Understanding the Importance of Supplier Evaluation and Selection

automotive supplier evaluation

“New technologies, electronics, components, and changing consumer demands are making automobiles far more complex than they were a decade back.”

— An Automobile Manufacturing Company

The automobile industry is witnessing a phase of tremendous disruption, brought on by the advent of new computing systems, manufacturing processes, and innovative designs. Today, neither manufacturing facilities nor automobiles look like how they used to a decade back. This rapid pace of change has not only brought with it a new set of challenges but has also put immense pressure on automobile companies to evolve and adapt. Automotive suppliers are also feeling the pressure and have been forced to alter their business strategies to stay relevant in today’s competitive marketplace. Many automotive suppliers are now working closely with buyers to refine their product offerings and bring about innovation. And whose who aren’t doing exactly that are rapidly rethinking their business models to align with automotive industry trends like smart mobility, connected cars, and autonomous driving. With most automotive suppliers realizing that the only way to stay profitable is to innovate through collaborations, buyers have been faced with the challenging task of evaluating suppliers carefully to analyze financial risks and performance. This could potentially be a time-consuming task for companies, provided they are engaging with a large number of suppliers. Leveraging a platform that aids in supplier evaluation and specializes in supplier performance evaluation can help automobile companies to a great extent. The case study below is a classic example of how BizVibe can help establish clear supplier evaluation criteria that are suited to your requirement and aid in supplier selection and evaluation.

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The Business Problem

A leading automotive company that has a total of 1,753 suppliers spread across the globe. The client is a firm that demonstrates excellence in supplier management and has put massive emphasis on supplier evaluation since the time it was founded.

— Client Information

With the automobile industry reaching new heights, the client – a leading automotive company – was looking to expand their base of operations to emerging markets. However, before investing huge sums into the project, the client wanted to gain a better sense of the key supplier risks and the best practices to establish a mutually beneficial supplier evaluation and selection process. They wanted to know more about the best practices for supplier performance evaluation and establish a process where automotive suppliers are rated against specific standards. To do so, the client approached BizVibe to leverage our expertise in supplier performance evaluation.

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Benefits of the Supplier Evaluation Solution

Since the more than half of the
client’s production costs came from
suppliers, it was important to establish a high-level supplier evaluation and
selection process to keep costs down. In this type of a business model, it is
essential for stakeholders to realize that the success of the suppliers is
essential for the success of their business. The team at BizVibe helped the
client to establish clear supplier evaluation criteria and implement a “Certification/Rating” process to evaluate automotive suppliers.
Suppliers were rated on the level of risk they pose, their performance, ability
to adhere to regulations, and ability to constantly innovate and introduce new

By leveraging BizVibe’s platform, the client was able to easily identify suppliers who meet or exceed their standards and recognize preferred suppliers. They were also able to identify suppliers who could be “coached” to the new supplier evaluation framework and bring them up to the current quality standards.

The team at BizVibe followed a categorical method for rating automotive suppliers. Supplier performance was evaluated by taking into account relevant performance variables. In addition, the team carried out a comprehensive cost-ratio analysis to analyze their financial performance. The data was presented to the client on our customizable dashboard and offered insights into how they could clearly define the objectives and aim of the supplier evaluation criteria. The platform also helped them to better analyze the performance of 1,753 automotive suppliers and select suppliers who they could “Coach”. Additional insights offered included data on all suppliers who should be “Rewarded” for their excellent performance and a list of suppliers who should be “Penalized/De-listed”.

At BizVibe,
we believe that the importance of supplier evaluation and selection cannot be
undermined and assumes the highest importance in the current scenario of global

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