VENDOR RATING

VENDOR RATING
Result of a formal vendor evaluation system.
Standing, status, or title given according to their attainment of
some level of performance.
To ensure that the desired characteristics of a purchased product
or service is built in and not determined later by some after-thefact indicator.

VENDOR RATING
In order to accomplish the rating of vendors, some sort of
review process must take place. The process begins with the
identification of vendors who not only can supply the needed
product or service but is a strategic match for the buying firm.
Then important factors to be used as criteria for vendor
evaluation are determined. These are usually variables that add
value to the process through increased service or decreased
cost. After determining which factors are critical, a method is
devised that allows the vendor to be judged or rated on each
individual factor.

CRITERIA FOR EVALUATION

Pricing
Quality
Delivery
Service

Pricing factors include the following:

Competitive pricing.
Price stability.
Price accuracy.
Advance notice of price changes.
Sensitive to costs.
Billing

Quality factors include:

Compliance with purchase order
Conformity to specifications
Reliability.
Durability.
Support.
Warranty.
State-of-the-art product/service.

Delivery factors include the following:

Time.
Quantity.
Lead time
Packaging.
Documentation.
Emergency delivery.

Service factors to consider:

Good vendor representatives have sincere desire to serve.

Inside sales.
Technical support.
Emergency support.
Problem resolution.

For suppliers that are critical to the success of the firm's strategy
or competitive advantage performance may need to be measured
by the following 7 C's.

Competencymanagerial, technical, administrative, and

professional competence of the supplying firm.

Capacitysupplier's ability to meet physical, intellectual and

financial requirements.

Commitmentsupplier's willingness to commit physical,

intellectual and financial resources.
Controleffective management control and information
systems.
Cash resourcesfinancial resources and stability of the
supplier. Profit, ROI, ROE, asset-turnover ratio.
Costtotal acquisition cost, not just price.
Consistencysupplier's ability to exhibit quality and
reliability over time.

AWARDS AND CERTIFICATION

Serves as an indicator of supplier excellence
Serious buying firms view these programs as an integral
part of their overall efforts to improve the total value of the
company.

BENEFITS
Helping minimize subjectivity in judgment and make it
possible to consider all relevant criteria in assessing suppliers.
Providing feedback from all areas in one package.
Facilitating better communication with vendors.
Providing overall control of the vendor base.

BENEFITS

Requiring specific action to correct identified performance

weaknesses.

Establishing continuous review standards for vendors, thus

ensuring continuous improvement of vendor performance.

Building vendor partnerships, especially with suppliers

having strategic links.

Developing a performance-based culture.