VENDOR MANAGEMENT IN FACTORIES

Abstract

PROCEDURE FOR SUPPLIER DEVELOPMENT The Vendor Development Process is carried out by the Purchase Department in close consultation with User Three Department 1) R&D 2) Material Testing 3) QA Department. First Step: - VENDOR REGISTRATION • Any vendor i.e., manufacturer/ authorized agents/distributors of the manufacturer /service providers and firms undertaking job works can be registered the Vendor Development Protocol. To register, the vendor should have GST registration (if applicable). The vendor must maintain an office/ shop/ show room registered in its own name, and should have a bank account wherein payments can be sent directly. • Vendors interested in registration shall submit an application furnishing details of their business and product line. On receipt of the application, they will be issued a vendor development questionnaire. The vendor should submit the duly filled questionnaire, along with their credentials, and details of manufacturing capacity, quality control facilities, past performance, after-sales service, financial background etc. • The duly filled development document received is submitted to the VENDOR DEVELOPMENT COMMITTEE. The Committee consists of Head of User Dept., Head of Material Testing/R & D Dept. & Head of Purchase and has the following powers: ○ after examining the documents and based on the Protocol for Vendor Development of that material, it, can advise the Purchase Department to call for samples for evaluation / plant trial of the material, or call for additional details / clarifications, if required. ○ In case the sample confirms to the specification, the Committee can advise Purchase Department to include the vendor in the list of approved vendors/recommend to issue plant trial order. ○ The Committee can also depute an officer for facility audit, if necessary. ○ Based on the facility audit, and plant trial reports, the Committee can advise the Purchase Department to include the vendor in the list of approved vendors. • Registered firms can be removed from the list of approved firms if they continuously fail to abide by the terms and conditions of the tender / contract or fail to supply goods on time or supply sub-standard items /goods or any false declaration made to company. Suppliers not taking part in the Tender / not supplying to HLL for a continuous period of 5 years will be removed from the list of approved suppliers Second Step: - VENDOR RATING PROCEDURE FOR SUPPLIER RATING Supplier rating is done based on the following criteria. 1) Quality of the product/service 2) Cost rating 3) Adherence to delivery schedule QUALITY RATING (QR) Quality rating comprises of two factors. 1) Inspection rating: Based on value of parameters of materials inspected. 2) Performance rating: Based on value of parameters of materials inspected during performance inspection. PRICE RATING This criterion compares the relationship of the price of vendors with the effective price of those materials. PRICE RATING = (Vendor’s effective price- Effective price of material)/ Effective price of material*100 DELIVERY RATING (DR) Delivery Rating of raw materials is calculated by Purchase Department on the basis of contracts entered into by concerned User Departments as mentioned below: • delivery in time as per schedule: Full credit 2 deliveries after the scheduled date: a grace period of 10 days is given if the material has been dispatched within the delivery date, and the party would get full credit for delivery. • if the material is received within 15 days from the date of delivery mentioned in the Order, a score of 25 % will be deducted. • if the material is delivered between the 16th day and 30th day stipulated in the Order, the score will go down by another 25 % i.e. a total deduction of 50 % • this will continue for every fortnight for the next two fortnights. • the total score thus obtained forms the basis for the grading. Frequency of supplier rating: The vendor rating shall be done on annual basis, or as detailed in Quality Management System (QMS) manual.