2.  A vendor is any person or company that sells goods
or services to someone else in the economic
production chain.
 Vendors or suppliers are given standing, status, or
title according to their attainment of some level of
performance, such as delivery, lead time, quality,
price, or some combination of variables.
 It may take the form of a hierarchical ranking from
poor to excellent and whatever rankings the firm
chooses to insert in between the two.

3.  For some firms, it may come in the form of some
sort of award system or as some variation of
certification.
 It is a direct result of the widespread implementation
of the just-in-time concept.

4.  To help the buyer in future selection
 To provide buyer with the information helpful
in subsequent negotiation
 To provide the buyer with the important
information which he can act upon any
corrective measure

5.  Helping minimize subjectivity in judgment and
make it possible to consider all relevant criteria in
assessing suppliers.
 Providing feedback from all areas in one package.
 Facilitating better communication with vendors.
 Providing overall control of the vendor base.
 Requiring specific action to correct identified
performance weaknesses.
 Establishing continuous review standards for
vendors, thus ensuring continuous improvement
of vendor performance.

6.  Inexperience with Products and Services
 Unfamiliarity With Corporate Operations
 Resistance Within Company
 Threat to Security

7.  Vendors are rated on the basis of various
characteristics:
 Time delivery
 Quality
 Price
 Others actors such as
1. Supplying useful market information
2. Meet emergency order

8.  Categorical plan:
 This is a very subjective method.
 Mangers from concerned department prepare list of
factors important from their views
 Each of the major supplier is evaluated against each
evaluator’s list of factors evaluation is done in the
terms of
1. Good
2. Satisfactory
3. poor

9.  Weighted point plan
 the buyer decides on
1. Factor important form evaluation
2. Weightages for each factor
3. The vendor performance in respect of each factor

10.  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 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
purchase

11.  The total delivery cost is Rs5000 and the total
purchases are Rs 1,00,000 then delivery cost ratio
will be
 5,000 / 1,00,000 x 100 = 10%