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Approved Vendor List (AVL)

Quick Definition

Also known as the Approved Manufacturer List (AML), an Approved Vendor List (AVL) is the official register of third-party suppliers approved by the company, indicating that those suppliers comply with all the corporate requirements and specifications for the company’s products.

What is an Approved Vendor List (AVL)?

An Approved Vendor List (AVL), also referred to as a Preferred Vendor List or an Approved Manufacturer List (AML), is a compilation of suppliers or vendors who have been evaluated and approved by an organization's procurement department or stakeholders to provide goods or services. The AVL serves as a reference and guideline for the organization's purchasing decisions and supply chain management.

The AVL includes a range of information about approved vendors, such as their contact information, pricing, accounts payable details, and terms of engagement. This allows the organization's stakeholders to easily identify and select appropriate vendors for their procurement needs. The list may also include specific criteria for qualification, such as quality standards, certifications, and compliance with relevant regulations.

The process of approving new vendors for inclusion in the AVL involves careful evaluation and validation. The procurement department assesses various factors, such as the vendor's reputation, track record, financial stability, project management processes, product quality, and service reliability. Stakeholders from different departments may also provide input and recommendations based on their experience and requirements.

Inclusivity is an important consideration in the AVL process. Organizations strive to create opportunities for diverse suppliers, including small businesses, minority-owned enterprises, and women-owned businesses. By including a diverse range of vendors on the AVL, organizations promote economic growth, foster inclusivity, and contribute to the development of local communities.

Maintaining an AVL helps streamline the procurement process by reducing the time and effort required to identify and vet vendors for each purchase. Instead, stakeholders can refer to the approved list, which has already undergone the necessary evaluation and validation. This saves time, reduces administrative burdens, and allows the organization to respond to procurement needs more efficiently.

AVLs are particularly beneficial in managing disruptions and ensuring business continuity. By having a pre-approved list of reliable vendors, organizations can quickly identify alternative suppliers if there are disruptions in the supply chain. This mitigates risks associated with unexpected events such as natural disasters, production delays, or changes in market dynamics.

To be included in the AVL, vendors may need to complete a qualification process. This may involve submitting documentation, completing a questionnaire, or undergoing site visits or audits. The purpose of this process is to ensure that vendors meet the organization's quality standards, compliance requirements, and specific needs.

The AVL is an essential tool in the procurement and supply chain management processes. When stakeholders require goods or services, they can generate a purchase order referencing the approved vendor from the AVL. This simplifies the purchasing process, ensures consistency, and maintains accountability.

Effective management solutions and technologies, such as Planergy or other procurement software platforms, can enhance the efficiency and effectiveness of AVL management. These tools streamline vendor evaluation, enable real-time updates to the list, and provide analytics and reporting capabilities for informed decision-making.

The AVL is not limited to for-profit organizations; nonprofit organizations and government entities also maintain approved vendor lists. In these contexts, the AVL helps ensure transparency, accountability, and compliance with regulations governing procurement processes.

While the AVL provides a useful reference, organizations should periodically review and update the list to reflect changes in vendor performance, market conditions, and emerging opportunities. This ensures that the AVL remains relevant, reflects current requirements, and aligns with the organization's objectives.

In summary, an Approved Vendor List (AVL) is a compilation of pre-approved suppliers or vendors who meet specific criteria set by an organization's procurement department or stakeholders. The AVL streamlines the procurement process, ensures high-quality and reliable sources of goods or services, fosters inclusivity, and promotes efficient supply chain management. By maintaining an AVL, organizations can respond effectively to disruptions, simplify purchasing decisions, and build strong relationships with their vendors.