Page 99 - DMGT525_MATERIALS_MANAGEMENT

Materials Management

Notes of this unit will also summarize the various techniques used for vendor rating. Picking up a
vendor is perhaps one of the most nerve wracking but critical activities a business should
embark on. Your vendors will be delivering your direct purchases – those that you use to
produce the products you sell and your indirect purchases – those that keep your business
running effectively.
When you are selecting a budding vendor, you are selecting a partner in your business and you
will trust them to work with you in a professional and profitable manner. It is significant that
you chose a company that can supply your requirements now and for the near future.

7.1 Suppliers Selection

In today’s business environment, supplier is an important element in the supply chain. He can
provide competitive edge by delivering quality product or services on time, at reasonable price,
on a consistent basis. Hence, supplier selection has become one of the most important tasks of
purchase. The task calls for identifying possible sources, collecting relevant data, analyzing
these data and choosing the right ones.

The process of selection of supplier can be grouped in four stages including:
1. Survey stage
2. Enquiry stage
3. Negotiation and selection stage
4. Experience stage

7.1.1 Survey Stage

There exist a large number of sources to identify prospective suppliers. The major sources
include: supplier’s purchasing information file, supplier catalogs, trade register and directories,
trade journals, trade exhibits – regional, national and Internet.
Supplier’s Purchasing Information File

Normally, purchase department maintains records of past and current suppliers. Records may
include names and addresses of suppliers, product range, prices, performance history and so on.
This could be a starting point in identifying sources for new items.

Supplier Catalog

Each supplier brings out a catalog to show the range of materials, parts, components and services
he provides. Usually, buyers maintain a library of such catalogs which are useful potential
source.
Trade Registers and Directories

Such registers contain information about commodities, trade names, manufacturers, addresses
and so on and are a useful aid in identifying new sources.

Trade Journals

Often each trade brings about its own journal(s). Advertisement and write-ups in such journals
provide useful information to buyers about suppliers and their products.

94 LOVELY PROFESSIONAL UNIVERSITY