Page 248 - The Handbook for Quality Management a Complete Guide to Operational Excellence

234 P r o c e s s C o n t r o l S u p p l y C h a i n M a n a g e m e n t 235

evidence of conformance by the vendor, inspection at the buyer’s receiving
dock, or actual use of the product by the buyer or the end user. This must
be the final proof of performance. If the end product falls short of require-
ments, it matters little that the vendor’s program looks good, or that all of
the in-process testing meets established requirements.
The surveillance activity is a communications tool. To be effective it
must be conducted in an ethical manner, with the full knowledge and
cooperation of the vendor. The usual business communications tech-
niques, such as advance notification of visits, management presentations,
exit briefings, and follow-up reports, should be utilized to ensure com-
plete understanding.

Vendor Rating Schemes

Evaluating vendors involves comparing a large number of factors,
some quantitative and some qualitative. Vendor rat ing schemes attempt
to simplify this task by condensing the most important factors into a
single number, the vendor rating, that can be used to evaluate the per-
formance of a single vendor over time, or to compare multiple sources of
the same item.
Most vendor rating systems involve assigning weights to different
impor tant measures of performance, such as quality, cost, and delivery.
The weights are selected to reflect the relative importance of each mea-
sure. Once the weights are determined, the performance measure is mul-
tiplied by the weight and the results are totaled to get the rating.
For example, consider the rating scheme shown in Table 11.2:
The performance for each of three vendors (A, B, and C) for a common
length of time are shown in Table 11.3. This performance data is then used
to attain the ratings calculations for the three hypothetical suppliers as
shown in Table 11.4.
As you can see in the example shown above, even simple rating
schemes combine reject rates, delivery performance, and dollars into a
single compos ite number. Using this value we would conclude that ven-
dors B and C are approximately the same. What vendor B lacks in the
pricing category, they make up for in quality and delivery. Vendor A has a
rating much lower than B or C.

Performance Measure Weight
Quality % of lots accepted 5
Cost lowest cost/cost 300
Delivery % on-time shipments 2

Table 11.2 Vendor Rating Scheme

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