Kirby Building Systems Limited

BUSINESS BLUEPRINT DOCUMENT

Materials Management
Process: Vendor assessment & Evaluation
Project: SAPphire

Version: 01
Date: 26.12.2007

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Document Information
Document Name

Vendor Assessment & Evaluation

Title
Document Purpose
Key Words
Document Status

Incomplete/ Complete/ Approved

Contact for Enquiries

Release
1.1

Document Change Control :

Description
Created
Date
by
Vendor
Sumodh
26.12.2007
Assessment & Srivastava
Evaluation

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Reviewed
by

Date

Approved
by

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Date

CI Number

99_ AP11_ZZ01

Process

Vendor Assessment & Evaluation

Applicable Sectors

All
TABLE OF CONTENT

1. Requirements/Expectations....................................................................................4
2. General Explanations (For Masters and Enterprise structure include Naming
Convention)...................................................................................................................4
3. Explanations of Functions and Events..................................................................6
4. Organizational Considerations................................................................................6
5. Process Diagrams.....................................................................................................6
6. Changes to Existing Organization processes.......................................................7
7. Description of Improvements..................................................................................7
8. Solution in SAP..........................................................................................................7
9. Description of Functional Deficits..........................................................................8
10. Approaches to Covering Functional Deficits.......................................................8
11. Integration considerations.....................................................................................8
12. Reporting Requirements........................................................................................8
13. Authorization Requirements..................................................................................8
14. File Conversion / Interface Considrations........................................................9
15. Workflow Requirement...........................................................................................9

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1. Requirements/Expectations
A brief / bulleted list of requirements and expectations
To a large measure, the quality & reliability of products depends on the technical competence and the
capacity of vendors. Keeping these words in view the following bullet points should be addressed in SAP
regarding Vendor Assessment & Evaluation. Currently all this exercise is offline now this process to be
incorporated in SAP.

The vendor assessment data (nature of the organization, details of the personnel, plant and equipment,
quality control ,facilities, nature of the products, capacity, financial status and stores) should be captured
& maintained in the system of any assessed vendor either approved or unapproved for future
consideration.
Vendor grading (Class 1, 2 & 3) to be achieved & allotted to vendors through SAP, based on their
Quality system, facilities, financial status and Production potential as assessed.
Class1:- Fit for Registration should be considered for floating Enquiries and placement or orders.
Class2:- Fit for Registration should be considered for floating Enquiries and placement or orders.
Class3:- Not Fit for Registration.
Vendor evaluation rating report should be generated through system covering all aspects of
evaluation.
Quality Rating
Price Rating
Delivery Rating
Service & Response Rating
SAP should take directly the Quality Rating from inspection report against PO.
SAP should take directly the Price Rating from quotation comparison report for same RFQ.
SAP should take directly the Delivery Rating from Goods Receipt against PO.
The Service & Response Rating will be dependent on Quotation required date, Vendor
Confirmation Fulfillment & post supplies services & response given by the vendor.
The vendor evaluation rating & assessment grade should be pop-up at the time of PO creation.
Vendor wise Quality Rating, Price Rating, Delivery Rating & Service & Response Rating should be
visible separately in SAP.

2. General Explanations (For Masters and Enterprise structure include Naming

Convention)
Describe the business process in detail. This typically does not include any SAP specific terms, it should
relate purely to the business rules.
Describe the naming and numbering convention in case of masters and enterprise structure
Currently all this exercise of vendor assessment & evaluation is off line and being performed manually. For
this exercise Purchase Department is responsible for qualifying the suppliers assisted by Quality
Assurance Department.
Vendor Assessment

Whenever a need arises to procure material / component /products from a new supplier or a new
supplier approaches Kirby for supplying material/or wants to carry-out subcontracted works,
Purchase Department shall give "Supplier Survey Form"(SSF) (Form No.K-401) to the new
source.

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The new supplier fills up and returns the supplier survey form seeking registration.

Purchase Department shall scrutinize the SSF and assess the supplier's capability based on SSF
and or by visiting the new supplier's work premises along with Quality Assurance personnel, as
required.

Based on the out-come of the assessment and approval of the same, a sample / trial order may
be placed on the new supplier with the purchasing information such as requirements for approval
of product, procedures, processes and equipment; requirements for qualification of personnel and
QMS requirements.

