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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

TABLE OF CONTENT CHAPTER

I

PATICULARS

Introduction Executive Summary Research Methodology

II

Page No. 1-3 1 2

Organisation Profile

4-13

• • • •

4

Industry Overview. Company Profile Mission, SWOT Analysis.

8 12 13

Theoretical framework III

IV

• Vendor analysis • Vendor rating methods

Analysis and Interpretation

15-20 15 18

21-34

• Working process of organization (Dept) • Present Method Followed By Company • Evaluating the performance of different vendors

21

V

Findings

35

VI

Suggestions

36

Conclusion Bibliography

37 38

VII VIII

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29 34

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

Executive Summary In Today’s competitive environment most of the Organizations are aiming at reducing the cost, thereby providing the product at competitive price and with best of the quality to their customer. Thus, unless and until the Vendors supply the Raw Material at competitive price and of good quality it is not possible for the Organization to achieve their goals. Thus, Vendor Analysis is found to be very crucial in achieving the Objectives of Organization. A success of the firm largely depends upon how effectively and efficiently it serves existing and prospective customers, because it is only the sales which bring revenue to the firm. The management of the firm can be efficient and control on the present and future actions of the firm.

Objectives: •

To evaluate the performance of different Vendors using Vendor Rating methods.

To study the present method followed in evaluating the Vendors.

To study the working of Organization

Proposed outcomes and Benefits of the Study: On studying the present method and on evaluating, the effectiveness would be judged or else the new method of rating would be suggested. A detailed report on Vendors performance will be provided to the Management, which will help them in preparing the Approved Vendor List. This report will also help the Management in preparing the approved sub-contract list. Thus overall, it would help the Company in reducing the cost and improving the quality of their product.

Limitations of the study: •

My study was restricted to only Hubli and Dharwad city.

Time was the major constraint that restricted my study to the limited extent.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

Research Methodology: Title: “Vendor Analysis” At BDK Group of Companies, Hubli.

Objectives: •

To evaluate the performance of different Vendor using Vendors Rating methods.

To study the present method followed in evaluating the Vendors.

To study the working of Organization.

Need for the Study: A Vendor represents an extension of buyer’s manufacturing or operating capacity. Not only must the quality of supplier’s product should match the specifications of the buyer, but his delivery performance also must conform to the buyer’s Manufacturing Schedule which has gain much importance due to the implementation of JIT concept. In Today’s competitive environment most of the Organizations are aiming at reducing the cost, thereby providing the product at competitive price and with best of the quality to their customer. Thus, unless and until the Vendors supply the Raw Material at competitive price and of good quality it is not possible for the Organization to achieve their goals. Thus, Vendor Analysis is found to be very crucial in achieving the Objectives of Organization.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

Sources of data: Primary Data •

Interviews The following persons were interviewed for the purpose 1. Assistant Manager – Purchase. 2. Assistant Manager – Quality.

Observations The data flow is observed in purchase department, stores and quality assurance department. It is verified and assured that the data required for the proposed system is available or can be extracted from the existing, documents.

Secondary Data •

Accessing the company documents. To propose a system the availability of the relevant data is confirmed by accessing the company’s documents. These documents would be: •

Purchase Order

Quotations

Inspection Report

Approved Vendor List (AVL)

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“VENDOR ANALYSIS� undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

INDUSTRY OVERVIEW Valves industry has been growing at a steady pace of 10-12 per cent annually. Today, nearly the entire requirement of valves in the country is met by domestic manufacturers. Thus, it is not only the volume growth but also technological development that has made significant contribution to the current status of the valves industry. "The Indian valves industry is currently enjoying the most favorable period, full of export orders and enquiries. In fact, this is the ideal time for the Indian valves and pumps industry to look into multinational demands and quality requirements." India is already a manufacturing hub for many internationally renowned valves and pumps manufacturers like Kestone, Crane, Audco, Flowserve, Durco, A.K., KSB, Spirex Sarco and Xomox. Yet another plus point of Indian export-oriented valves manufacturer in the Asian market is that they can communicate well in English compared to other Asian nationals, and the Indian market is often preferred over its Chinese counterpart. On the flipside, the valves industry is facing numerous problems, which it is able to cope with it. For instance, the energy sector is one of the biggest users of valves. Most of the companies in this sector are owned by the government. These companies use the tendering method to buy their requirements, which is faulty, time-consuming and outdated. In India, commercial evaluation takes place first followed by technical evaluation. Abroad it is just the other way around." The non-availability of easy funds for expansion and working capital is another cause of worry for the valves industry. Despite these problems, the future for the valves industry looks bright. Most of the people Project Monitor spoke to were bullish about the future. The industry's future will mainly depends on activity in user industries like water treatment, fertilizers, shipyards, collieries, refineries, steel and power sectors. "Looking at the trend in the medium term, demand is expected from water supply and power sectors," Babasabpatilfreepptmba.com

