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Vendor Rating
A vendor is any person or company that supplies raw

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materials/parts, goods or services to the buyer organizations.
The effectiveness of the purchasing department is judged by
the quality and reliability of its suppliers.
Vendors or suppliers are rated on the basis of their
performance, consistency in delivery, lead time, quality
products and services, price or some combination of these
variables
Vendor Rating

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Rating evaluation is done on a periodic basis and it
may take the form of a hierarchical ranking from poor
to excellent.
Assessment of vendor’s performance on certain criteria
is called vendor rating. Vendor rating is the result of a
formal vendor evaluation system.
Vendor Rating - Objectives
 Selection of Right Suppliers

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It helps the buyer organizations in the selection of right suppliers.
 Rating Assessment of Suppliers
It rates the entire performance of the suppliers and gives a clear-
cut vision about the quality, cost, reliability of the products and
services to be provided by the suppliers.
 Negotiation with Suppliers
It provides buyer organizations with the information helpful in
subsequent negotiation with suppliers.
Vendor Rating

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 Proper Feedback
It gives a feedback to suppliers to further improve their
performances.
 Useful Information
It provides the buyer organisations with the important information
which is helpful in the development of the suppliers.
 Reward
It recognizes and rewards outstanding suppliers.
 Standardised Practices
It generates suppliers’ standard practices
Process improvement: Kaizen

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• Japanese Word for gradual and orderly continuous
improvement over a long period of time with minimum
financial investment, and with participation by everyone in
the organization.
• Three things required for successful kaizen program:
operating practices, total involvement, and training.
• Operating practices expose opportunities for improvement.
JIT reveals waste and inefficiency as well as poor quality.
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Process improvement: Kaizen
• Every employee strives for improvement.

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• Top management views improvement as part of strategy.
Middle management implement top management’s
improvement goals by improving cooperation amongst
departments, and by making employees conscious of their
responsibilities for improvement
• Workers engage through suggestions, small group activity
etc.
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 Kaizen: Implementation - PDSA Cycle

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• - The Deming cycle: Originally developed by Walter Shewart, but
renamed in 1950s because Deming promoted it extensively.
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Kaizen: Implementation - PDSA Cycle

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• Plan – Study the current system; identifying problems; testing
theories of causes; and developing solutions.
• Do – Plan is implemented on a trial basis. Data collected and
documented.
• Study – Determine whether the trial plan is working correctly
by evaluating the results.
• Act – Improvements are standardized and final plan is
implemented.
• Variation of PDSA cycle: FADE – Focus, Analyze, Develop,
Execute cycle!
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Kaizen: Implementation - PDSA Cycle

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There are four stages to a PDSA cycle:
Step 1: Plan - Plan the test or observation
 State the objective
 Make predictions about what will happen and why
 Develop a plan to test the change. (Who? What? When? Where?)
Step 2: Do - Try out the test on a small scale
 Carry out the test
 Document problems and unexpected observations
 Begin analysis of the data
Kaizen: Implementation - PDSA Cycle

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Step 3: Study - Set aside time to analyze the data and study
the results
 Complete the analysis of the data
 Compare the data to your predictions
 Summarize and reflect on what was learned
Step 4: Act - Refine the change, based on what was learnt
from the test
 Determine what modifications should be made
 Prepare a plan for the next test
Features of KAIZEN

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1. Value-added and non-value added activities.
2. Muda-seven classes of waste-Overproduction, delay,
transportation, processing, inventory, wasted motion, and
defective parts.
3. Principles of motion study and use of cell technology
4. Principles of material handling and single piece flow
5. Documentation of standard operating procedures
6. Five ‘S’ for workplace
Five ‘S’
JAPANESE ENGLISH MEANING

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TERM EQUIVALENT
SEIRI Tidiness Cleaning – Throw away all rubbish unrelated
materials in the work place
SEITON Orderliness Arranging - Set everything in proper place for
quick retrieval and storage
SEISO Cleanliness Sweeping – Clean the work place, every thing
without fail
SEIKETSU Standardization Maintaining Cleanliness – Standardizing the way
of maintaining cleanliness
SHISUKE Discipline Self Discipline – Practice ‘5S’ daily. Make it a
way or life. This also means commitment.
 Five ‘S’

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Objectives of Five ‘S’

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· To create a neat and clean work place
· To create systemize day to day working
· To improve work efficiency
· To standardize work practice
· To improve work discipline
· To improve the quality of work and products
Additional process improvement
tools

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Kaizen blitz
• An intense and rapid improvement process in which a team or
a department throws all its resources into an improvement
project over a short period of time.
• Short time “burst” rather than long range simmer- hence the
name.
• Blitz teams usually comprise of employees from all areas
involved in the process who understand it and can implement
the changes on the spot.
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Additional process improvement
tools

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Poka-Yoke (Mistake proofing)
• Approach for mistake-proofing processes using automatic
devises or methods to avoid simple human error.
• Developed and refined in the 1960s by the late Shigeo Shingo
• Focused on two aspects:
1. Prediction – Recognizing that a defect is about to occur and
provide a warning.
2. Detection – Recognizing that a defect has occurred and stop
the process.
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Quality circles

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• Teams of workers and supervisors that meet regularly to
address work-related problems involving quality and
productivity.
• Developed by Kaoru Ishikawa at University of Tokyo.
• Became immediately popular in Japan as well as USA.
• Typically small day-to-day problems are given to quality
circles. Since workers are most familiar with the routine tasks,
they are asked to identify, analyze and solve quality problems
in the routine processes.
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