The document discusses procurement decision making and vendor evaluation. It outlines the procurement cycle and key aspects of vendor evaluation including price, quality, delivery times, technical support, and financial stability. The benefits of vendor rating are also summarized, which include tracking vendor performance, providing feedback, comparing vendors, recognizing best suppliers, and rationalizing the supplier base.

1. Procurement Decision
By
Pankil Shah

3. Procurement Cycle
Determination of
requirements
Source
determination
Vendor selectionPO monitoring
Receipt of goods,
invoice & payment
processing

4. Vendor Evaluation
Underlying purpose behind Vendor Evaluation are:
(i) To reduce the risk and uncertainty associated with procurement
(ii) To maximize overall value to the organization
(iii) To build long-term relationship with suppliers

5. • Price
• Quality / Reliability of the product
• Technical support / After sales support
• Ability to meet delivery schedule / Delivery lead time
• Quality system at suppliers’ place/ quality policy /quality philosophy
• Technological capability / Innovation capability / R & D capability
• Breadth of product line / Ability of a supplier to supply a number of items
Different Criteria of Vendor evaluation:

6. • Sensitivity of suppliers to buyers’ requirements
• Willingness of suppliers to share information
• Existence of IT / Communication system
• Integrity of vendor/ Vendor’s image
• Financial capability of the supplier
• Business volume / Amount of past business
• Geographic proximity of suppliers

7. Vendor Rating’s Benefits
Tracking the performance of vendors
Providing feedback to the vendors
Comparison of vendors
Recognition of best performing supplier
To decide on ‘share of business’
To assign the ‘green channel’ supplier status
Rationalization of suppliers
Reverse marketing

8. Case study on
Vendor evaluation