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“VENDOR ANALYSIS� undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI Several refinery projects are coming up in India like the Panipat, Bina and Bhatinda refineries, and expansion of existing refineries. Besides, NTPC is also setting up several power projects. Therefore, we feel the demand for valves is going to be very high in the coming years."

Global markets Most of these markets are growing in Asia and Latin America regions, as there is discernible trend in shifting of heavy manufacturing in these regions. Bulk of the new power generation capacity is being implemented in China and India. Rising energy costs have shifted industries, which are big consumers from the US to Asia. Therefore, the market for pumps used in pulp in paper, chemicals, metal working and refining has shifted making Asia the largest purchaser. Another potential area of growth for the pumps and valves industry is via the replacement market. "Replacement market is inherently higher in slurry pumps (mining and sewage) and pumps for petrochemicals and oil and gas applications as the highly abrasive nature of slurries and corrosive environments in the petrochem applications lead to severe wearing of parts. In some circumstances, replacement parts over a five year period can be 4-5 times the original cost of the pump. The world market value of industrial valves will rise 5.4 percent yearly through 2009 based on healthy end use sectors, especially energy. Developed nations will lag global average gains yet improve on recent performance. Automatic valves will outpace conventional types as process manufacturers seek to boost efficiency. This study analyzes the $50 billion world industrial valve industry. It presents historical demand data (1994, 1999 and 2004) and forecasts to 2009 and 2014 by valve product (e.g., standard multiturn, quarterturn, automatic control, regulator, automatic actuators); by market, by world geographic region (e.g.,

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI North America, Western Europe, Asia/Pacific); and for 34 major national markets. The study also considers market environment trends and indicators, details industry structure, evaluates company market share and profiles 43 major players including Tyco, Emerson Electric, Kitz, Dresser, and Flow serve.

Control Valve Suppliers Are Striving to Meet Demand As demand for control valves has skyrocketed after years of decline, many control valve suppliers are struggling to meet the demand. The leading obstacle to meeting demand in the control valve market is limited manufacturing capacity in the foundry industry. Foundries are a necessity in the manufacture of control valves because they are used to forge steel into finished valve bodies. Several factors contributed to the decline in the number of foundries in operation between 2000 and 2005 including high prices for raw steel and the overall shift in emphasis towards software–based products. While the control valve market was focused on developing software and digital positioned products, the decline in foundry capacity was not a problem. With the industry’s renewed emphasis on hardware sales, however, the limited number of foundries available is a challenge for control valve suppliers.

China and India Lead Growth China and India’s dynamic and expanding economies are the main driving factors behind growth occurring in control valve, actuator, and positioner investments worldwide. China’s production is skyrocketing, reflecting its strong economic growth and signaling its emerging status as a major global manufacturing force. China, the fastest growing economy in the world, is expanding its industrial infrastructure at breakneck speed to meet growing demand from increasing consumption. Large chemical & petrochemical Babasabpatilfreepptmba.com

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI plants, grass-root oil & gas refineries, and new power plants are fueling much of the market growth in China

