Vendor Rating

The process of measuring

VENDORS’ capabilities and performance.
VR is an ongoing activity, wherein the Vendors are
assessed continuously or periodically

1. It forms the basis for developing SRM

2. Minimizes subjectivity in assessing
suppliers’ performance.
3. Providing feedback to vendors,
from all functional areas, in one package.
4. Providing overall control of the vendor base.
 VR is a COMPOSITE rating based on vendor’s
performance , on following criteria –
1. QUALITY RATING
2. PRICE RATING
3. DELIVERY RATING
4. SERVICE RATING
 1. Quality rating ( QR)

(Qty. accepted X 1) + (Qty. accepted conditionally X 0.5)

Quality rating = --------------------------------------------------------------------
Total Quantity Supplied
2. Price Rating ( PR)

Lowest acceptable price (among all vendors)

PR = ------------------------------------------------------------
Price of this vendor*

* vendor – for whom we are calculating the rating

3. Delivery Rating ( DR)

Qty. supplied within stipulated time frame**

Delivery Rating = -----------------------------------------------------
Total qty. supplied

** Stipulated time frame can be within : max.2 days prior & 1 day late
from the desired delivery date
4. Service rating ( SR)

Service rating is a qualitative factor.

( It cannot be quantified like earlier 3 factors)

Service rating = Average (Purchase dept. service rating in % +

Quality dept. service rating in % +
Stores service rating in % +
Accountant service rating in %)

Service ratings are given by officers based on the helpfulness

of the vendors on several occasions
Finally,

where,
WQ , WP , WD , WS are the weightage appropriated
by the company for quality, price, delivery and service.
Vendor Rating Calculation : An example
Vendor Rating Calculation : An example

Vend Total % Quality Avg. Lowest/ Price % Delivery Servic Service Total
or Consign accepte Rating Price Actual Rating within rating e rating compos
ments d (%x /unit price X Sched X Marks X it
supplied 35 % 30 % ule 20 % % 15 % rating

P 100 90 31.5 40 40/40 30 80 16 90 13.5 91

Q 60 80 28 50 40/50 24 90 18 40 6 76
R 50 70 24.5 60 40/60 20.1 100 20 60 9 73.6
Actions after VR –

 90 % + (A Gr.) : Preferred Vendors,

Recommended for -
Self-Certification Scheme

 80 -90% (B Gr) : Satisfactory

 below 80% (C Gr) : Unsatisfactory,

either to upgrade in 1 yr, or to quit.
Action Plan :
 Preferred Satisfactory Must Total
(A) (B) Improve
(C)
Present 70 120 85 275
Status
Next I Yr. 110 60 30 200
Target
Next 2nd 140 50 Nil 190
Year Target
 BAL has adopted TPM policy, also replicated by its vendors.
This has led to enhanced Eqpt. Efficiency, HR Efficiency &
Cost Efficiency.
 As on 2014, 141 Tier 1 vendors and 33 Tier 2 vendors are
practising TPM.

 BAL assesses its vendors on the improvement targets given

to them on a yearly basis.
 Based on the various productivity initiatives adopted by the
vendors - Till March 2014, 87 vendors have been awarded
TPM award and 36 vendors have been awarded TPM
Excellence award.
 Formed Bajaj Auto Vendors Association (BAVA) with the
objective of extending Bajaj GMPs → to its vendors.
 BAVA organises training programs for members on TPM
techniques, quality improvement, daily work management,
logistics improvements etc.
 135 vendors out of 337 are part of BAVA.
 BAVA initiatives : monthly meeting with BAL plant and
Purchase. Sharing of initiatives in terms of TPM, Energy and
Technical Developments adopted by BAL/vendors.
 BAL conducts ‘Cluster Kaizen Competition' every quarter,
and accordingly awarded ‘Best Kaizen’.
 BAL encourages procurement from Local Vendors (Presently
70% ), leading to a significant impact on the local economy
and minimisation of GHG emissions.