VENDOR DEVELOPMENT

Department of Pharmaceutics MCOPS, Manipal University

Presented by : Shikha singh160617009

Under the guidance of :Dr . Mahalaxmi Rathanand

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

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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 of suppliers &

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• Source• Time• Service• Place

7 Rights

10 Rating parameters

Quality performances

Delivery performance

Price 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 ways1. ADHERENCE TO TIME SCHEDULE It can be calculated by following formula(No. of deliveries made in time/Total no of scheduled deliveries) weightage2. ADHERENCE TO QUANTITY SCHEDULEIt 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

14Factor weightage

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 Price performance = (Minimum price offered / Vendor

price)10

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 evaluator’s 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 received2. Promptness of deliveries made3. Quality of service given by vendor

Buyers decides on:1. Factor important form evaluation2. Weightages for each factor3. 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

22• Vendor will be included in the temporary approved

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 LISTInitial 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 contains1.Material ID number2.Vendors name3.Contract number4.Vendor class5.Material description 6.Vendor certificate ID 7.Product supplied by vendor8.Last audit date9.Specification approved such as date of approval

by QA, QC & production department

VENDOR CERTIFICATION

Vendor certification is a supplier-customer partnership & can only be successful with the full involvement & agreement of both partners

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Forms of certificatio

n

Certificate of test

Certificate of

compliance

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 vendor contract

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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