VENDOR DEVELOPMENT

Department of Pharmaceutics
MCOPS, Manipal University

Presented by : Under the guidance of :

Dr . Mahalaxmi Rathanand
Shikha singh
160617009
2 CONTENT
INTRODUCTION
VENDOR DEVELOPMENT
VENDOR EVALUATION
VENDOR RATING
PROCEDURE
APPROVED VENDOR LIST
VENDOR CERTIFICATION
CONCLUSION
REFERENCES
3 INTRODUCTION

VENDOR:
Vendor means a person who sells & supplies his
products
An intelligent purchasing involves the rational
selection of sources from which materials can
be obtained
Efforts are needed in identifying, developing
and evaluating the prospective suppliers
Essential to continuously appraise the
performance of the current suppliers
4 VENDOR DEVELOPMENT

Process of development of the most economical ,efficient

& willing source to continually serve the industry
Essential for buying of material in right quantity of right
quality at right price from right source at right time and
place
5 Why we need vendor
development?
To provide a system to valuate suppliers to
supply materials such as raw & packing
conforming to specified requirement
To make sure the vendors understand tasks
which they must be completed & verify and
their completion deadlines are reflected
accurately on the project schedule
To interview the prospective key personnel both
the integrator and the manufacturer
6 VENDOR EVALUATION

One of the most important processes performed

in organizations today is the evaluation,
selection & continuous measurement of
suppliers
Criteria's are fundamental to choose the best
supplier
The evaluation is done especially on two counts,
namely quality and delivery
The purpose of vendor evaluation is to ensure a
portfolio of best in class suppliers is available
for use
7

Based on the information obtained via the

evaluation, a supplier is scored & either
approved/unapproved as one from whom to
procure materials or services
ASL- qualified supplier is then added
Approved vendor- re-evaluated periodically or
annually
Suppliers are selected according to their ability
to supply quality goods
AVL- listing of various types ofsuppliers &
providers that a company has agreed meets its
standards in terms of quality and price
8 VENDOR RATING

Vendors or suppliers are given standing, status,

or title according to their attainment of some
level of performance
It may take the form of a hierarchical ranking
from poor to excellent
Increased
outsourcing

Need for
effectiveness

Strategy for
improvement
9 How vendors are rated?

Quantity
Quality
Price

7 Rights
Source
Time
Service
Place
10
Rating
parameters

Quality Delivery Price

performances performance performance

Time
schedule

Quantity
schedule
11 Quality performance
It is the measure of material not in conformance
with given specifications
A supplier can be judged for quality performance
from the view point of rejected lots
This takes into account the no. of defects as well
as seriousness of defects
Ex: If a supplier has supplied 100 pieces and 10
pieces are rejected from the lot, he has rating of
90%.
(Number of lots accepted/Number of lots
supplied)100 = weightage
(90/100) 100= 90%
12 Delivery performance
It measures the promptness of vendor in keeping
schedules of delivery, removing of rejected materials
and nature of response to other activities
Delivery performance thus can be made into 2 ways
1. ADHERENCE TO TIME SCHEDULE
It can be calculated by following formula
(No. of deliveries made in time/Total no of scheduled
deliveries) weightage
2. ADHERENCE TO QUANTITY SCHEDULE
It can be measured by the following formula
(Quantity supplied/Scheduled delivery) weightage
13 Price performance

It is another very important criteria for

evaluating a vendor

It is a measure of price differential for the same

product supplied by the different vendors

It can be evaluated as
(Minimum price offered/vendor price) weightage
 Factor weightage
14

Quality 70

Service 20

Price 10

For example, assume that 160 lots were received during a

year & 16 lots were rejected on account of poor quality
Quality rating = (No. of lots accepted/No. of lots
supplied)70
Quality rating = (144/160)70 = 63
Adherence to time schedule
(No. of deliveries made in time/ Total no of scheduled
deliveries)20
Adherence to quantity schedule
(Quantity supplied / Scheduled delivery)20
15 Methods for vendor rating

Categorical plan:
Very subjective method
Managers from concerned department prepare
list of factors important from their views
Each of the major supplier is evaluated against
each evaluators list of factors evaluation is
done in the terms of
1. Good
2. Satisfactory
3. Poor
16 Categorical plan
POINTS REMARKS

80-100 Excellent

70-80 Very good

60-70 Good

50-60 Average

40-50 Very poor

17 Weighted point plan

Based on:
1. Quality of goods received
2. Promptness of deliveries made
3. Quality of service given by vendor

Buyers decides on:

1. Factor important form evaluation
2. Weightages for each factor
3. The vendor performance in respect of each factor
18 Cost ratio plan

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
19 Cost ratio plan

The cost ratio is calculated in percentage on the

basis of total individual cost & total value of
purchase
Example

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%

20 PROCEDURE FOR VENDOR
DEVELOPMENT

Source selection of vendor

Request for quotations

Receipt and analysis of quotations

Evaluation of vendor

Evaluation by QA department
21 Evaluation by QA department

Samples from 3 consecutive batches/lots of API

. should be procure sample along with COA

QA should analyze the samples

.

Analytical report along with the comments of QA

. department shall be send to purchase department
 Vendor will be included in the temporary approved
22 vendor list if sample meet the specification

List is entered manually & approved by QA & QC

head till the list is amended

Purchase department after studying the comment

from QA shall inform the supplier for supply

Purchase department shall carefully study the

quality aspect & also quantity and financial
aspects of the vendor

Vendor approved by the product license holder

will be listed separately
23 APPROVED VENDOR LIST
Initial sample evaluation &
approval of initial supply

Vendor is audited by
manufacturing, engineering,
QC, purchase department

Audit that the vendor is

following GMP requirements

Vendee is satisfied with

vendor performance

Responsibility of the
purchasing department to
keep the approved vendor
list maintained
24 Approved vendor list contains
1.Material ID number
2.Vendors name
3.Contract number
4.Vendor class
5.Material description
6.Vendor certificate ID
7.Product supplied by vendor
8.Last audit date
9.Specification approved such as date of approval
by QA, QC & production department
25 VENDOR CERTIFICATION

Vendor certification is a supplier-customer

partnership & can only be successful with the
full involvement & agreement of both partners

Forms of
certificatio
n

Certificate
Certificate of
of test complianc
e
26 Certificate of test:- This document, issued by a
test laboratory, states that certain product was
tested for certain qualities the product is
identified by description, amount, lot no. etc
Certificate of compliance:- This is an assertation
the product complies to specification. This
certifies that the material delivered under this
contract is in accord with the terms of the
contract
In some companies the formalising of this act
includes sending the vendors a document, that
is a certificate to attest to the fact that the
vendor as reached the state of qualification
described in the document
To designate the process used in formalising a
27 CONCLUSION

It is important to have a good vendor development

plan in a company
Vendor approval, vendor rating should be carried
out periodically & if need arises, companies should
change the vendors and approve vendors who can
serve the company in a better way
It is equally important to have a good vendor-
vendee relations which helps companies to procure
materials at right time in right quantity and at right
place
28 REFERENCES

1.Khanna O.P, Industrial Engineering and

Management, Revised 1st edition, pg: 23.9-23.11
2.Datta A.K, materials management procedures,
text and cases, 2nd edition, pg: 88-104
3.Amrine Harold T., Ritchey john a, Hulley Oliver s,
Manufacturing Organization and Management,
4th edition, pg:250-253
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