50639047 vendor-management

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50639047 vendor-management

  1. 1. 2011CFC Management Services (P) Ltd.pravin KoyandeWINTER PROJECT: VENDORMANAGEMENT[Type the abstract of the document here. The abstract is typically a short summary of the contents ofthe document. Type the abstract of the document here. The abstract is typically a short summary of thecontents of the document.]
  2. 2. PROJECT REPORT ON “VENDOR MANAGEMENT’’ IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE COURSE MASTER OF MANAGEMENT STUDIES UNIVERSITY OF MUMBAI SUBMITTED BY MR. MAYANK VILAS SANKHE ROLL NO:- 200926 BATCH: 2009-2011 SPECIALISATION:- OPERATIONS UNDER THE GUIDANCE OF PROF. RITESH LAL VISHWESHWAR EDUCATION SOCIETY’SINDIRA INSTITUTE OF BUSINESS MANAGEMENT SANPADA, NAVI MUMBAI
  3. 3. Certificate VISHWESHWAR EDUCATION SOCIETY’S INDIRA INSTITUTE OF BUSINESS MANAGEMENT SANPADA, NAVI MUMBAI It is hereby certified that the Project Report on “Vendor Management” has been successfully completed in MMS Semester IV of the academic year 2009-2011 by Mr. Pravin Koyande under the guidance of Prof. RITESH LAL.PROF. RITESH LAL DR. SUBHASH KULKARNI(Project Guide Internal) DIRECTOR
  4. 4. Acknowledgement I would also express my sincere thanks to our Director, Dr. SUBHASH KULKARNI for enabling me to undertake such an excellent project, which made me to acquire tremendous knowledge and self- confidence. I would also like to place on record my sincere thanks to Prof RITESH LAL my guide, for her valuable guidance and inputs which helped me to select and focus my work on this project.PRAVIN DATTARAM KOYANDEMMS: OPERATIONS
  5. 5. Table of ContentsABOUT COMPANY ......................................................................................................................................... 6 Key principles for operational excellence ................................................................................................. 6 VISION ....................................................................................................................................................... 6 MISSION .................................................................................................................................................... 6 OBJECT ...................................................................................................................................................... 6 SERVICES ................................................................................................................................................... 6 OPERATIONS ............................................................................................................................................. 7 Online ............................................................................................................................................ 7 Calling Toll Free Number............................................................................................................... 9 SEARCH WORK TICKETS............................................................................................................... 10 INVOICE HISTORY. ....................................................................................................................... 11 PROCESSES FLOW-CHART ....................................................................................................................... 12VENDOR MANAGEMENT............................................................................................................................. 13 Strategies to Strengthen Vendor Relations ............................................................................................ 13 The Successful Vendor Selection Process ............................................................................................... 15 Vendor Search: .................................................................................................................................... 16 Contract Negotiation Strategies ......................................................................................................... 17 Strategies for Planning Contract Negotiations ....................................................................................... 18 Preparation ............................................................................................................................................. 20PROBLEMS FACED BY CFC ........................................................................................................................... 21SOLUTIONS .................................................................................................................................................. 22 Categorized the services in two different types: .................................................................................... 22 Category A ........................................................................................................................................... 22 Category B ........................................................................................................................................... 22 CREATING QUALITY EVALUATION MATRIX FOR VENDORS………………………………………………………………….24