On successful completion of trial order / sample order and acceptance by Quality Assurance
Dept., the new supplier shall be put-up for approval in the approved suppliers list based on the
following Approval Authorization Criteria.
1. For all major steel suppliers.
2. For other Materials / Components / Products / Services / Spares.

Once 'Approval Committee' accepts, then new supplier's name shall be included in 'Master List of
Approval Suppliers'.

Approved supplier's list shall be updated once in three months.

Vendor Evaluation
Purchase Department is responsible and shall carryout the supplier rating for each and every order
executed based on Quality Rating, Price Rating, Delivery Rating and Service Rating with the following:-

CODE

DESCRIPTION

QR

QUALITY RATING

PR

PRICE RATING

DR
SR

DELIVERY
RATING
SERVICE
RATING

RESPONSIBILITY

POINTS

Q.A.DEPARTMEN
T
PURCHASE
DEPT.

30
20

PURCHASE
DEPT.

10

Quality Rating shall be calculated as per the following:-

A.
B.
C.
D.

Total acceptance
Minor Defect
Major Defect (Rework)
Rejection

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40

STORES

REMARKS

Minimum 60% must be

obtained in each
Rating.

100%
85%
40%
0%

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Price Rating shall be calculated as per the following:-

A.
B.
C.
D.

Lowest quote (L1)

Second Lowest Quote (L2)
Third Lowest Quote (L3)
OR Estimated price x 100/ Supplier quoted price

Delivery Rating shall be calculated as per the following:-

30 Points
20 Points
10 Points

A. Supplied within specified time

B. Minor delay (7 days)
C. Major delay (More than 7 days)

100%
90%
40%

Service rating shall be calculated based on pre-sales service /after sales service. Purchase Dept.
shall decide on this.

Grading of Supplier rating shall be done based on the following:-

Sl.
No.
1

ABOVE 90%

VERY GOOD

ABOVE 75%

GOOD

ABOVE 60%

SATISFACTORY

INCLUDING 60% AND BELOW

DISQUALIFICATION

POINTS OBTAINED

GRADE

REMARKS

Supplier rating shall be done once in six months (July & December) by Purchase Dept. Results of
Rating shall be put for the relevant Committee's approval as the case may be and accordingly
inform the suppliers.

3. Explanations of Functions and Events

Explain what events and processes trigger this process
Vendor Assessment:
1)
2)
3)
4)
5)

Any new vendor seeking for registration.

Any new requirement for which new source to be developed.
To select and / or develop new design / technology for indigenization and product Improvement.
To distribute the bulk requirement.
Periodic assessment of certain vendor.

Vendor Evaluation:
1) To consider whether or not to continue placement of orders on registered vendors.
2) For disqualification of vendor.
3) To review vendors performance over a period of time.

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4. Organizational Considerations
Address any issues agreed in the workshop concerning the SAP organizational structure and this process.

5. Process Diagrams
Provide all related process maps or diagrams
New req. /
vendor
approach.

Purchase
Dept.
provide SSF
to vendor

Trial PO placed
on new vendor

Vendor fills &

returns the SSF to
Purchase Dept.

Yes

Assessment & Approval

for trial PO

No
Receipt of
material
against trial
order

QA
Acceptance
/ Rework/
Rejection

Rework

Scrutinize
SSF by Pur.
Dept.

Vendor visit
if required
w/Q.A

Put-up for committee

approval

Acceptance

Rejection

Disapprove
Approve

Re approach with Improvement

Disapproved
vendor list

Added to
Approved
vendor list

Once the new vendor is approved & added APPROVED VENDOR LIST only then the
Enquiries for quotations (Procurement) can be floated to him.

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Pre defined procurement process shall be followed for procurement from approved vendor

Receipt
Price Rating on
the basis of quoted
rates against
Enquiry
(L1,L2,L3) on
while comparison
(Pur. Dept.)

Inspection

Delivery
Rating on the
basis of
delivery made
against PO over
a period of time
(Stores)

service

Quality Rating
based on
Acceptance %age
in a delivered lot
for delivery made
over a period of
time (Q.A)

Service Rating
on the basis of
post & pre
service provided
by vendor

VENDOR EVALUATION PROCESS

Evaluation report

6. Changes to Existing Organization processes

Change management issues as appropriate.