BDK Industry BDK group of companies is one of the largest and reputed manufacturers of industrial, valves and process pumps in India. BAK was established in the year 1978. The company is located of 25 acres plot in Hubli city. Karnataka state India. The company has a very well equipped manufacturing and marketing facilities stretched over two hundred thousand square feet. The company designs and manufactures diaphragm valves, butterfly valves, ‘B’ series check valves, rubber lined items and moldings the company caters to the need of major sectors like water treatment plants, savage and effluent treatment plants, rayon plants, chemical and fertilizer plants, refineries, nuclear power plants etc. and exports its products to Australia, New Zealand, Malaysia, Thailand, Singapore, Japan, Taiwan, Indonesia, UK, Spain, Denmark, Austria, South Africa, Kenya, USA, Canada etc. five of its manufacturing plants have been accredited with ISO-9001 certification by RW-TUV of Germany. BDK group India ltd, is one of the leading and reputed manufacturing industry of India. It is larger responsible for economic development of the country. It is actively participating in achieving the countries economic goal. It has given its contribution in solving many of the prevailing problems such as unemployment, pollution problem, low capital formation, proper utilization of natural resources etc. It has helped in solving unemployment problem by giving employment to above 600 people, which inclines both skilled and unskilled laborers, technical and non-technical staff and officers and electives.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI The BDK group, along with associate companies offers a wide range of industrial valves and pumps catering to petro chemical processes industries BDK strength is quality products, affordable price and prompt delivery helped it to excel.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

COMPANY OVERVIEW BDK GROUPS OF COMPANIES AND THE FOUNDER: BDK group of companies which mainly includes three units i.e., BDK Process Control, BDK engineering lastly BDK Marketing Services pvt ltd BDK group of companies are situated beside Gokul Road Hubli, opposite to airport exactly 5 Kms from the Hubli city. It is spread over 25 acres. BDK group of companies were established and started functioning in the year 1978 by Bharat Khimji.

Major Products: •

Diaphragm Valves

Butterfly Valves

Plug Valves

B Series Check Valves

Rubber Lined Items and Moldings

Applications: These Valves are used in sections like •

Water Treatment Plants

Swage Effluent Plants

Rayon Plant

Chemicals Fertilizers Plants

Refineries

Nuclear Power Plants and Thermal Power Plants

Petro Chemicals

BDK Products are well accepted in Indian as well as in foreign market in chemicals and process industries and focusing more clearly on the future to ensure long growth and leaping towards market leadership.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI MARKETS

Market of BDK group is mainly divided into two parts they are •

Local market

Global market Local Market Delhi Chennai Ahmedabad Bangalore Hyderabad Goa Pune Mangalore Vizag Baroda Surat Nagpur Assam etc

Global Market Australia New Zealand Thailand Singapore Japan Taiwan Italy Philippines Indonesia Middle East Germany France UK Spain Denmark Austria South Africa

Standards: •

BDK process has documented quality systems to meet the requirement of ISO 9001/1994 to ensure that its orders processed, produced and rendered to meet the customer requirements.

The unit has been already accredited to ISO 9001/1994 quality assurance standards by M/S RWTUV Germany.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

COMPANY PROFILE

Name

:

BDK PC PVT LTD

Constitution

:

Pvt Limited

Ownership

:

Hindu – undivided

Sales – Head quarters :

47/48, Gokul Road Hubli 580030 (Karnataka)

Registered Office

:

“A” Block, 8th floor Shivasagar Dr. A B Worli, Mumbai – 400018 Ph – (022) 4927671 4938451 Fax - (022) 4950580

E-mail – Marketing Agents

BDK@Bm2.vsnl.net.in :

BDK Marketing Services pvt ltd 47/49 Gokul Road, Hubli 580030 (Karnataka)

Marketing Location

:

Gokul Road, Hubli 580030

Phone number

:

0836 – 2331499, 2333930

Fax

:

0836 – 2330749, 23330899

E-mail

:

BDKhubli@bgl.vsnl.net.in

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

MANAGAMENT STRUCTURE OF B.D.K.PC

CEO

EXE. DIR

M.R

HOD MTRL

HOD SC

HOD DSN & DEV

HOD PPC

HOD QA

B.D.K consists 3 management levels Top Management: Consists of the following personnel •

CEO

Executive Directors

Management Representative

Functional Management It consist of the functional department who reports to management representative Middle Management It consists of sectional in charge (SIC) who report to representative of function management

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

MISSION STATEMENT To design, to manufacture, to market quality products at competitive prices to the entire satisfaction of the customer and attain market leadership.

