Vendor Rating

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Description of Vendor Rating. Explanation.

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Vendor Rating

Definition Vendor Rating. Description.


Vendor Rating (also called: supplier rating) is a system used by buying organizations or industry analysts to record, analyze, rank and report the performance of a supplier in terms of a range of predefined criteria, which may include such things as:

  • Quality of the product or service

  • Delivery performance and reliability

  • Cost, price

  • Capabilities

  • Service

  • Financial continuity of the firm

The method includes defining the criteria and the weight each criterion receives in the overall result, development of the questions and questionnaires, actually carrying out the measurements, and finally interpreting the results. If vendor ratings are carried out periodically or even ongoing, the results (per vendor) can be analyzed and compared over time.


Benefits of Vendor Rating

  • Clear and objective overview of performance of suppliers

  • Enables better vendor management

  • Incidents and escalations can be monitored earlier

  • Suppliers are stimulated to improve their performance

  • In the case of periodical vendor rating: analyze trends in vendor performance

Objective and Subjective Vendor Rating

Broadly 2 types of supplier rating can be distinguished:

  • Objective vendor rating (based on lead times, costs, number of service calls, etc.)
  • Subjective vendor rating (based on opinions, experiences and perceptions about suppliers)

Supplier Rating, Assessment, Evaluation and Ranking

These terms are all closely related and similar, but:

  • Vendor Evaluation
    • Is a process carried out after the product is delivered or the service is rendered.
    • Can indicate a continuous process of measurement, usually comprehensive.
  • Vendor Rating
    • Can be used before or after order fulfillment.
    • Is usually used with reference to a scale.
    • Is an approach of comparing various or multiple vendors.
  • Vendor Assessment
    • Usually indicates a one-time process.
    • Typically used for one particular vendor.

  • Vendor Ranking is the end result of the above processes.
Vendor Rating Forum
  Vendor Rating versus Vendor Evaluation
In the summary of Vendor Rating I see that:
Vendor Evaluation
- Is a process carried out after the product is delivered or the service is rendered.
- Can indicate a continuous process of measurement, usually comprehensive.

...
     
 
  Supplier Relationship Management
Cultivate a good relationship with suppliers so that they can contribute to the improvement of quality.
Supplier relationship management is important to the company's quality programs. The suppliers should be trained so that they know the changi...
     
 
  Tips on Supplier Evaluation
Beyond the 4 purchasing categories described by Kraljic, how do I go about evaluating suppliers? What are the main steps and what are the pitfalls that should be avoided?...
     
 
  Gradually Evaluate Suppliers
There are many suppliers in our company. When we were audited by a certification body, the auditor recommended to gradually evaluate suppliers. He got it as a observation finding. Therefore, how to evaluate the suppliers gradually? Any suggestion?...
     
 
  Objective Vendor Evaluation and Appraisal
Whenever vendor evaluation has been done by any organization, the results should be captured in key performance indicators within a specified period of time. Without this, a lot of subjectivity will still find its way into the whole process....
     
 
  Vendor Rating must be Fair
Vendor rating needs a system which is fair between vendors. We should ask ourself what is the priority? Price or performance? It is difficult to get the lowest price with the best performance/quality....
     
 
  Disadvantages of Vendor Rating; Where it is Difficult to Use
When limited sourcing (very few or only 1 supplier) is available, the use of the vendor rating is counter productive....
     
 
  Vendor Rating Usages
Any organization who carries out any activities to meet customer requirements expects information on his performance. Vendor rating meets this with respect to the supplier performance. Supplier improvement can be measured and monitored and rewarded o...
     
 
  Vendor Rating needs Benchmark
Vendor ratings are important but they are only practical if a benchmark is available. The availability of the benchmark itself can make a marked difference in the output quality of vendors. Also of equal critical importance is co-ordinated vendor dev...
     
 
  Vendor Rating for New, Potential Vendor
I'd like to understand how should one can create a first vendor rating procedure for new suppliers (not yet present into the supplier list). It should be useful to use not only financial KPI (debtness ratio, turnover, cash to cash cycle, etc..), but ...
     
 

Vendor Rating Special Interest Group


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Best Practices - Vendor Rating Premium

Expert Tips - Vendor Rating Premium

Resources - Vendor Rating Premium

Supplier Evaluation and Selection. Process and Methods

Presentation about supplier (vendor) selection, includes following sections:
1. Importance of Supplier Selection
2. Supplier Selection Proce...
Usage (application): Vendor Rating, Supplier Selction
 
 

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Compare with: Kraljic Model  |  Vendor Managed Inventory  |  IC Rating  |  Credit Rating  |  Behaviorally Anchored Rating  |  Corporate Governance Rating

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