How do supplier selection in the automotive industry?

Purpose: 

To implement a system for supplier evaluation, supplier selection and supplier approval on the basis of their ability to supply products as per the company’s requirements.

Scope: 

It covers all material, parts/components, job work service & direct production consumables whose product/services affect end-product quality.

Note: – This procedure is not applicable for customer-approved sources or Raw Material Suppliers.

Responsibility of Supplier Selection:

Purchase Head / MR is the overall responsible person for reviewing & implementation of this procedure.

Procedure for supplier selection :

Identification of potential suppliers :

Identify potential supplier for Raw materials, Brought out parts & Job work.

• Supplier approaching the company
• Customer’s recommendation
• Known acquaintances

Shortlisting the supplier and sending supplier evaluation forms for assessing the capability of the supplier.

Receipt of supplier assessment form duly filled. Send the Audit Team for confirmation of assessment as done by the supplier. Do supplier quality system audit as per supplier audit check sheet.

For Machine Tools, Spares & Consumables items the sourcing shall be done directly from the manufacturer or its authorized dealer or suppliers based on reputation and past experience. Wherever required trials of the material intended to be used shall be done to verify the suitability.

Supplier selection criteria:

For New supplier selection,minimum overall 60% marks in vendor quality system audit & minimum 50% marks in key clauses.

Key Clauses for Tear 2:

• 4M change management,
• education & training
• abnormality handling in quality
• Safety
• Control of manufacturing Equipment

In case of Quality Management System Audit. Counter measure will be received within fifteen days and NC closer evidence will be received within one month. Re audit is conducted of the supplier. If the supplier stills fail to achieve the passing criteria, the supplier is rejected.                       

If the supplier achieves the passing criteria, send product details to the supplier. Receipt of sample from supplier and approval taken from quality department. If the quality department does not approve the samples, samples are demanded again for 2 times. if samples are not approved then reject the supplier. If the sample is approved, take a quotation from the supplier & add the supplier to the Approved Supplier List.

Performance monitoring of suppliers :

Ensure quality performance rating of suppliers is monitored and recorded at set frequency. Check supplier performance with following parameters. Weightage can be changed as per company requirement.

• Quality Rating – 15%
• Rejection PPM – 15%
• QPCR /Customer Line Disruption – 20%
• Delivery performance rating – 20%
• Premium freight paid by organization – 5%
• 4M change reporting – 10%
• QMS Certification – 5%
• Reply of QPCR – 10%

Compute overall supplier rating. Communicate the overall supplier rating to suppliers and demand action plan for improvement on the inadequacies identified. Those supplier rating continuously three months below 70% than supplier will be add in supplier improvement activity. Communicate to supplier for improvement for their performance. If supplier performance is not improving drop the supplier from approved list.

Prepare re-evaluation plan for suppliers :

• Supplier’s periodic Quality System Audit (once in year but if any supplier under in improvement activity then audit 1/6 month)
• On deterioration in performance.
• Criticality of components / Process.

Results of performance rating of suppliers. If supplier Rating consecutively 100% from last 12 month then we can skip supplier audit

Supplier audit:

• Make a plan for supplier audit.
• Conduct supplier audit as per plan once in a year as per supplier audit check sheet.
• Passing criteria is more than 50% in key clauses and more than 60% overall.
• Audit observation sheet shared with supplier and action is required.
• Verify all closure points with evidence.