QUALITY POLICY The name B.D.K is synonymous with quality The quality policy shall be • To design • To market quality product at competitive price • To the entire satisfaction of the customer and • To attain market leadership The quality policy was declared by the managing director at the quality policy meeting of all employees called by him. He expressed the meaning of quality policy and intention of the management in terms of organizational goal and commitment. The quality policies written in English and kannada are displayed at prominent places. The deployment of quality policy among the staff is done through groups.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

SWOT ANALYSIS Strength: •

They are large-scale manufacturers and suppliers of valves and pumps.

They have good reputation in the market.

They are recognized by their quality.

RW-TUV GERMANY and also API Certification have awarded the ISO 9001 / 2001.

The plant has well equipped calibration room and a chemical and metallurgical laboratory. They have efficient and well qualified personnel.

The plants are fully provided with latest production and testing equipments including CAD / CAM Centre.

They have provided a healthy environment to the employee.

They follow standard system for all activities.

They have a well established sales and services network in both domestic and global markets.

Weakness: •

They do not have financial controller.

Cost for maintaining standard is more.

They have not computerized wholly.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

Opportunity: •

There is no restriction for movement of product in the world due to globalization.

There is no sales tax and excise duty on exports.

There are many foreign countries still to be covered.

To diversify their business to FMCG market.

Opportunities to enter the IT field.

Abolition of surcharge on corporate tax except 2 % levy for calamity contingency fund.

Threats: •

More competition from MNC’S.

Many foreign valve companies entering the domestic market because of globalization.

Valve and pump industries are in the grip of recession.

Heavily depending on foundries because of causing and other raw materials

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

Vendor Analysis Vendor analysis is usually a purchasing department activity, with incidental contributions from other areas. It seeks to appraise the capability and actual or production, financial strength, and management. Several mathematical systems have been developed for rating vendors, all rely on four main variables Price, Product, Quality, Services surrounding the buying transaction. In reality a supplier represents an extension of the buyer’s manufacturing or operating capacity without the attendant implication of ownership and control. Not only must the quality of a supplier’s product match the specification of the buyer, but his delivery performance also must conform to the buyer’s manufacturing schedule or other operational timetable. The vendor’s price is an indivisible part of the total cost of getting materials to the point of usage in the buyer’s plant, office, or other facility. Any delay in delivery or deviation in quality adds to the buyer’s procurement costs. In consequence, buyers must be certain that their suppliers meet the standards of performance and quality for which their own operations have been planned. Rapid advances in product technology and the spiraling demand for goods and services characteristics of many industries have given an air of urgency to ways of accurately assessing identification, definition, and measurement of vendor capacity to satisfy the buyer’s particular requirements. A buyer requires commodities rather than capabilities. However, when requirements are unique, calling for special design, performance, or reliability features, or when they entail expensive tooling, extended periods of preparation, high setup costs, and involve large quantities of materials over extended periods of time, the purchasing department’s job is to buy capabilities as well as products.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

Evaluating Vendor Capacity To the extent that the buyer recognizes vendors as extensions of his own resources and operational capacity he must appraise there in terms of there •

Technical and Production Capabilities

Financial capabilities

Management capabilities.

Technical and Production Capabilities: A vendor’s capability in technology refers to the excellence extensiveness of his design and development engineering, production engineering, test engineering, and tool engineering. Adequate know-how and sophistication in these various phases of engineering is necessary to assure consistency in the quality of products before, during, and after production. Vendor productions capability refers to the efficiency and completeness of his manufacturing facilities and practical know-how, as well as the means to extend or supplement them through both subcontracting and procurement.

Analysis: Technical and production capabilities usually involve •

On-site inspection of his facilities and visits with his key officials in production, purchasing, engineering, and sales.

Trained and experience people quickly appraise conditions in the vendor’s plant.

Varity of standards and special equipment used the adequacy of inventories to support production schedules, and the orderly conduct of manufacturing operations.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

Financial capabilities: A vendor’s financial capabilities is usually measured by his credit standing, cash flow, equity, and augment capital funds through borrowing or additional investment. Financial ratios particularly those that indicate liquidity, are important tests of financial capacity. Vendors with a large net worth are usually able to raise funds readily because the owner’s investment provides a cushion of safety for creditors. Similarly, a large net worth to debt ratio provides a basis for more credit.

