Vendor management-SESSION 7 [Compatibility Mode]

8/7/2019 Vendor management-SESSION 7 [Compatibility Mode]

1/22

Vendor managementOut sourcin decision


2/22

Need to out-source The challenge of sourcing is to materialize the

value that will meet customer needs . This

requires decision on whether to make or buy .

Any retailer can either manufacture all goods in

their manufacturing units or source the

merchandise or service from some outside agency.


3/22

Need to out-source , cont ..

The decision on whether to make or buyshould be aimed to achieve a quality cost

com na on o va ue a max m zes o

customer benefits and company profits.


4/22

Need to out-source , cont ..

Dramatic changes in the business environment are

demanding flexibility and innovativeness .

and availability and maximizing cost . These often

can be achieved more effectively through external

network rather than internal arrangement .


5/22

Where to buy ???

If a retailer plans to buy instead of make , the

next question is from where to buy .


6/22

Criteria for Vendor Selection

Product type

Capacity

Cost

Countrys infrastructure Political conditions

Compliance Financially sound


7/22

Criteria for Vendor Selection , cont ..

Technically competent

Quality

Strong product development and design

capabilities .

Lead time .


8/22

Vendor Compliance Are the rules by which vendors will conduct

business with their customers . The rules are set

up by the buyer ,and vendor has to follow them.

Vendor compliance rules help companies to

streamline and standardize their internal

procedures for dealing with vendors


9/22

Vendor compliance documents Routing guide

This document explains how to ship merchandise to yourbuyer / trading partner .

Content :

W c carr er to use . Ship from and ship to point .

Location of ship to point ( Distribution centre or store )

Which stores are served by which distribution centre . Web site to be used for shipment scheduling .


10/22

EDI Mapping guidelines

Directs how inbound and outbound transactions willbe formatted .


11/22

Vendor Guidelines

This document covers all aspects aside from routing and edi mapping

Content :

o General vendor performance guidelines .

o Item , carton and pallet barcode lable specifications .

o Hanger , tag , polybag specifications .

o Trading partner contact information .

o Set up and testing documentation and procedures .

o Value added network and mailbox information .

o Logistical requirements .

o Product quality specs .

o Service standards .


12/22


13/22

VCC Includes ..

Compliance with laws

Environment

Labour

a) Child labour

b) Contract labour requirements

c) Discrimination


14/22

d. Forced labour

e. Humane treatment

f. Wa es and benefits

g. Working hours

Working conditions

Occupational health and safety


15/22

In case vendor does not comply with the above

, it can lead to ..

Cancellation of orders

Termination of business relationship

Legal action


16/22

Vendor Development

Need for vendor development :

Spread the risk

To ensure vendor is constantly upgraded as per

the latest technology and know how .


17/22

Ways of vendor development Providing technical expertise.

Help in getting the vendor compliance as per requirement .

Helps in establishing R&D cell .

May provide some capital for equipment , working capital etc .

Guarantee a certain amount of business .

Provide education and training to agents , vendors and factory

management .

Making them understand the expectations .


18/22

Vendor evaluation

Vendor evaluation can be defined as a permanent

and objective monitoring and evaluation process

of a vendors performance regarding specific

criteria as quality or timeliness .

The main objective of any vendor evaluation is to

ensure a companys product and service quality is

maintained at all times.


19/22

Vendor evaluation , cont ..Constantly monitor the working of the vendor

Keep taking feedback from the market .

Make visits to the vendors manufacturing units

Do record checks

Keep asking for new areas developed

Check vendor rating

Monitor compliance follow up .


20/22

Audit suppliers to test compliance :

Payroll and documentation review .

Health and safety inspection .

Confidential worker interview .

De brief with factory management .

Conduct interviews with factory management .

Conduct private interviews with factory workers .


21/22

Vendor Management

Vendor management is the process of

constantly monitoring and working along with

e ven or o ensure a smoo wor ng re a onbetween the buyer and vendor .


22/22

Points covered under vendormanagement

Vendor Rating

Setting guidelines for vendor selection

.

Setting vendor compliance

Vendor Selection

Vendor Development

Vendor Evaluation

Documents

Vendor management-SESSION 7 [Compatibility Mode]