Vendor
Development
Prepared By :
Nirja Kolhe
Nirav Kapadia
Prabodh Jadhav
Yaseer Kagdi
Vendor Development
Vendor means a person (or company) who
sells and supplies his (or its) products.
Vendor Development is defined as any
activity that a Buying Firm undertakes to
improve a Vendors performance and
capabilities to meet the Buying Firms'
supply needs.
Questions Company needs to ask
themselves before attempting to
Develop Vendor
How much quantity is required to be purchased?
How much time is available for making such purchases?
Will the material be required repeatedly or occasionally?
What is the volume of purchase of the required material?
Which industry is producing the raw materials?
What is the commercial viability of the materials, or ability of
the product/service to compete effectively & to make profits ?
Based on the answers, a list of potential supplier
is drawn
For the purchase of items that are of repetitive
nature, a detailed evaluation procedure of
suppliers is adopted
For a one-time purchase, elaborate inquiries and
evaluation procedures may not be necessary,
unless the item is costly and has a high
technological content
Effective negotiations can avoid many difficulties
in regard to supplies
Supplier Evaluation Form
Factors Grading
1. Supplies as per Always Usually Seldom Never
quantity specified 9 8 6 5 3 2 0
7 4 1
2. Deliveries are as
per schedule
[Link] follow up
are not necessary
[Link] his raw
material problem on
his own
[Link] to
accommodate when
production schedules
are suddenly changed
5
Factors Grading
Always Usually Seldom Never
9 8 6 5 3 2 0
7 4 1
6. Helps in
emergency
7. Behavior is
courteous and
considerate
8. Reasonable
in Pricing
9.
Miscellaneous
Each supplier can be evaluated and a number-score can
be calculated as shown below.
Then, it is converted into word rating. The conversion of
scores is as follows:
Point Remark
80-100 Excellent
70-80 Good
60-70 Average
50-60 Very poor
7
Vendor Development Process
Strategy &
Planning
Recognizing Mapping and
the team measuring
Controlling Developing
the Process the Process
Achieving Implementing
Results the Process
Best Practices in Vendor Development
Creating dedicated supply developments teams
Focus on underline causes of long cycle times
Involving supplier in new product and process development
Providing on line training programs and offline education
programs to suppliers
Conducting frequent improvement focus seminars for suppliers
Creating supplier support centres at their location itself
Improving the suppliers supply chain system
Barriers to Vendor Development
Poor communication and feedback
Misguided improvement objectives
Credibility of vendor
Misconception regarding purchasing power
Lack of clarity and commitment
Lack of a unified approach
Misaligned sourcing and performance metrics
Concealment problems
Initiative fatigue
Resource limitations
"Blame the supplier" culture
Lack of trust Confidential issues
Imbalance of power in the relationship
Vendor Development Activities
Basic Vendor Moderate Vendor Advance Vendor
Development Development Development
Evaluation of suppliers Awarding and approval Involvement of
performance and of suppliers suppliers in buyers new
feedback to suppliers performance product development
Sourcing from limited improvements process
number of suppliers Visiting suppliers plant Training to suppliers
Parts standardization Collaboration with Intensive information
Supplier qualification supplier in materials exchange with
improvement suppliers
Supplier certification
Capgemini's 2014-2015 Global
CPO survey
Customer Responses
Almost 80% of the respondents state that improving the
quality is a current focus area
70% are currently focusing on contract compliance
within the business.
27% of the respondents realize that there are no controls
in place to monitor compliance.
Only 16% of the respondents have a corporate strategy
and process in place to manage supplier relationships
Current Trends in SRM/Vendor
Management
Future Of Procurement and
the role of
Supply Chain
1. Cloud technologies, mobile Example-Blendle provides a online
applications, social media, and big news platform where users can
data can be disruptive as well as a search and read articles from a
key differentiator for the supply variety of newspapers and pay per
chain article. Many customers cancelled
2. Companies are not only their subscriptions to newspapers
experimenting with last-mile
Differentiat
and switched to Blendle
delivery by drones, but also with Digital ed
applications for safety inspections, world customer
network connections or agricultural experience
purposes
1. Build up global know-how of Persistent Causes of sudden constraints in
Fight for
materials threat of the supply chain
resources
2. Develop alternative product Insecurity 1. political instability,
strategies 2. global security threats,
3. sourcing secondary raw 3. financial crisis and
materials and using renewable 4. environmental considerations
primary materials can.
4. Partnering with local suppliers in
the supply chain
Thank You!