supplier selection criteria- an overview - indian...

Supplier Selection Criteria- An Overview

Rajnish Kumar National Academy of Indian Railways, Vadodara

Contents

1.1 INTRODUCTION .................................................................................................................................. 2

1.2 SELECTION OF CRITERIA IN RESEARCH ............................................................................................... 2

1.3 QUANTIFICATION OF CRITERIA FOR SUPPLIER SELECTION .................................................................. 3

1.4 SYSTEMS AT MAJOR MANUFACTURERS ............................................................................................. 6

1.4.1 BHEL- Bharat Heavy Electricals Limited ............................................................................... 6

1.4.2 ABB ........................................................................................................................................ 11

1.4.3 VOLVO .................................................................................................................................. 12

1.4.4 ALCOA HOWMET ................................................................................................................ 14

1.4.5 General Dynamics Land Systems .......................................................................................... 17

1.4.6 Ordnance Factories Board (OFB)......................................................................................... 18

1.4.7 RAIL COACH FACTORY - INDIAN RAILWAYS .................................................................. 21

1.4.8 COAL INDIA LIMITED ........................................................................................................ 23

1.4.9 STEEL AUTHORITY OF INDIA LTD (SAIL) ........................................................................ 26

1.4.10 LOCKHEED MARTIN AERONAUTICS ........................................................................... 29

1.4.11 UNITED TECHNOLOGIES CORPORATION ................................................................. 30

1.4.12 SCHAEFFLER TECHNOLOGIES AG & CO. KG ........................................................... 31

1.4.13 BUREAU OF INDIAN STANDARDS, IS 12040:2001 ...................................................... 36

1.5 REFERENCES .................................................................................................................................... 40

of 42

1.1 Introduction

The dynamics of market has forced all manufacturers to resort to large scale outsourcing.

Traditional manufacturers have been forced to outsource major activities. Selecting a

supplier is a very complex and risky process since the factors responsible for selection are

difficult to be quantified. It is not possible to quantify all factors and predicting supplier’s

behaviour is quite difficult. For a public procurement agency it is all the more difficult as

it has to maintain the image of a fair, transparent and just decision maker. The

manufacturers and companies have evolved several methods for supplier evaluation. Few

of the systems followed in major companies were analyzed for finding patterns of

similarity and also their closeness to models in research. Generally quality is considered

the most important criteria for selection of supplier. But quality is not the factor which is

decisive, in most cases it is the purchase price. Thus an integrated approach is must for

qualifying the suppliers. The paper has analyzed a few of the major manufacturer’s

systems to get a fair idea of prevalent practices in industry. The research done on this

topic of supplier selection has been compiled to find the gaps and similarities. The aim of

the work is to reconcile the practice with research.

1.2 Selection of criteria in research

Bureau of Indian Standards has published a standard IS: 12040-2001 which provides the

broad guidelines for development of Vendor Rating System. The standard stipulates

Quality, Price, Delivery, Service and System as five key factors to work out rating

system.

Factors for supplier evaluation which have evolved over the years have been compiled as

listed in Table I.

of 42

Table I Factors/criteria for supplier selection

FACTOR/CRITERION

Quality systems in operation at the supplier’s place/quality philosophy

Financial capability of the supplier

Technological capability/R&D capability

Reputation for integrity/believability and honesty/Vendor’s image

Existence of IT standards/communication system

Performance awards/performance history

Bidding procedural compliance

Profitability of suppliers

Breadth of product line/ability of a supplier to supply a number of items

Supplier’s proximity/geographic location

Management and organization

Contribution to productivity

Conflict resolution

FACTOR/CRITERION

Production facilities and capacity

Communication openness

Labour problems at the supplier’s place

Business volume/amount of past business

Price

Quality/Reliability of the product

Ability to meet delivery promise/ Delivery lead time/ Consistent Delivery

Management sensitivity to buyer’s requirements/ Attitude

After Sales Support/ Technical support available

Positive attitudes towards complaints

1.3 Quantification of criteria for supplier selection

The important point in the selection of criteria is that they it must be possible to quantify

them and the data also be available. Each such criterion, therefore has been analyzed

(Table II) for its feasibility to be included in the list of selection criteria.

of 42

Table II Feasibility of selection criteria

CRITERION FEASIBILITY

Quality systems in operation at the supplier’s place/quality philosophy

For existing suppliers, only certificate can be asked, cannot be quantified. This will automatically reflect in the quality of supply. But for assessing capability of potential supplier, this is an important basis.

Financial capability of the supplier

For new bidders this can be factor, but no discrimination can be done on this basis and it is difficult to assign ranking to a prospective or current supplier. This can also have the effect of restricting competition and allow only established players to bid/supply. But even with this drawback, it is a very important factor while determining potential suppliers.