Analysis: Financial analysis often brings to light weakness that make a vendor undesirable as a supplier. The types of firms which fail financial tests are •

New firms of limited net worth and experience

Rapidly expanding firms

Firms that refuse to divulge information about financial condition

Small firms because of the greater uncertainty.

Management capabilities: The ability of a vendor firm’s management to plan, organize, integrate, and control its facilities, manpower and materials, time, and cost s a critical but elusive quality.

Analysis: Buyers usually seek to identify the vendor’s key management people and their •

Titles

Responsibilities

Experience extent of formal education.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

Rating Vendor Performance •

QUALITY RATING

DELIVERY RATING

SERVICE RATING

COMPOSITE RATING

Vendor Rating Criteria (Factors) for Vendor Appraisal •

Technical Capability

Manufacturing Capability

Service Capability

Financial Capability

Management Capability

Methods of evaluating Vendor Performance (Vendor Rating) •

Categorical Method

Weighted Point Method

Cost-Ratio Method

Categorical Method •

Is based on the experience and opinion of the user departments

Significant performance criteria are drawn up by the purchasing department

Users assign a grade of plus, minus or neutral against each criterion

Regular meetings are held and suppliers rated overall as high, medium or low

Inexpensive but subjective rating system

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI Weighted Point Method •

Significant performance criteria are listed

weights are assigned to each criteria based on their importance

The scores of all the criteria are totaled to get the composite performance score of each vendor

Acceptable and unacceptable ranges can be applied for the composite scores

This enables to compare the ratings of all the suppliers Factor

Weight

Actual Performance

Quality

40

90%Acceptable

Performance Score 40X .9 =36

Delivery

30

90% Acceptable

30X .9 =27

Price

10

125% of lowest price 100/125=0.8

10X .8 = 8

Cost Reduction

20

% of total received =60

20 X .6 =12 Total Score =83

Cost-Ratio Method Based on the use of cost analysis in rating suppliers •

Significant performance criteria are identified

Costs associated with each criteria are identified

Costs associated with quality

Defective products, inspections, visits to vendor plants, sample evaluation etc Costs associated with delivery •

Telephone follow-ups,

Additional paper work to expedite orders,

Factory down-time due to delays,

Emergency transport costs etc.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI Costs associated with service Intangible costs of training, spare availability, repair capability, prompt responses etc. •

All such costs for different criteria are related to the value of the products received

A higher cost to value ratio gives a lower rating and a lower value of the ratio will give a higher rating

The costs so computed are adjusted with the supplier’s quoted price to determine the “net adjusted price” Supplier

A B C D

Q/C D/C S/C Ratio Ratio Ratio 2% 2% 2% 1%

1% 3% 1% 1%

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-4% 2% 1% -1%

Total Quoted Net Adj. Cost Price/Unit Price/Unit Penalty -1% 7% 4% 1%

95.5 95 94.75 95.25

94.55 101.65 98.54 96.2

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

I. The Working Process of Organization (Dept). Sales Co-Ordination Department

Introduction: The sales co-ordination department plays an important role in synchronize & harmonize the activities of all department units’ o fan organization toward the accomplishment of organization objectives. This department is a helping hand to market all the products of BDK Group of Companies and its sister concerns.

The B.D.K. Group consists of two important marketing & service oriented units. 1) B.D.K. Marketing Service Pvt. Ltd: B.D.K. Marketing Service Pvt. Ltd is a marketing organization to sell all the products available from B.D.K. Group of Companies and efficient service. The B.D.K.M.S. has ten branch offices and Hubli is the head office.

2) B.D.K. Process Equipments Inc: B.D.K. Process Equipments Inc. is the merchant exporter engaged in exporting manufacturing products by B.D.K. Group of Companies as well as associated companies.

Objectives: •

To understand customers requirement fully and resolved deviations if any before execution of the contract.

To translate mutually agreed customers’ requirements in to work order or amendment.

To co-ordination with customer and concerned departments for prompt execution of the order.

To attained the customer complaints promptly and co-ordinate to minimize recurrence.

To strive for the entire satisfaction of the customer.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

Functions: •

The B.D.K.MS. Will make an offer to its customers.

