How do supplier selection in the automotive industry?


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


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

Note: – This procedure does not apply to customer-approved sources or Raw Material Suppliers.

Responsibility of Supplier Selection:

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

Procedure for supplier selection :

Identification of potential suppliers :

Identify potential suppliers for Raw materials, Brought out parts and job work.

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

Shortlisting the supplier and sending supplier evaluation forms for assessing the supplier’s capability.

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

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 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, a minimum overall of 60% marks in vendor quality system audit & minimum of 50% marks in key clauses.

Key Clauses in vendor system audit report for Tear 2:

In the case of Quality Management System Audit. Countermeasures will be received within fifteen days and NC closer evidence will be received within one month. An audit is conducted of the supplier. If the supplier still fails 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 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 the quality performance rating of suppliers is monitored and recorded at a set frequency. Check supplier performance with the following parameters. Weightage can be changed as per company requirements.

  • 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 an action plan for improvement on the inadequacies identified. Those supplier ratings continuously three months below 70% than supplier will be added to supplier improvement activity. Communicate to supplier for improvement in their performance. If supplier performance is not improving drop the supplier from the approved list.

Prepare a re-evaluation plan for suppliers :

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

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

Supplier audit:

  • Make a plan for supplier audit.
  • Conduct supplier audit as per plan once 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.

Supplier audit check sheet:

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