Vendor rating: The evaluation of supplier or vendor rating provides valuable information which help in improving the quality of the decision. In the vendor rating three basic aspects are considered namely quality, service and price

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The Development Project Committee of the National Association of Purchasing Agents (U.S.A.) has suggested following methods for evaluating the performance of past suppliers.   

1. The categorical plan: Under this method the members of the buying staff related with the supplier like receiving section, quality control department, manufacturing department etc., are required to assess the performance of each supplier. The rating sheets are provided with the record of the supplier, their product and the list of factors for the evaluation purposes. The members of the buying staff are required to assign the plus or minus notations against each factor.

2. The weighted-point method: The weighted-point method provides the quantitative data for each factor of evaluation. The weights are assigned to each factor of evaluation according to the need of the organization, e.g., a company decides the three factors to be considered—quality, price and timely delivery. It assigns the relative weight to each of these factors as under:

Quality ……… 50 points

Price ……… 30 points

Timely delivery ……… 20 points

3. Critical incidents method: Record of events related to buyer vendor relationships is maintained in each vendor’s file. They reflect positive and negative aspect of actual performance. This kind of documentation useful in discussing ways and means of improving performance, acknowledging the existence of good relationships, determining the competence of a vendor, and if necessary considering termination

4. The cost-ratio plan: Under this method, the vendor rating is done on the basis of various costs incurred for procuring the materials from various suppliers. The cost-ratios are ascertained delivery etc. 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 purchases.

5. Checklist system: A simple checklist is used to evaluate the vendors. Check list may be something like Reliability, technical capability, after sales service, availability, buying convenience etc

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