The document discusses vendor selection and rating. Vendors are companies that sell goods or services and are part of the supply chain. Vendor selection is an important purchasing decision made based on factors like price, quality, delivery, production facilities, financial position, and performance history. Vendor rating evaluates and approves potential vendors through a quantitative assessment of their performance in areas such as delivery, quality, and price. There are three main methods for vendor rating: the categorical method which uses subjective evaluations, the weighted point method which allocates points based on factors, and the cost ratio method which calculates ratios based on procurement costs.

1. VENDOR SELECTION AND
RATING
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2. VENDOR /SUPPLIER
 Person/Company that sells goods or services to
someone else in the economic production chain.
ie:who sells and supplies products.
 Vendors are a part of suppy chain.
 Comes from French verb vendre-means to sell
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3. VENDOR SELECTION
 Important decision in purchasing
 Vendor selection is made based on factors such as:
 Price,Quality ,Delivery
 Production Facilities
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4.  Financial position of the vendor.
 Performance history,Warranties & Claim policies.
 Geographical Location.
 Repair service,Labour relationsRecord.
 Reputation and Position in Industry etc.
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5. VENDOR RATING
 Process of evaluating and approving potential vendor
by quantitative assessment.
 For determining Supplier’s performance.
 May take the form of a hierarchical ranking from
poor to excellent.
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6.  Helps in providing feedback to suppliers with low
rating
 Encourage improvement in their performance
Vendors are rated on the basis of various
characteristics:
 Delivery
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7.  Quality
 Price
 Others actors such as
1. Supplying useful market information
2. Meet emergency order
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8. METHODS OF VENDOR RATING
A few ways by which a vendor can be evaluated are
listed below:-
 1) Categorical method
 2) Weighted point method
 3) Cost ratio method
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9. 1.CATEGORICAL PLAN
This is a very subjective method.
Buyer makes out a list of factors important from
their view.
At periodic intervals, say once in three- months ,
prepares a performance report.
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10. Each of the major supplier is evaluated against each
evaluator’s list of factors .
Evaluation is done in the terms of
1. Good
2. Satisfactory
3. Poor
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11. 2.WEIGHTED POINT PLAN
 Uses a point rating basis on the quality of goods
received
 the promptness of deliveries made & quality of the
service rendered by the vendor.
 Points can be allocated as
eg: Quality :50 points
Price :30 points
Delivery :20 points
Total :100 points
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12. 3.COST RATIO PLAN
Vendor rating is done on the basis of various costs
incurred for procuring the materials from various
suppliers.
The cost ratios are ascertained for the different rating
variables such as quality, price, timely delivery etc.
The cost ratio is calculated in percentage on the basis
of total individual cost and total value of purchase.
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