  6. 6. ABOUT COMPANY CFC - Central Facility Channel is the first Facility Management Company having teams in all Facilities Service Lines. CFC is your best bet when it comes to resolving all home management complaints so as to avoid any disturbance to your daily activities. We will send a contractor at your doorstep once you have expressed your availability and duration. Our services will be made available through a nominal fee for all the callers for the requisite services.Key principles for operational excellence: Single point of contact Single implementation process Single application, local adaptation Single dedicated account management teamVISION: CFCs’” Vision is to be India’s Premier Facilities Service Providers. We will earn our Customers’ Loyalty through Continuous Improvement driven by Enthusiasm, Integrity and Hard-work of CFC Family."MISSION: We guarantee to our customers savings and process optimization through – Single Point of Contact and Contract ManagementOBJECT: To capture the Navi Mumbai Market by end of 2011 and ensure timely delivery of services as promised to the client. Ensure Vendor SatisfactionSERVICES: Electrician Plumbers Security Janitorial Carpenter ApplianceRepairs Paint
  7. 7. OPERATIONS CFC has operations in Navi Mumbai. CFC makes Annual Maintenance Contract with households with nominal subscription fees according to the size of the flat. The subscription fees are as follows: 1BHK 2000/- INR 2BHK 3500/- INR 3BHK 4500/- INR 4 BHK 5500/- INR RH 3500/- INR 2RH 4500/- INR 3RH 5500/- INR Above 4BHK 1000/-INR are charged for each room and same for the Row Houses. After submitting dully filled form, Address proofs and fees (by Cash, Cheque or Demand Draft) Welcome kit is send to him contains: Customer ID Login Password User Manual List of Services Terms and Conditions Copy. FAQ’s After customer gets his Welcome Kit he can create WORK ORDER as many times as he wants any services from the list of services. There are two ways to create work order Online: Customer can log in on web portal www.cfchannel.in using their authorized credentials to create the work ticket on the web-portal. Customer information page ill be displayed after logging into the portal. Customer will then select the ‘CREATE WT’ tab to generate new work ticket. The next page will show up with customer’s details along with the fields to be filled. Call date and time will be auto generated fetching it from the
  8. 8. PC time. Customer needs to enter the caller name, problem description,comments (if any), choose the category if it’s a repair work ormaintenance work, select the priority if it emergency or non-emergency,select the nature of work and click next.WORK TICKET number will be auto generated.When clicked ‘Next’, the appeared page will show the information fed inthe previous page and also show you the past history of relevant ‘NatureOf Work’ done in last 3 months. You can select the ‘Not ExceedingAmount’ as per you have budgeted for the work done. And click the‘Submit WT’ tab to process the request.On submitting the request the system will lead you to page where youwill get your ‘WORK TICKET NUMBER’ for all further communication ofthat particular job.When the work ticket is generated by default the system will send anemail to all the call center executives and account managers notifyingabout the service request.On receiving the notification email, troubleshooting call is made to thecustomer by one of the customer service executives to understand theproblem in detail and if it can be resolved by troubleshooting steps.If the problem is resolved by troubleshooting tips, CFC CSR will click onedit button, ‘check’ dispatch avoided box and mention the reason for thesame and close the ticket.If the problem is not solved by troubleshooting tips, CFC CSR proceedwith the work ticket after discussing the priority and understanding theproblem in detail and design the vendor for the job.Call consultant will then do the follow up with the technician to makesure the job is been take care as per the schedule date and time.Vendor visits site with his authenticated identity as a proof that he isauthorized vendor of CFC.Vendor will then proceeds with the work.If ‘Parts in Order’ then vendor intimates the customer and the callconsultant if any chargeable parts are to be ordered. Then the WORKSTATUS of the ticket would go as ‘on hold’ and will be completed only onthe completion of the work. Part to be ordered can be purchased fromCFC provided appliances stores with discount or customers ownpreferred store and brand. Once he parts are available customer willintimate the call consultant about the same. Call consultant will thenfollow up with the technician and schedule his visit to complete the work.
