Vendor rating is a tool used by the organizations to assess the performance of their vendors to ensure efficient and effective upstream supply chain. The paper presents the views expressed by the experts in literature and studies vendor-rating methodologies used by industries requiring supplies of mechanical engineering components. Weightages recognized during study would help organizations to understand the explicit and implied requirements of their customers. Apparently, basis of vendor rating is quality and delivery reliability.

Kee-hung et al. (2005) have defined quality in the supply chain as conformance to mutually agreed-upon requirements among the partner firms with the aim of improving the performance of the transactions taking place in the chain. Nair (2006) reported that with an increasingly supply chain-oriented business environment, improvements targeted at the supplier's end such as supplier quality management is essential for improved operational performance. To improve the overall performance, many firms are focusing on their core competencies and outsourcing non-core activities that were previously performed in house (Krause, 1999). Outsourcing is further expected to improve core competency. Park et al. (2001) reported that trends such as increased outsourcing, supply base reduction and consolidation have increased the reliance of buyers on their suppliers. For many companies, purchase accounts for 50-60% of sales amount and are the sources of half of the quality problems (Juran and Gryna, 1996; and Besterfield et al., 2001). Krause (1999) and Suhong and Binshan (2006) agreed that in the respective markets, ability of buying firms to provide high levels of customer service depends on supplier performance and/or capability. Tan et al. (1998) further concluded that in shedding non-core-competency activities, firms have developed the need for effectively managing supplier performance capabilities for outsourced products and services. Kaynak and Hartley (2007) suggested that managers should extend their vision beyond their own firms into the supply chain to manage quality. Consequently, understanding a supplier's capabilities and performance potential can be critical to the success of the buying firm (Park et al., 2001). Thus, use of data and reporting is necessary for measuring and improving supplier's performance (Krause, 1997). Hence, managers are looking beyond their organizations into the supply chain to manage quality, and vendor rating is a tool used in this regard for `specifying', `communicating', and `dynamic monitoring of the fulfillment' of customer's expectations. When suppliers know what is expected of them and how they are evaluated, they can focus on developing a strategy for improvement (Vera, 1992).

Supply Chain Management Journal, Vendor Rating, Mechanical Engineering Components, Business Environment, Quality Management, Management Policy, Decision Making Process, Manufacturing Segments, Customer Satisfaction, Industrial Market, Electronic Data Processing Systems.