Then the customer will send an inquiry to B.D.K.MS.

A letter of indent will be sent to B.D.K.MS and copy of it to sales coordination department.

Sales co-ordination department will send back inquiry for an offer made to B.D.K.MS; in return it will send a purchase order and offer to the head of the sales co-ordination department.

After understanding the customer requirement completely the sales coordination will prepare contract review for preparing order assurance, work order and amendment.

To copies of work orders and amendment will send to the planning department marketing department, zonal offices customers master file and engineering file.

Quality Assurance plan is prepared and sent to PPC department, QA department and customer o f needed.

It will review about the product with PPC for progress delivery. Then status information about the product will be given to B.D.K.MS or customers, further the arrangement, for inspection will be made.

If any details are missing then forwarding note will be sent to B.D.K.MS and copy of it will be sent concerned department.

A performs invoice will be prepared and sent to B.D.K.MS or customers according to their requirements.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

MATERIALS DEPARTMENT Introduction: Material department it is also called purchase department. This department plays an important role well in smooth running of the organization by plan and procures material and stores in a scientific manner.

Objectives: •

To plan and procure material and services conforming to specified requirements.

To store and preserve materials till they are issued for use.

Functions: •

The company selects and approves the sub-contractors so that specify requirement of the company can be fulfilled.

Procurement from approved sub-contractors.

Performance rating of sub-contractors.

Receipt storage handling preservation and issue o f materials.

Maintaining the document and records of book like stores ledger, receipt ledger, issued ledger, return ledger, non-conformance ledger etc.

Maintaining updated relevant standard and codes by making the material based on colour codes numbers of alphabets.

The issue of materials is made on the basis of FIFO method.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

Responsibilities and Authorities: •

The HOD has managerial responsibilities for the effective functioning of the material department.

Assigning responsibilities to all personnel in the department.

Plan for manpower and identify training need based on established.

Select and approve suppliers.

Participate in designing review conformance reviews, internal quality, audit and management review meeting, initiate corrective and preventive action.

Review, revise and approve documents and maintain quality document and records.

Authorized to approve suppliers / purchase orders / amendments / LOI / departmental manual and work instructor / issue of product drawings and proves sheets.

Establish and maintain the quality system is the department as per the established procedures.

Authorized to approve rate contracts / price lists.

Established processes needed for the department measurement of process perform.

Sub-Contractors Selection and Approvals The material department is responsible for selection and approval of subcontractors for supply of materials and services to meet the specified requirement. Sub-contractors are classified according to supply of casting services and bought out materials. The list of approved sub-contractor as prepared on the basis of previous demonstrated capabilities. The material department shall finish the periodic performance rating once in the months to the sub-contractor based on quality performance data complied by material.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

Sub-Contractors are classified into four grades for the purpose of Rating Rating

Category

Grade

85 % & above 75 % to 84% 60% to 74 % Below 60 %

Excellent Good Fair Poor

A B C D

The sub-contractors whose rating is above 60% are included as approved subcontractors.

Control of Non-Conforming Products: To ensure that only conforming product are stored and issued for further processing and excise the control over the non-conforming products. •

ND nominates a non-conformance review committee for review and disposition of non-conforming product.

NCRC (Non Conforming Review Committee) reviews materials and decisions are taken for corrective action required by the concerned department.

Non-conformance of processes is revived and communicated to the suppliers to avoid re-obeisance of non-conformance and to improve the quality of the products and services.

Purchase Order: Purchase order are released on approved sub-contractors purchase order shall contain date clearly describing the material order shall content the prices information of type, size class, specification, grade, mark, drawing numbers and other relevant data.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

List of Major Suppliers: •

Malnad Alloy Casting Pvt. Ltd. Shimoga.

Jsons Foundery Pvt. Ltd Sangel.

Ambarmas, Shimoga.

G.K. Alloy Steel Ltd. Combatore.

ORV Casting Ltd. Bellary.

AKP Foundries Pvt. Ltd. Belgaum.

Beejay Metal Process, Hubli.

