VENDOR RATING SYSTEM

Presented by:
PRADEEP GUPTA
09PR001014B023
INTRODUCTION
 Also known as “Performance Monitoring System”.

 The performance appraisal which is & should be done by

the buyer as a continuous monitoring exercise for the
vendors who are already on the regular list for supply is
termed as ‘vendor rating system’.
CHARACTERISTICS ON THE BASIS OF
WHICH VENDOR RATING IS DONE

 Delivery (to deliver on time as per order).

 Quality (to deliver as per the quality specifications).

 Price (to supply the materials at as low a price as

possible).
 Other factors :

 Capability to meet emergency orders.

 Help in various other aspects.

HOW VENDOR RATING IS DONE?
 Assign weightage to the various characteristics

 Measure the performance of vendors periodically on the

basis of certain norms or standards.

 Total of vendor’s performance is calculated.

EXAMPLE SERVICES BASED COMPANY
 Gives 40% weightage to delivery on time,
 45% to quality

 15% price performance of the vendor.

Services provided last month:

Made 37 deliveries on time out of 40 orders,
No. of service free/rejects: 2
Price Rs.97.5 when to market price Rs.100
calculate the rating of the vendor.
SOLUTION
 (40/100)*(37/40)*100 = 37.00 points
 (45/100)*(35/37)*100 = 42.50 points
 (15/100)*(97.5/100)*100 = 14.50 points

Total Rating = 94.00 points

ADVANTAGES OF VENDOR RATING
SYSTEM
 Assess the overall performance.

 Comparison of different vendors can be made.

 Provides better flexibility to the buyer.

 More detailed & better evaluation of different vendors

can be done.
ADVANTAGES OF VENDOR RATING
SYSTEM
 Problem areas can be pin-pointed & rectified.

 Beneficial for suppliers also.

 Based on fact not on opinion.

 Reveals shortcomings.

 Helps in further improvement.

THANK YOU