Vendor quality improvement through the implementation of the green channel concept

Vendor selection and evaluation are arguably some of the most critical functions for the success of an organisation. The competitive international business environment has forced many organisations to focus on supply chain management to cope with highly increasing competition. The proposed model provides a methodology called the 'green channel concept' for establishing a vendor performance rating and cost reduction. Those suppliers who pass the devised guideline will be termed as 'green channel suppliers' and their supplies will be inspected very rarely. This leads to the reduction of inspection costs, since some components from some of the suppliers need not be inspected. Moreover, this will minimise the inventory of the organisation by having a Just-in-Time (JIT) supply of such materials from those suppliers. The objective of this paper is to develop a model for the performance rating on the suppliers and identify the green channel suppliers. The application process has been accomplished in a tyre manufacturing company established in India.