delivery marks
of the month will be Zero.

5.0 GUIDELINES FOR USAGE OF VENDOR RATING PROCEDURE

 The monthly rating shall be communicated to all the vendors by DPM.

 Purchasing shall take out the least performing 10 vendors on monthly basis & request vendors
to take action plan for performance improvement.
 Purchasing shall prepare the audit plan in the format PUR-107/01 for the least performing 10
vendors based on the 6 months cumulative vendor rating. The vendor audit is conducted as
per schedule in the format PUR-107/02. The countermeasures for the observations in the
audit will be taken from the vendor in the format PUR-107/03. The evidences are collected
from the vendor by responsible person for the closure of the observation as per the target
date.
 Purchasing shall take out list of bottom 10 vendors after completion of financial year &
communicate the same to MSIL-SC for making further business decisions.

6.0 RECORDS

Sr. Format
Record Type Responsible Retention Period
No. Number
Detailed vendor rating
1 - PUR 3 Years
report
Audit plan for least
2 PUR-107/01 PUR 3 Years
performing vendors
3 Vendor Audit check sheet PUR-107/02 PUR 3 Years
Vendor Audit
4 PUR-107/03 PUR 3 Years
Countermeasure report
 CP-102/01

History Sheet
Reference Number
Regulation Name Procedure for Vendor Rating
PUR-1-07
Original Applicable Date: 01/12/2017
Amendment Date Contents
Changes made as per the requirements of revised CP-1-02
01/06/2018
(Dt.25.04.2018)
Section 4.1 (a): Defect rating formula changed to
150 – ( A *75 + F*30+G*10+R*25)*K
Section 4.1 (b): Line Rejection Rating formula changed to 100 – P
Section 4.1 (c): Record Management changed to Section 4.1 (d).
Also the criteria is changed as

 Rating will be made on the basis of all parts report received

from a
vendor
 Last report submission date will be considered for rating
calculation
 In case SMIR is N/A for any particular vendor, 4M marks will
get doubled
Section 4.1 (c): Additional parameter QPCR Rating included.
Formula= 50-(G*50+RI*50+S*50+K*50)
Section 4.1 (e): Additional parameter-Warranty Rating included
30/04/2019 Section 4.1 (f): Additional parameter Negative Marking system
included.
Penalty (Marks Deduction) on Quality Rating obtained by the
vendor:
(N- month of occurrence)
i.For Recall / Service Campaings 100%(N), 75% (N+1), 50% (N+2),
25% (N+3)
ii.For Dispatch suspension / Unapproved changes 50% (N)
If more than 2 events are applicable in the same month, higher
debit shall apply. There is no debit addition.
Section 4.2 (a): E-Nagare quantity default rating changed to
Formula = 75 - (n X18.75 X 100)
Section 4.2 (b): E-Nagare time default rating changed to
Formula = 150 - (n X 1.5 X 10)
Section 4.2 (c): Additional parameter-Spares Default made by
Vendor included
Formula = 75 - (n X 3.75)
Section 5: Records changed to Section 6
Section 6: Guidelines for usage of vendor rating procedure changed
to Section 5. The vendor audit guidelines included in the
procedures & also below formats linked to the procedure.