An approved vendor list (AVL) is a listing of various types of suppliers and providers that a company has agreed meets its standards in terms of quality and price, and has authorized purchasing agents and others within the company structure to place orders with when and as required. Along with companies, non-profit organizations and even governmental departments will also normally assemble a list of approved vendors to use for everything from stocking the vending machines in an employee break area to the purchase of high-priced equipment for use in a manufacturing operation. Typically, any supplier who wishes to be added to the approved vendor list of a company or other organization must meet and maintain stringent standards set by the customer.
While the requirements for inclusion on an approved vendor list vary from one situation to another, the need to provide goods or services of high quality at competitive prices is often essential. Customers may also evaluate attributes such as the ability of the vendor to promptly fill large quantities as part of an order, effectively managing recurring or standing orders without fail, and manage the delivery process in a manner that the customer considers timely and efficient. Most companies and government agencies will have specific criteria that any supplier must meet before being considered for inclusion on the list, and will often share that criteria with any provider who is interested in doing business with the company.
One of the benefits of being an approved vendor list is that many companies with this type of arrangement in place insist that orders be placed only with providers that are on the list. Sometimes known as a vendor of choice arrangement, this means that unless a vendor on that approved list is unable to fill an order within the time frame allowed, agents and others within the company who are authorized to place orders must use an approved vendor. This means that being on the list will often ensure a steady flow of business volume from the customer, provided that the vendor does not do anything to jeopardize that approved status.
In order to be granted a place on an approved vendor list, it is not unusual for a vendor to extend discounted pricing or offer other perks as a means of securing the customer’s business. The terms surrounding that discounted pricing and other benefits is usually documented in some sort of contractual agreement, such as a volume purchase agreement or some other type of document that locks in the pricing and terms for a specific period of time. Typically, a customer who is willing to commit to a higher volume of purchase over that time period will receive greater discounts, a strategy that helps to manage costs on the customer’s end while also allowing the vendor to project production and inventory needs based on those commitments.