  9. 9. On completion of work vendor will have the work ticket paper work filledby the customer for invoicing and mention all the costs involved in thework and will also intimate the call consultant to close theticket.(Customer will NOT pay anything to the vendor on site.)Call consultant will change the status of the work ticket and send it forinvoice process.Accounts department will then raise an Invoice to the customer by notingon the work ticketing and changing the status as ‘Invoice Processing’ aswell as send someone to the customer along with the status of theInvoice to collect the payment.Once the payment is received Accounts department will change thestatus of the work ticket as ‘Invoice Paid’.Calling Toll Free Number: Customer can call Toll Free Number 1800-22-2329 and place request for work order. Call is received from thecustomer care department. Call consultant will verify the identity of thecaller by his/her registration number and verify the details of thecustomer available on the screen to make sure he/she is RPC.After verifying the details call consultant will then precede with askingand verifying the details of the issues and creating the work tickets. Whilecreating the work ticket, call consultant gives troubleshooting tips to thecustomer if available.If the issue resolved by troubleshooting WORKTICKET gets voided.If issue is not resolved, then the call consultant proceeds with thecreation of work ticket and schedules the visit of the technician as per thecustomer’s convenience.Call consultant provides work ticket number to the customer to thecustomer for their reference, follow-up and further documentation.Call consultant provides work tickets number to the customer for theirreference, follow-up and further documentation.Call consultant make outbound call to the technician of that area tointimate the work and to make sure he reaches on time.Vendor visits the site with his authenticated identity as a proof that he isauthorized vendor of CFC.Vendor then proceeds with the work.If ‘Parts in Order’ then vendor intimates the customer and the callconsultant if any chargeable parts are to be ordered. Then the WORKSTATUS of the ticket would go as ‘on hold’ and will be completed only onthe completion of the work. Part to be ordered can be purchased from
  10. 10. CFC provided appliances stores with discount or customers ownpreferred store and brand. Once he parts are available customer willintimate the call consultant about the same. Call consultant will thenfollow up with the technician and schedule his visit to complete the work.On completion of work vendor will have the work ticket paper work filledby the customer for invoicing and mention all the costs involved in thework and will also intimate the call consultant to close theticket.(Customer will NOT pay anything to the vendor on site.)Call consultant will change the status of the work ticket and send it forinvoice process.Accounts department will then raise an Invoice to the customer by notingon the work ticketing and changing the status as ‘Invoice Processing’ aswell as send someone to the customer along with the status of theInvoice to collect the payment.Once the payment is received Accounts department will change thestatus of the work ticket as ‘Invoice Paid’.SEARCH WORK TICKETS: On the portal customer can search the workticket by selecting the option ‘SEARCH WT’ tabs.The displayed page gives three options by which customer can searchtheir desired work ticket.  Ticket Number  Invoice Number  Nature of BusinessSearch by ‘Ticket Number’: If customer already has the ticket number andwant to view the particular service request, then enters the availablework tickets number in the field and press ‘find’. The desired work ticketswill appear and you can view, edit or add notes as per the statuspermissions.Search by ‘Invoice Number’ once the work is completed, the accountsdepartment changes the status of the work ticket to ‘Invoicing’. If youalready have the invoice number customer can directly enter the same inthe fields and press ‘Find’ button. Depending on the status of the Invoicethe permissions are set to view, edit and add notes on the invoice workticket.Search by ‘Nature of Business’: If you wish the view the entire servicerequest by its category of work for the reference you can select the
  11. 11. nature of business from the options and press ‘Find’ button. All theservices request open till Invoice Paid will be available to customer.INVOICE HISTORY: There are three ways to search the Invoices.  Process Invoice  View Approved and Paid Invoices  Nature Of businessProcess Invoice: There are various options given to modify your search inthis category. You can check the invoices based on their level of category,priority, WT number, Invoice Status, Date Range, and Invoice Amount.Customer can search and with combinations as well.After filtering customer can search the report.Complete list of invoiced work orders will populate which best fits yoursearch criteria. Customer can also download the result on the excel sheetor pdf.View Approve and Paid Invoices: Customer can simply click on the viewand approved tab to see those invoices, he can also download it as perhis requirement.Nature Of Business: Selecting particular nature of business from dropdown list customer can view the Invoice work ticket.
