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
3.Rigorous follow up
are not necessary
4.Solves his raw
material problem on
his own
5.Willing 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
applications, social media, and big
data can be disruptive as well as a
key differentiator for the supply
chain
2. Companies are not only
experimenting with last-mile
delivery by drones, but also with
applications for safety inspections,
network connections or agricultural
purposes
Example-Blendle provides a online
news platform where users can
search and read articles from a
variety of newspapers and pay per
article. Many customers cancelled
their subscriptions to newspapers
Differentiat
and switched to Blendle
Digital ed
world customer
experience

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!