Capacity assessment to be done at the time of vendor assessment (For Sub-Contracting).

Formula based Quality Rating & Delivery Rating to be calculated through SAP.

Quality Rating
Quality Rating will be given to the vendor for every item supplied by the vendor against particular
order. If no supply has been made by the firm till the stipulated initial delivery schedule, obviously
no QR can be worked out and VR in such cases will be ZERO. There is no absolute quality rating.
Quality rating is based on the quality of supplies from the vendor in question as assessed during
the acceptance inspection of the stores / lots against a particular order. Depending on their nature
and quantity offered at a time, the stores may be accepted either on the basis of 100% inspection
or by the sampling inspection of lots based on a specified Quality Plan. The quality rating
procedure to be followed for these two methods is explained below : (a) Stores Subjected to 100 percent Inspection. for these quality rating will be determined by the
ratio of store accepted to the total stores offered by the vendor against a particular order
modified by the quality weightage of stores accepted on concession or after rectification as
given by the formula indicated below :N1 + KN2 + 0.4 N3

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QR=

-------------------------NS

Where N1 is quantity of stores accepted as per specification on first submission.

N2 is quantity of stores accepted on concession.
N3 is quantity of stores accepted after rectification.
NS is total quantity of stores offered for inspection.
K is the concession factor.
The values of K recommended are 0.7, 0.5 and 0.4 for stores accepted on concession D/E
Class, C class & B Class respectively.
(b) Stores Subjected to Sampling Inspection. For stores accepted on the basis of sampling
inspection of lots, QR may be worked out by using the quality weighted Acceptance Ratio
System, the formula for which is as under :N1 = 0.8 N2 + 0.6 N3 + 0.4 N4
QR=
-------------------------------------NS
Where N1 is equal to number of lots accepted on the basis of single sampling plan.
N2 is equal to number of lots accepted on the basis of second sample as per double sampling
plan.
N3 is number of lots accepted on concession.
N4 is number of lots accepted after segregation / rectification.
NS is total number of lots offered against a particular order.
In case there is a wide variation in lot sizes, weighted lot numbers according to lot size may
be used in the formula.
Delivery Rating
Delivery rating (DR) will be calculated on the basis of the actual time taken for submission of
the advance / pilot sample and the bulk supplies as compared to contracted period. For this
purpose the following formula may be used :0.3 * Contracted period
0.7 * Contracted period for bulk
for advance / pilot sample
supplies
DR= ------------------------------+ -------------------------------------Actual period taken for
Actual period taken for bulk
Advance / pilot sample
supplies
When advance sample is not applicable, 0.7 is to be replaced by 1.0 Where advance sample
or bulk is supplied within the contracted period; the supply period will be equal to contracted
period.

Marking based vendor assessment to be derived from SAP (Class 1, 2 & 3 Category).
Point to be covered for grading the vendor are as per the below indicated file.

Vendor Grading.pdf

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7. Description of Improvements
Describe improvements which will result from implementation of the SAP System. Be sure to include any
impact on business drivers.

Capturing of all vendor assessment data in SAP.

Pop-up while comparison of quote & creation of PO for better idea about vendor.
System generated & calculated QR, PR & DR will provide a better performance review of vendors
and suggest for taking action for improvement on right time.

8. Solution in SAP.
Describe how this process will be addressed in the product.

9. Description of Functional Deficits

Where appropriate, identify any gaps. This section is important when assessing risk, as well as estimating
the need for ABAP (or similar) resources.

10. Approaches to Covering Functional Deficits

Documentation of any work-around or assumptions that have been made when outlining functional
deficits.

11. Integration considerations

Specify what integration you need with other modules / sub modules

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12. Reporting Requirements

Document the various reports that you would require.

13. Authorization Requirements

Document the level of authorizations that you need for each process in the system

14. File Conversion / Interface Considerations

Document file conversion / interface requirements. Where the information is to come from, what data is to
be converted manually/automatically and at what point in time. This is critical information that is used later.

15. Workflow Requirement

Document workflow requirement in this process including the levels of approval required. Mention who will
initiate the workflow and who all will be the recipients of the work item

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