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Vendor development is one of the
popular techniques of strategic sourcing, which improves the value we
receive from suppliers.
Vendor development can be defined as any activity that a buying firm
undertakes to improve a supplier's performance and capabilities to meet
the buying firms' supply inputs . The vendor rating is usually done
considering the actual performance of the vendor with respect to:
(i) price - ratio of price accepted to the lowest price offered/estimated
price,
(ii) Quality- ratio of quantity accepted and quantity supplied and
(iii) delivery - ratio of time actually taken and time promised. Vendor
development strategies constitute an important component in achieving this
flexibility.
Establishment and growth of an organization, also requires the development
of a well established customer and vendor relationships. Each company is
striving to develop and maintain a database of customers that displays
characteristics such as satisfaction and loyalty, all within the efforts
of ensuring repeat business from the customer, referrals, and
organizational recognition. By harnessing the Vendor development
techniques companies can develop local small scale companies, local
producers in line of their business for getting the material locally and
small scale producer. This will not only support these small scale
suppliers but also companies get material at much reduced price. This
strategy can be very well appreciated from the initiatives of BPCL.
Procurement of goods and services by BPCL locally helps create livelihoods
in the communities where they operate. They have considered goods and
services procured in India as local.
For procurements other than crude, approximately 90% of their materials,
which include ethanol, additives, packages, chemicals and catalysts, are
procured indigenously.
Their procurement policies are pre-disposed towards sourcing goods and
services from within India. However, due to limited crude reserves
available in the country, they are compelled to rely heavily on crude
imports. NRL [Numaligarh Refinery Limited (NRL)], which was set up at
Numaligarh in the district of Golaghat (Assam) in accordance with the
provisions made in the historic Assam Accord signed on 15th August 1985,
has been conceived as a vehicle for speedy industrial and economic
development of the region.
The shareholding pattern as on 03rd March, 2006 is Bharat Petroleum
Corporation Limited (61.65%), Govt. of Assam (12.35%), Oil India Limited
(26.00%)] is located in the state of Assam. This region had historically
been isolated from rest of India's growth story due to difficult terrain,
lack of infrastructure and few access routes, by virtue of its remote
location in the north-eastern part of the country, NRL has an intuitive
policy which supports procurement of goods and services from local
suppliers in the North Eastern region so that it can contribute to the
local economy and its development.
This policy, can often pose business challenges due to limited
availability of local vendors and contractors who can provide the
requisite level of services. Notwithstanding these constraints, NRL’s
efforts to procure goods and services from the region as far as possible,
is evidence of their commitment to local economic development of the
places in which they operate. In the financial year 2007-08, there were
approximately 150 local suppliers from Assam supplying materials to NRL,
and the economic value generated by NRL for the state of Assam was Rs. 145
million. The quantum of social benefits to local communities in and around
NRL is estimated to be Rs. 84.82 million.
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