List of Major Raw Materials: • • • • • • • • • •

Casting Bar Metal Teflon Sheet (PTF) Raw Rubber Gaskets Packing Material Fasteners Forged Steel Alloy Steel Stainless Steel

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

PURCHASES DEPARTMENT

EXE . DIR

EXE.WORK

H.O.D. MATERIALS

SIC STORES

FIC STORES

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SIC PURCHASE FIC PURCHASE

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

QUALITY ASSURANCE DEPARTMENT Introduction: The organizational success largely depends on the smooth functioning of Q.A. Department, more over it can rightly said as Q.A. Department is the mainstream for smooth running of the firm, accordingly keeping in view, the quality policy of the organization. The B.D.K. set up the Q.A. department to assist it in promoting quality products to its customers.

Objectives: •

To maintain and consistent and correct appraisal of quality of the product at all the stages of manufacturing till the product is dispatched. Such that the required product quality is achieved, maintained and improved.

To development of necessary competence in the development for meeting specific quality requirements.

Inspection & Testing: Inspection and testing involves of following functions. •

Incoming material inspection.

In process inspection.

Painting, Packing and Dispatch.

Control of non-conforming production.

Corrective and preventive action.

Records.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

II. Method followed by BDK in evaluating the Vendors. Selection & Approval of Suppliers Approved Suppliers List

Material Indenter

Purchase Dept. Receives Material Indents

In case of discrepancy seek clarification

Initial Procurement Activity

Release Letter Of Intents (LOI) For Materials Where Rates Are Not Finalized & Subsequently regularize Such LOI’s Through Purchase Orders

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

Suppliers

• Float enquires from materials & services required • Invite Quotations • Negotiations • Finalize & Release Purchase Orders

Review & Release Purchase Orders For Materials as per agreed rates/price lists

Follow-up for delivery & expedite supply through 1. Correspondence 2. Telephonic follow-up 3. Personal visit to suppliers office/works

Receive materials at stores

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI Record the receipts of materials & services through the (GR/IR)

Communicate to the suppliers regarding non – conformances (if Any)

Ensure rework & rejected materials as decided by NCRC are returned to suppliers & replacements are relieved

Suppliers performance rating

Maintain Records

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

SUPPLIERS PERFORMANCE RATING SCOPE: This covers the procedure for assessment of suppliers through the periodic performance rating. PROCEDURE: The control is exercised over the suppliers through the performance rating computed from their suppliers made. The performance rating is done for the following products & services.

a. Diaphragm Valve: Body (Including Castings, Machining Casing, Machining Services) Bonnet, Compressors, Stem, Diaphragm, Bonnet Assembly & Pneumatic Actuators, Components. b. Butterfly Valve: Body & Disc (Including Castings, Machining Casing, Machining Services) Seat & Stem. c. Plug Valve: Body, Plug & Cover (Including Castings, Machining Casing, Machining Services) PTFE Sleeve. The performance rating for the approved suppliers of the above products is derived & communicated to the suppliers every quarter. For the products other than those mentioned above which directly go into the final products the approved suppliers or assess through their performance rating computed in the basis of their suppliers made during the quarter of every year (Jan-Mar) & Communicated once in a year. In case of temporary suppliers’ .The supply of products directly going into the final products, the performance rating is derived & communicated. The performance rating also called quality performance rating.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

Method: 1 QPR-Quality Performance Rating is computed from the following formula

QPR = X1.Q1+X2.Q2+X3.Q3 X100 Q Where Q = Total Quality Supplied Q1 = Quality Conforming Q2 = V Accepted On Deviation Q3 = Quality Accepted On Rework X1 = Merit Factor for Q1 = 1.0 X2 = Merit Factor for Q2 = 0.15 X3 = Merit Factor for Q3 = 0.10 Based on the Performance Rating Suppliers are rated as follows RATING 100% 96-99% 90-95% 80-89% 70-79% 60-69% Below 60%

GRADE A++ A+ A B+ B C D

Suppliers with rating of 60 & below are not preferred and discontinued after two such consecutive performance rating.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

Method: 2 Delivery Time Rating

No. Of Days

RATINGS

0

100%

0-7

90%

7-14

80%

16 & Above

70%

Delay by due date or before - 100% [EXCELLENT]

Delay up to 7 days

- 90% [GOOD]

Delay up to 14 days

- 80% [AVERAGE]

Delay of 15 days & above

- 70

[POOR]

ANALYSIS •

After the study and observations of the respective documents it is understood that

The company follows two criteria's for vendor analysis o Suppliers Performance Rating o Timely delivery Rating

The most Significant method of vendor rating (Cost Ratio Method) has been over looked by the company where performance criteria, Costs associated with each criteria and Costs associated with quality are identified and Beneficial Ratings of vendors can be done, which is discussed further in suggestions part.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

III.

