Vendor Selection And Interaction


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Vendor Selection And Interaction

  2. 2. COOPERATIVE RELATIONSHIP WITH VENDOR - 1 <ul><li>A vendor should be included in the vendor list after careful considerations, so that materials are received in time at competitive prices without any problem, contractual or legal. </li></ul><ul><li>A cooperative relationship with the vendor is very essential. </li></ul>
  3. 3. COOPERATIVE RELATIONSHIP WITH VENDOR - 2 <ul><li>It is true that buyer is in a better position as compared to the seller, because the former gives business to the later. But it is also true that seller is also very important to the buyer, as it provides him the right material and services at reasonable price. </li></ul><ul><li>In case of an emergency, a good vendor always comes forward to help the buyer and ensures that the buyer’s requirements are met with in time to meet any changes in his production schedule or to meet the sudden market demand on him. </li></ul>
  4. 4. CRITERION FOR SELECTION OF VENDORS - 1 <ul><li>Vendor’s product range. </li></ul><ul><li>Technical competence of the vendor. </li></ul><ul><li>Financial health. </li></ul><ul><li>Location of the vendor. The location of the head office, regional office and distribution network. </li></ul><ul><li>Location of service center of the vendor. </li></ul><ul><li>If the vendor’s operations dedicated to the industrial sector of the buyer. For example, a cement plant would prefer to deal with the vendors who are specialized with the materials for cement industry. </li></ul>
  5. 5. CRITERION FOR SELECTION OF VENDORS - 2 <ul><li>If the vendor is single unit or multi-unit organization. </li></ul><ul><li>If the vendor has interest in a number of industrial sectors? If so, how important are his interests in other industrial sectors in comparison to the industrial sector of the buyer? </li></ul><ul><li>What is the market reputation of the vendor? </li></ul><ul><li>What is the size of vendor’s operations in terms of assets, turn over, sales and number of employees etc. </li></ul><ul><li>Type of technical support provided by the vendor. </li></ul>
  6. 6. CRITERION FOR SELECTION OF VENDORS - 3 <ul><li>Research and development facilities available in vendor’s organization. </li></ul><ul><li>If the vendor is connected on-line through computer. </li></ul><ul><li>If the representative of the vendor makes regular visits to interact with the buyer or the representative visits only when called. </li></ul><ul><li>How is the pricing of his products as compared to others? </li></ul>
  7. 7. VENDOR LIST <ul><li>A list of vendors containing details of name, address, telephone number, fax, E-mail address, currency code, product range and payment terms and duly approved by the management is known as vendor list. </li></ul><ul><li>Vendor list can be based on group of items. Examples are suppliers of electrical items, pumps, air conditioners, washing machines. </li></ul><ul><li>It can be separately for local vendor or foreign vendor. </li></ul><ul><li>It can be separate for each country like for USA, UK, & JAPAN. </li></ul><ul><li>The vendors could be formally registered. </li></ul><ul><li>Vendors in the list are qualified vendor for future dealings. </li></ul>
  8. 8. PURPOSE OF MAINTAINING VENDOR LIST <ul><li>Have an approved group of bidders for solicitation purposes. </li></ul><ul><li>Increase competition during the bid process creates problems. </li></ul><ul><li>Enable the company to anticipate satisfactory performance from all potential vendors. </li></ul><ul><li>Black listed vendors are eliminated. </li></ul>
  9. 9. OPERATION OF VENDOR LIST - 1 <ul><li>A balanced number of vendors should be selected based on the nature of items to be procured. </li></ul><ul><li>Different vendors should be included at different times by rotation. </li></ul><ul><li>Vendor of the last purchase order for the same item should normally be included in the list to get competitive offers. </li></ul><ul><li>In special cases, such as procurement of raw materials or purchase of items involving very high value or items of critical nature, prior approval of Purchasing Manager or any other competent authority should be obtained about the names of the vendors, to whom inquiries are to be sent. </li></ul>