AVL (Approved Vendor List) - Definition, Importance & Example
What is AVL (Approved Vendor List)?
Approved Vendor list is a list of all the approved vendors, suppliers and other providers which have already been onboarded and approved for procurement as per the policies of the company. As a part of the supply chain, each business is connected to various other businesses to procure its raw materials, packaging etc. These businesses are typically referred to as suppliers/vendors. Each organization maintains a detailed list of its suppliers, the item they supply and the recent shipment history. Such a list of the approved suppliers is also referred to as the Approved Supplier List (ASL).
Importance of Approved Vendor List
Business continuously procure different materials for the production of finished goods. A company which makes an end product for the customer may not produce all the raw materials themselves. Most of the business depend on suppliers or vendors for the same. These vendors supply these raw materials and components to the businesses as their customers. There are of repeat purchases with same or different specifications.
Finding a vendor every time you need to buy is not practical. In modern business, repeat purchases are beneficial to everyone. To ensure that this process is smooth, companies maintain a list of all vendors which have either done business in the past or are recently onboarded as per the regulations. Dealing with a new vendor can be time consuming and lead to delays. If a material has to be procured, vendors from this list can provide quotes and procurement can happen safely and within the policies of the company. These vendors also would understand the requirements of the business well and try to plan accordingly.
There is a process for adding and removing vendors from this list as per new rules and regulations.
Example of Approved Vendor List
Let us assume there is a company which makes chocolates and requires cocoa and milk for the production. To ensure that they get the right quality and quantity of the raw materials every time, they will prefer vendors who are already approved and onboarded and understand the requirements well. It will not be beneficial to the company to go out looking for new vendors without any approvals every time they need to produce more chocolates.
Hence, this concludes the definition of AVL (Approved Vendor List) along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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