Vendor Rating

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Summary
Vendor Rating

What is Vendor Rating? Meaning.

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.

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Tips on Supplier Evaluation
Beyond the 4 purchasing categories described by Kraljic, how do I go about evaluating suppliers? What are the main steps (...)
5
 
1 comments
Objective Vendor Evaluation and Appraisal
Whenever vendor evaluation has been done by any organization, the results should be captured in key performance indicat (...)
5
 
Gradually Evaluate Suppliers
There are many suppliers in our company. When we were audited by a certification body, the auditor recommended to gradua (...)
4
 
1 comments
Vendor Rating needs Benchmark
Vendor ratings are important but they are only practical if a benchmark is available. The availability of the benchmark (...)
3
 
Vendor Rating Usages
Any organization who carries out any activities to meet customer requirements expects information on his performance. Ve (...)
2
 
🔥 NEW 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 (...)
1
 
Supplier Relationship Management
Cultivate a good relationship with suppliers so that they can contribute to the improvement of quality.
Supplier re (...)
0
 

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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. (...)
11
 
4 comments

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 (...)
8
 
11 comments

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 perform (...)
5
 
3 comments

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Supplier Evaluation and Selection. Process and Methods

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

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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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