Page 111 - DMGT525_MATERIALS_MANAGEMENT

Materials Management

Notes  A good vendor is an asset to the company; and, therefore, just at customer goodwill it is
considered as important.

 A vender who supplies the proper quality material in proper amounts in proper time is
not very easy to find.
 Until the present and even now, the Indian Industry has not given/is not giving much
attention and importance to vendor relations. The emphasis, if any, has been on vendor
selection and on monitoring the performance of the vendors through a vendor rating
system.

7.6 Keywords

Vendor: A person or company whose principal product lines are office supplies and equipment.
Competitive Edge: It is the ability of an organization to produce goods and services more
effectively than competitors do, thereby outperforming them.
Request for Information (RFI): The RFI is a formal way to request information from a supplier
or vendor about a product or service a buyer is about to procure.
Just-in-Time (JIT) System: It is an inventory strategy companies employ to increase efficiency
and decrease waste by receiving goods only as they are needed in the production process,
thereby reducing inventory costs.
Vendor Rating: It is a method of measuring and evaluating the performance of suppliers.
Lifecycle Costs: Lifecycle costs are costs incurred throughout the life of a product or service.

Electronic Data Interchange (EDI): Electronic data interchange is a method for transferring data
between different computer systems or computer networks.
Attributes: A quality or feature regarded as a characteristic or inherent part of someone or
something.

7.7 Review Questions

1. How can a supplier provide competitive edge to the company?
2. What are the stages involved in the process of suppliers’ selection?

3. What do you mean by RFI?
4. Discuss the contents of RFI.
5. Who are the eligible suppliers?
6. What is vendor rating? Discuss the review process for rating of vendors in short.
7. What are the attributes that need to be considered while rating vendors?

8. Briefly discuss categorical system.
9. Write a short note in lifecycle costs.
10. What is weighted point method of vendor rating?

11. What are the benefits of a buyer under cost-based system?
12. Why do companies build new vendors?

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