Vendor cost analysis is the assessment of existing or potential suppliers with respect to their finances and payment ad delivery terms. It assesses the ability of a company to implement a solution if services are being procured. Businesses can assess their capability and capacity to supply the required products and services to their customers. It is commenced when a company is uniting its existing suppliers, choosing new vendors or analyzing the skills of the current suppliers.
Vendor cost analysis helps a company in searching potentials suppliers for the possible solution to a business problem that it has. For example, the business can use the template if it is seeking to amalgamate its accounting, inventory and purchasing systems using one software system.
The Vendor cost analysis template will accommodate up to five sources. The order is allocated automatically among vendors based on the relationship between the vendor’s price and the average price quoted by all vendors. The allocation gives each bidder an order of equal dollar volume.
Vendor cost analysis template helps companies to:
- Determine their financial strength.
- Estimate turnover and profit levels at a monthly and yearly level.
- Assess the reliability and quality of their products.
- Calculate the cash flows and revenues in terms of availability of experienced staff.
Some companies often purchase from a large number of suppliers and they need to accept a series of periodic vendor analysis. This helps them to understand which of their suppliers are donating the most to their profit and conversely which are costing more to manage than they are contributing. This vendor analysis thus becomes an appraisal benefit analysis.
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