EVALUATING

THE

PERFORMANCE

OF

DIFFERENT VENDORS.

Weighted Point Method Vendors Name Lakshmi Enterprises Manjunath Industries. Metal o Print,Hubli Katwe,Belgaum

Factor

Weight

Actual Performance

Quality

40

90%Acceptable

Performance Score 40X .9 =36

Delivery

30

90% Acceptable

30X .9 =27

Price

10

125% of lowest price 100/125=0.8

10X .8 = 8

Cost Reduction

20

% of total received =60

20 X .6 =12

Cost-Ratio Method Supplier

Q/C Ratio

D/C Ratio

S/C Ratio

Lakshmi Enterprises Manjunath Industries. Metal o Print,Hubli Katwe,Belgaum

2% 2% 2% 1%

1% 3% 1% 1%

-4% 2% 1% -1%

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Total Cost Penalty -1% 7% 4% 1%

Quoted Price/Unit

Net Adj. Price/Unit

95.5 95 94.75 95.25

94.55 101.65 98.54 96.2

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

FINDINGS Vendor Information – Current State: Current state (Vendor - PUSH data): •

No Standard Vendor Data Deliverables for Control Valves.

Contractor requests vendor data using a company specific Vendor Information Request Form.

Every form is different – asking for different information.

Must accelerate the Information after purchase.

Work process involves: o Accelerate - Procurement with Vendor o Send vendor data to Engineer for validation

Vendor Information – Future State Future state (Purchaser - PULL data): •

Vendors identify valve physical characteristics that will not change from placement of the order through delivery to project site.

Set times when this information will be available “fit for use” on the Vendor Web Site. o Eliminates: o Company specific request forms.

Expediting - Many unnecessary steps in the current procurement process

Makes information available early in design even before the purchase order is placed.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

SUGGESTIONS Suggestions are put forth to develop better vendor rating and vendor analysis system •

Suitable price grading of vendors must be followed by the company. o Cut down the cost o Better vendor selection.

Share vendor cost criteria with estimating, purchasing, financial, and other departments.

Improve productivity using flexible ad hoc estimating, and pre-defined reports.

Reduce costs by comparing costs between vendors on individual line item components.

Roll up your sleeves and do the hard work - manage your vendors the way leading publishers do.

The relationship between vendors and buyers is typically one of "mutual mystification".

Vendors routinely try to hide the cost of various processes or components in an effort to profit from obscure information.

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“VENDOR ANALYSIS� undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

CONCLUSION The stochastic optimal control uses the vendor performance monitoring data to optimize the proposal evaluation process on the average rather than with assured precision. The dynamic feedback control helps in improving the evaluation process while the evaluation is ongoing. The feedback elements can be evaluator progress of evaluation, amounts and quality of comments written by the evaluators, evaluator feedback on appropriateness of the criteria, appropriateness of the cost models, upset levels and other process variations.

The evaluation element typically consists of identifying the attributes, criteria, or factors relevant to the decision and then measuring or rating each vendor by considering each of the relevant factors. A critical part of the overall supplier selection process is the determination of the relative importance of each of the factors. This approach is based on a multivariate statistical method, principal component analysis, that uses information obtained from eigenvalues to combine different ratio measures defined by every input and every output. The method has been employed to aggregate multiple performance measures for a real-world data set of suppliers.

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“VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD, HUBLI

WEBSITES • www.bdkindia.com • www.google.com • www.answers.com

BOOKS • SUPPLY CHAIN MANAGEMENT - B.S.SAHAY. •

INDUSTRIAL MARKETING

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- Richard M.Hill

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A Project Report on “VENDOR ANALYSIS” undertaken at B.D.K. PROCESS CONTROL PVT. LTD HUBLI  
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