Vendor Analysis can be defined as the assessment of weaknesses and strengths of prospective and current suppliers with respect to their – availability of capable staff, business model, capacity, sales revenue, stocks, reputation, mark-ups, mark-downs, gross margins, quality, service, reliability, pricing policies, payment terms, etc.
This process is undertaken generally when a company is choosing a new vendor, consolidating the existing suppliers, or assessing the capabilities of the existing suppliers. It can also be done when a company decides to reach out to third party for some problem existing in their business. Let us consider an example – Raymonds was seeking an IT solution provider to perform all the IT related jobs for them. Accenture is now doing that for them.
Raymonds would have analysed all the quotations they received and the vendors from they received on the earlier mentioned parameters. After performing the vendor analysis only they would have finalized Accenture.
There are companies which deal with a number of vendors. They perform vendor analysis from time to time basis in order to understand which vendor is most beneficial to in them with respect to the cost of doing business with them and their contribution in company’s profit. Businesses are always looking to cut costs, increase profits and efficiency of operations. In such a scenario vendor analysis is very important for all the stated goals.
Sample Vendor Analysis Score Card
Hence, this concludes the definition of Vendor Analysis 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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