  12. 12. PROCESSES FLOW-CHART
  13. 13. VENDOR MANAGEMENT It is just as important to communicate with your suppliers and vendors as it is to communicate with your customers. Establishing the proper communication channels and information flows between you and your suppliers can lead to increased efficiencies, reduced costs and better customer service. This section will cover the simple communication methods (i.e. telephone) and other ideas that will allow your company to build a win-win relationship with your suppliers and vendors. Strategies to Strengthen Vendor Relations Vendor management allows you to build a relationship with your suppliers and service providers that will strengthen both businesses. Vendor management is not negotiating the lowest price possible. Vendor management is constantly working with your vendors to come to agreements that will mutually benefit both companies. Share Information and Priorities The most important success factor of vendor management is to share information and priorities with your vendors. That does not mean that you throw open the accounting books and give them user IDs and passwords to your systems. Appropriate vendor management practices provide only the necessary information at the right time that will allow a vendor to better service your needs. This may include limited forecast information, new product launches, changes in design and expansion or relocation changes, just to name a few. Balance Commitment and Competition One of the goals in vendor management is to gain the commitment of your vendors to assist and support the operations of your business. On-the-other-hand, the vendor is expecting a certain level of commitment from you. This does not mean that you should blindly accept the prices they provide. Always get competitive bids. Allow Key Vendors to Help You Strategize If a vendor supplies a key part or service to your operation, invite that vendor to strategic meetings that involve the product they work with. Remember, you brought in the vendor because they could make the product or service better and/or cheaper than you could. They are the experts in that area and you can tap into that expertise in order to give you a competitive advantage. Build Partnerships For The Long Term Vendor management seeks long term relationships over short term gains and marginal cost savings. Constantly changing vendors in order to save a penny here or there will cost more money in
  14. 14. the long run and will impact quality. Other benefits of a long term relationshipinclude trust, preferential treatment and access to insider or expert knowledge.Seek to Understand Your Vendors Business Too Remember, your vendor is inbusiness to make money too. If you are constantly leaning on them to cut costs,either quality will suffer or they will go out of business. Part of vendormanagement is to contribute knowledge or resources that may help the vendorbetter serve you. Asking questions of your vendors will help you understandtheir side of the business and build a better relationship between the two of you.Negotiate to a Win-Win Agreement Good vendor management dictates thatnegotiations are completed in good faith. Look for negotiation points that canhelp both sides accomplish their goals. A strong-arm negotiation tactic will onlywork for so long before one party walks away from the deal.Come Together on Value Vendor management is more than getting the lowestprice. Most often the lowest price also brings the lowest quality. Vendormanagement will focus quality for the money that is paid. In other words: value!You should be willing to pay more in order to receive better quality. If the vendoris serious about the quality they deliver, they wont have a problem specifyingthe quality details in the contract.
  15. 15. The Successful Vendor Selection Process The vendor selection process can be a very complicated and emotional undertaking if you dont know how to approach it from the very start. Here are five steps to help you select the right vendor for your business. This guide will show you how to analyze your business requirements, search for prospective vendors, lead the team in selecting the winning vendor and provide you with insight on contract negotiations and avoiding negotiation mistakes.
  16. 16. Analyze the Business Requirements Before you begin to gather data or performinterviews, assemble a team of people who have a vested interest in thisparticular vendor selection process. The first task that the vendor selection teamneeds accomplish is to define, in writing, the product, material or service thatyou are searching for a vendor. Next define the technical and businessrequirements. Also, define the vendor requirements. Finally, publish yourdocument to the areas relevant to this vendor selection process and seek theirinput. Have the team analyze the comments and create a final document. Insummary: 1. Assemble an Evaluation Team 2. Define the Product, Material or Service 3. Define the Technical and Business Requirements 4. Define the Vendor Requirements 5. Publish a Requirements Document for ApprovalVendor Search: Now that you have agreement on the business and vendorrequirements, the team now must start to search for possible vendors that willbe able to deliver the material, product or service. The larger the scope of thevendor selection process the more vendors you should put on the table. Ofcourse, not all vendors will meet your minimum requirements and the team willhave to decide which vendors you will seek more information from. Next write aRequest for Information (RFI) and send it to the selected vendors. Finally,evaluate their responses and select a small number of vendors that will make the"Short List" and move on to the next round. o Compile a List of Possible Vendors o Select Vendors to Request More Information From o Write a Request for Information (RFI) o Evaluate Responses and Create a "Short List" of Vendors
