- Supplier rating
A Supplier rating (or vendor rating as it sometimes referred) is a
business term used to describe the process of measuring an organization's supplier capabilities and performance.Supplier rating often forms part of an organization's
supplier relationship management program. Such systems can vary in the criteria that are assessed; this broadly falls into quantative and qualative types [What Every Engineer Should Know About Quality Control By Thomas Pyzdek] can be used as when undertaking vendor rating, the process varies from one organization to another – common criteria often include:#
Quality – for example number of not right first-time deliveries
#Delivery Schedule Adherence
# Cost/Price
# Capability
# ServiceResults of each variable are then weighted into a final score – usually a percentage, allowing suppliers to be ranked.
Supplier rating is an ongoing activity [Purchasing Performance: Measuring, Marketing, and Selling the Purchasing Function By Derek Roylance] ; suppliers are often assessed continuously or periodically (i.e. assessing the last year's trading). Various criteria can be analyzed within supplier rating systems – a common approach is to utilise Cost Quality and Delivery measures and apply weighting against criteria in accordance with company requirements [ [http://supplychainmechanic.com/?p=29 Example supplier rating systems supplychainmechanic.com] ]
Organizations then often band suppliers according to results which may commonly be used to highlight poor performing suppliers so that they can be removed from use. Supplier rating results may also trigger improvement programs on suppliers that score low. Trend analysis is often applied to supplier rating which allows organizations to monitor changes in supplier performance over time. [ What Every Engineer Should Know About Quality Control By Thomas Pyzdek] . Both suppliers and buyers should utilise supplier ratings system to drive performance and improve the business relationship. [http://www.adm.monash.edu.au/procserv/purchasing/cips-appraising-suppliers.pdf CIPS appraising suppliers] .
Problems with vendor rating
Effective supplier rating requires a consistent and objective approach - where rating criteria are open to interpretation inaccuracy can be introduced. This is especially true where
subjective criticism from buyers is introduced into the rating process. It must be remembered that past history is not always a guide to future performance [ The Gower Handbook of Management By Dennis Lock, Gower Publishing Company] and that suppliers should be consulted as part of the assesment.References
Further reading
Corporate homepages publicising example supplier rating programmes.
[https://raysrs.raytheon.com/srsrc/rc/web/srsrcMain.jsp Raytheon Supplier rating homepage] [http://www.borealisgroup.com/public/about/supplying_us/supplier_rating.html Borealisgroup Supplier rating program]
External links
[http://office.microsoft.com/en-us/templates/TC300007341033.aspx Supplier Comparison Chart - Easy to use tool for suplier rating and evaluation]
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