Purchasing Cycle and Vendor Rating Guide
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Ravi VarmaPurchasing Cycle and Vendor Rating Guide
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Ravi VarmaPurchasing Overview:-
Purchase Cycle:
Requisition Request for Quotation Quotation Quotation Analysis
Inspection
Delivery Receipt Purchase Order
1) Requisition:
When company wants to buy or purchase any item a requisition is created.
2) RFQ (Request for Quotation):
Once the requisition is approved then company will request for quotation specifying the required item,
quantity etc and send them to various supplier who can supply the items.
3) Quotation:
The Supplier responds to the RFQ and sends their quotations mentioning details of the item and all their
terms and conditions regarding payment terms, discount, delivery schedules, etc.
4) Quotation Analysis:
After receiving different quotations from different vendors/suppliers, organization will go through the
quotations i.e. analyzed the quotations and approves the quotation that is best suited/reliable for the
company.
5) PO (Purchase Order):
Based on the approved quotation Purchase Order is generated to the vendor. Now the vendor will supply
the item.
6) Receipts:
Once the Item is shipped the vendor will raise the Receipt to the company/person.
(GRN – Goods Receipt Note)
Invoice:
Based on the receipt Invoice is generated company makes an inspection of item. For this invoice the
company/person will make Payments.
Vendor ratings and its benefits:
Vendor Rating is used by buying organizations to record, analyze, rank and report the performance of
a supplier. This may include a range of predefined criteria such as:
1) Quality of the product or service
2) Delivery performance and reliability
3) Cost, price
4) Capabilities
5) Service
6) Financial continuity of the firm
Benefits of Vendor Rating:
1) Clear and objective overview of performance of suppliers
2) Enables better vendor management
3) Incidents and escalations can be monitored earlier
4) Suppliers are stimulated to improve their performance