  17. 17. Request for Proposal (RFP) and Request for Quotation (RFQ) Thebusiness requirements are defined and you have a short list of vendors that youwant to evaluate. It is now time to write a Request for Proposal or Request forQuotation. Which ever format you decide, your RFP or RFQ should contain thefollowing sections: o Submission Details o Introduction and Executive Summary o Business Overview & Background o Detailed Specifications o Assumptions & Constraints o Terms and Conditions o Selection CriteriaProposal Evaluation and Vendor Selection The main objective of this phase is tominimize human emotion and political positioning in order to arrive at a decisionthat is in the best interest of the company. Be thorough in your investigation,seek input from all stakeholders and use the following methodology to lead theteam to a unified vendor selection decision: o Preliminary Review of All Vendor Proposals o Record Business Requirements and Vendor Requirements o Assign Importance Value for Each Requirement o Assign a Performance Value for Each Requirement o Calculate a Total Performance Score o Select a the Winning VendorContract Negotiation Strategies The final stage in the vendor selection process isdeveloping a contract negotiation strategy. Remember, you want to "partner"with your vendor and not "take them to the cleaners." Review your objectivesfor your contract negotiation and plan for the negotiations be covering thefollowing items: o List Rank Your Priorities Along With Alternatives o Know the Difference Between What You Need and What You Want o Know Your Bottom Line So You Know When to Walk Away o Define Any Time Constraints and Benchmarks o Confidentiality, non-compete, dispute resolution, changes in requirements o Do the Same for Your Vendor
  18. 18. Contract Negotiation StrategiesThe final stage in the vendor selection process is developing a contract negotiationstrategy. The worst contract negotiation objective is to bleed every last cent out of thevendor for the lowest price. Remember, you want to "partner" with your vendor so thatboth of you will meet your corporate goals and objectives by signing the contract.Successful contract negotiation means that both sides look for positives that benefitboth parties in every area while achieving a fair and equitable deal. A signed contractthat benefits both parties will provide a firm foundation to build a long lastingrelationship with your vendor. Objectives of Contract Negotiations The following contract negotiation objectives can be use to evaluate the contract on each of the following items: Explain clearly all essential prerequisites, terms and conditions Goods or services to be provided are unquestionably defined Compensation is clearly stated: Total cost, payment schedule, financing terms Acknowledgement of: Effective dates, completion/termination dates, renewal dates Identify and address potential risks and liabilities Define and set reasonable expectations for this relationship currently and into the futureStrategies for Planning Contract Negotiations List Rank Your Priorities Along With Alternatives As you develop your contract negotiation strategy, you may keep returning to this area to add additional items. You will not be able to negotiate effectively all areas of the contract at once. You want to be sure that what is most important to you is discussed and agreed upon before you move to less important items. In addition, you may want to refer to the least important items if you have to give up something to get your top items. Know the Difference Between What You Need and What You Want Review your priorities frequently throughout the contract negotiations planning process and one final time at the end. Be sure to ask the hard questions: "Is this really a priority for our company, or is it a nice to have?" "Was this priority a result of some internal political jockeying, or is it for real?"
  19. 19. Know Your Bottom Line So You Know When to Walk Away is there a cost orhourly fee that your company cannot exceed? Have you come to realize that oneor two of the top priorities are truly non-negotiable and you will be better towalk-away from this contract if the vendor does not agree to it? List these alongwith the rationale so they are not forgotten.Define Any Time Constraints and Benchmarks In any substantial project youwill want to set performance measurement standards that you will expect fromyour vendor. If these are essential to your business, then you will want negotiatea fair and equitable penalty when they are not meet. For example: projectcompletion dates, delivery date for first batch of parts, start date for the service,lead times, etc.Assess Potential Liabilities and Risks What is the potential for something to gowrong? What if unforeseen costs are encountered? Who will be responsible ifgovernment regulations are violated? Whose insurance will cover contractworkers? These are just a few of the more common questions that must beaddressed in any contract.Confidentiality, non-compete, dispute resolution, changes in requirementsThese are other items that could be a potential negotiation stumbling block ordeal closer. For example, if the vendors (or an employee) have the possibility ofbeing exposed to confidential information, you will want to be sure aconfidentiality clause is put into the contract with the liability assumed by thevendor.Do the Same for Your Vendor (i.e. Walk a Mile in Their Shoes) Now that youhave completed the contract negotiations planning process for your business,repeat the same process as if you were the vendor. What area do you think ismost important for them? What risks or liabilities will they want you to assume?Your list wont be perfect, but it will succeed in putting you into a frame of mindto look at things from their perspective. This is how great partnerships betweenclient and vendors are built.
