Vendor assessment is a process used by companies to evaluate whether a vendor is financially stable, capable of providing goods or services, and able to offer acceptable levels of support. The assessment includes factors such as the vendor’s policies, procedures, and ability to respond to sudden increases in demand. Price is also an important consideration.
Sometimes known as a vendor review, a vendor assessment is an approach companies use to determine whether a particular vendor or vendor is a good candidate for an ongoing working relationship. The idea behind the assessment is to ensure that the vendor is financially stable, capable of providing the quantity of goods or services required, and capable of providing a level of service and support that is considered acceptable. The price offered by the vendor is often a key component in vendor evaluation.
While the exact criteria involved in vendor evaluation will vary based on business needs, there are several basic factors that are highly likely to be taken into account. Some of these factors will focus on general information about the supplier which helps to further inform the potential customer about the operation of the supplier. Questions about the number of locations operated by the vendor, a general idea of how large the employee workforce is, and the vendor’s annual revenue help establish that the vendor is established and has successfully created a presence in the trading community.
Along with the basics, the supplier assessment will go a little deeper into the supplier’s policies and procedures. Here, the objective is to determine whether the supplier is capable of providing goods or services at volume levels that meet the customer’s needs. For example, a large company looking for a teleconferencing provider might inquire about the number of connections that can be made in a single conference call and whether the company has the capacity to handle a large influx of company teleconferences at specific business times. week. Similarly, a textile manufacturer may want to ensure that the supplier can supply a certain amount of raw materials by a certain day each week without failure.
The supplier assessment also typically includes some attention to the supplier’s ability to respond effectively in the event of a sudden increase in the need for goods and services. Discussions about how long the supplier would need to make arrangements to respond to emergency situations and how requests for these needs can be expedited are often important to potential customers. Likewise, questions about customer support, typically or in emergency situations, are also part of the assessment.
As with many types of business valuation, price is also an important consideration in any vendor valuation. The potential customer will want to know that the supplier is not only capable of meeting the needs, but will also provide those goods and services at a competitive price. Assuming the products, level of service and support, and prices are attractive enough to continue discussions, the customer may be willing to take a proposal from the vendor and eventually choose to sign a contract that benefits both parties.
Asset Smart.
Protect your devices with Threat Protection by NordVPN
