The document discusses the importance of vendor appraisal systems for manufacturing companies. It notes that material costs typically account for 60-70% of costs, so sourcing strategically from good vendors is key to business performance. A good vendor appraisal system should address challenges like increasing complexity, dynamics, and margins. It then outlines the objectives, types, elements, and examples of vendor appraisal systems for both initial selection and continuous performance monitoring. Developing an effective customized system requires considering issues like criteria, metrics, data capture, users, and buy-in.

1. VENDOR APPRAISAL

2. Typical cost structure of manufacturing companies…. … .with such high contribution, Material cost has a significant influence on business performance Material Cost- 60 to 70% Personal Cost Other Costs

6. Key Objectives…Vendor Appraisal Vendor Appraisal Selection of Vendors Performance monitoring Supplier Upgradation Business Decisions e.g. Share, Pricing Trigger for corrective action Audit requirements (e.g. QS9000) Motivating Vendors (creating competition) Vendor rewards

7. Types of Appraisals Systems…. Appraisal for Selection Continuous Performance Appraisal

10. Example- Vendor Appraisal for Selection…. Criteria Wgt Below Avg Avg Above Avg Product & Process Technology Range of products available/Access Access to emerging product technology across the globe Prototype making & testing facility & lead-time Machining Gear cutting Finishing operation Assembly 30% Manufacturing & Quality Systems Equipment maintenance Inventory control House Keeping and Safety Rework Rejection (internal and external) Raw material & Bought out inspection Performance Testing - Final ISO/QS Certification 30%

11. Contd…. Criteria Wgt Below Avg Avg Above Avg Tooling Capability Tooling Design, Mfg & maintenance Tool sourcing 5% Logistics Distance & Regional advantage 10% Current Performance Schedule adherence Leverage opportunities Buyers experience 15% Management strength Continuous improvement- Product & Process Ability to visualize &adapt to changing customer & market needs Cost analysis & control Financial strength Customer based future plans 10%

15. Supplier Performance – Possible Factors to Evaluate Sourcing and the Management of Suppliers Quality Dealing with problems Continuous improvement Provision of spares Responsiveness Cost and price management Communication On-time delivery IT systems Provision of clarification Management of contract change