  20. 20. PreparationBefore the actual contract negotiations begin, make sure the following items are reviewed andconfirmed: Determine If You Will Need Legal Counsel Negotiating a contract for one year of janitorial services in a small office is vastly different than negotiating a contract to outsource a fairly large call center. If you feel the least bit uncomfortable reviewing contract "legalese", do not hesitate to retain a lawyer specializing in contract negotiations. On-Site or Teleconference Agree upon where the negotiation session(s) will take place. If you think you have the upper-hand by negotiating at the vendors site, then propose up front that you will travel to them. If the distance is too far to travel cost effectively, set up a teleconference to accomplish the negotiation session. Make sure it is a video conference because body language speaks louder than words. Make Sure the Person Representing the Vendor Has Authority to Negotiate Before your people travel to the vendors site or the vendor travels to your site, make sure the person/people representing the vendor have the authority to negotiate on behalf of the vendors company. It would be a huge waste of time to hear at the end of a long negation session "Well, let me get back to you after I hear what my boss has to say about this."
  21. 21. PROBLEMS FACED BY CFCCFC is offering Annual maintenance Contract to houses in Navi Mumbai. They offer severalrange of services from Electrical Equipment to the Janitorial total seven trades with more than100 services. It is always been challenge that to decide between outsourcing or in-housevendors.The cost of services is very high. Other major issue is people currently working and servicingcustomer charges according to the financial status of the customer. There are no standardsabout the costing of services. These things are hurdle to outsource the operations.Services like plumbing, painting or electrical the labor rates changes according to the make andbrand of the material. Take an example of flooring if someone wants to make floor of simplekadappa the labor rates are very low, while if the material to be used is premier brand in thevitrified tiles then the labor rates are different.The service rates or labor rates are not only depending on the financial position of customerand materials used but also depend on the total amount of work and who is providing material.If customer is providing material then labor rates are little more that if the material ispurchased from vendor. Single point fixing in 4BHK flat is around Rs. 120/- while for 1BHK itsabove Rs.150/- per point.There are many other parameters which change the labor rates. Some vendors charges Rs.20/-per sFt for wall tiles where as others charges Rs.35/- the difference between two is the qualityof work. Vendors those charge less just scrubs the surface of the wall and then fix the tiles andthis is not the right method to do work.So finding the right vendor and negotiate on the charges is always a difficulty. Unless we don’tinspect his work we cannot guarantee the vendor is right to appoint for further work.
  22. 22. SOLUTIONSCategorized the services in two different types: Category A: Services that extensively used man force and material Electrician Janitorial Carpenter Paint These services need more than 3 people to work at site. These always take more than a weak to complete the work. Also the material used is very costly and normally the total cost goes in one lack and above. Frequency occurrence is very low not more than once a year. Category B: Services that used less manpower and material Plumbers Security Appliance Repairs These services need less than 2 people to complete the work. The work normally finished within a day. The material required is very less and not more than Rs5000/-.Now ‘category A’ services are less frequency occurrence and utilizes extensive manpower thebest way is to out-source these services. And make long term contract with the vendor.Negotiating for the lowest rates are possible as we can offer them bulk orders.‘Category B’ services occur frequently like appliance repairs, Plumbing. Out-sourcing will not bethe good idea as those vendors’ charges high visiting charges. Recruiting in-house vendors forfixed salary will save the cost of the customer and CFC.
  23. 23. CREATING QUALITY EVALUATION MATRIX FOR VENDORSAfter we create two different categories and appoint all vendors its very important now toevaluate their performance. We will use performance evaluation matrix based on differentcriteria and grade all our vendors.QUALITY EVALUATION started from the day we start interacting vendor. Considering the way hebehaves, his body language and communication skills.The Evaluation matrix is as follows. Communication Body Labor Quality Availability Customer Skill Language Charges Of on time. Satisfaction ServiceA:Weightage 0.08 0.07 0.20 0.25 0.15 0.25B:Marks Out Of 100 C=AXB TOTAL OF ALL “C”Quality Matrix is used to evaluate the performance and then to decide whether to continuewith vendor or remove him and find the better vendor.
  24. 24. Bibliographyhttp://www.supplychainmanagement.inhttp://en.wikipedia.org/wiki/Supply_chain_managementhttp://www.sap.com/solutions/business-suite/scm/index.epxhttp://www.indianmba.com/Faculty_Column/FC461/fc461.htmlhttp://logistics.about.com/http://www.wisegeek.com/what-is-supply-chain-management.htm

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