An Approved Vendor List (AVL) is a list of suppliers that meet a company’s standards for quality and price. Suppliers must meet rigorous standards and offer discounts to be included. Being on the list ensures a steady flow of business from the customer.
An Approved Vendor List (AVL) is a list of various types of vendors and suppliers that a company has agreed meets its standards for quality and price and has authorized purchasing agents and others within the business structure to place orders with when and as needed. Along with businesses, non-profit organizations, and even government departments they usually also have a list of approved vendors to use for everything from stocking vending machines in an employee break area to purchasing expensive equipment for use in an operation of production. Typically, any supplier who wishes to be added to a company or other organization’s list of approved suppliers must meet and maintain rigorous standards set by the customer.
While the requirements for inclusion on an approved supplier list vary from situation to situation, the need to provide high-quality goods or services at competitive prices is often paramount. Customers can also evaluate attributes such as the supplier’s ability to promptly fill large quantities as part of an order, effectively handle recurring or standing orders without errors, and manage the delivery process in a manner that the customer considers timely and efficient. Most companies and government agencies will have specific criteria that any supplier must meet before being considered for inclusion on the list, and will often share those criteria with any supplier interested in doing business with the company.
One benefit of being an approved supplier list is that many companies with this type of agreement insist that orders are placed only with suppliers on the list. Sometimes known as a vendor choice agreement, this means that unless a vendor on that approved list is unable to fulfill an order within the permitted time frame, agents and others within the company who are authorized to place orders must use an approved supplier. This means that being on the list will often ensure a steady flow of business from the customer, as long as the seller does nothing to jeopardize that approved status.
In order to gain a place on an approved supplier list, it is not unusual for a supplier to extend discounted prices or offer other benefits as a means of protecting the customer’s business. Terms around discounted prices and other benefits are usually documented in some sort of contractual agreement, such as a volume purchase agreement or other type of document that locks in the price and terms for a specific amount of time. Typically, a customer who is willing to commit to a greater volume of purchases in that time period will receive greater discounts, a strategy that helps manage costs on the customer while allowing the supplier to design production needs and inventory based on these commitments .
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