Technological capability/R&D capability

For regular well established items, this may not be a important criterion. Moreover, there is no scale possible for this subjective opinion. This can have a similar effect as financial capability criterion. When new suppliers are invited, this again is very important. Independent expert opinion may be required for assigning ranking/marks for this criterion.

Reputation for integrity/believability and honesty/Vendor’s image

This is a very important. However, to assign ranking is a very difficult problem. And in the present condition, the onus of ranking the integrity lies with the purchasing organization. This therefore, cannot form the part of selection criteria.

Existence of IT standards/communication system

This is an important for increasing the efficiency of the supplier; however, the purchasing organization should be more concerned about delivery and quality than the internal arrangements of the supplier. The professionalism of the supplier is best reflected in the ensuing supplies. This criterion also cannot be quantified to a satisfactory level with reduced subjectivity. For potential suppliers some credit has to be given for their systems.

Performance awards/performance history

This is an important criterion, but is covered in quality of product and delivery history. It can be a basis for a potential supplier. Credit can be given for market reputation and delivery performance for other supplies.

of 42

Bidding procedural compliance

Without this in public procurement no supplier can qualify so it is a redundant criterion in case of public procurement.

Profitability of suppliers

It may not be possible to assess this factor completely; moreover the focus of organization is on quality and timely delivery. If these are achieved this criteria becomes redundant. If the supplier cannot breakeven then it may no longer supply and which is surely a matter for concern. But in public procurement quantifying is must which only can lead to objectivity, but for this factor it will not be possible.

Breadth of product line/ability of a supplier to supply a number of items

This item is not quantifiable. Since the aim is to reduce subjectivity it will not qualify to be in the criteria list. Moreover, when the judgement has to be on several items this will play an important role but as long as the supplier is being evaluated for a single item, it does not matter.

Supplier’s proximity/geographic location

This is an important factor in reducing cost of transportation and ease in case of crisis. But in a globalization era, this may not be right way to assess suppliers.

Management and organization

Cannot be quantified

Contribution to productivity

This will automatically reflect in price of product and cannot be quantified.

Conflict resolution This also cannot be quantified and any opinion will be subject of dispute.

Production facilities and capacity

This is an important criterion for first time registration of suppliers, once the track record of supply is there, it may not be useful

Communication openness

Cannot be quantified

Labour problems at the supplier’s place

Similarly, this criterion also cannot be quantified.

Business volume/amount of past business

This criterion is important for assessment of new suppliers.

Price This is a very important criterion and can be quantified

Quality/Reliability of the product

This is a very important factor and methods to quantify this are available.

Ability to meet delivery promise/ Delivery lead time/ Consistent Delivery

This can be quantified and one of the most important criterion for a supplier to qualify.

of 42

Management sensitivity to buyer’s requirements/ Attitude

Difficult to quantify but is covered in warranty obligations etc.

After Sales Support/ Technical support available

This is an important factor and can be quantified on basis of history of problem resolution for old suppliers and industry feedback for new suppliers.

Positive attitudes towards complaints

This can be factored in a common criterion “service” which includes a few of the above mentioned criteria.

Based on past research, and evaluation of criteria applicable and manageable in present

context, the four salient criteria which may be identified as most relevant in supplier

evaluation and selection are,

a. Quality

b. Delivery

c . Price

d. Service

The principle to be adopted is “You can’t manage what you don’t measure”.

1.4 Systems at Major Manufacturers

Few important and famous companies whose supplier evaluation and rating system could

be found have been detailed to find out the which are the most relevant and practical

criteria for supplier evaluation and selection.

1.4.1 BHEL- Bharat Heavy Electricals Limited

Bharat Heavy Electricals Limited (BHEL) is a Public Sector Enterprise manufacturing

integrated power plant equipments It is based in New Delhi, India. BHEL was established

in 1964, ushering in the indigenous Heavy Electrical Equipment industry in India. It is

engaged in the design, engineering, manufacture, construction, testing, commissioning

and servicing of a wide range of products and services for the core sectors of the

economy, viz. Power, Transmission, Industry, Transportation, Renewable Energy, Oil &

Gas and Defence. It has 15 manufacturing divisions, two repair units, four regional

of 42

offices, eight service centres, eight overseas offices and 15 regional centres and currently

operates at more than 150 project sites across India and abroad. Most of its manufacturing

units and other entities have been accredited to Quality Management Systems (ISO

9001:2008), Environmental Management Systems (ISO 14001:2004) and Occupational

Health & Safety Management Systems (OHSAS 18001:2007).

It is the 7th largest power equipment manufacturer in the world. It has a workforce of

about 50,000.

BHEL has a scientific method of Supplier Performance monitoring and rating system.

Supplier Performance Rating (SPR):

Supplier performance is assessed with respect to the following main factors and it is

calculated for each consignment/ purchase order:

Rating Weightage

Quality 60

Delivery 30

Service 10

Total 100

Quality Rating (QR) is given 60% weightage.

Quality rating is based on acceptable quantity of material offered for inspection or

delivered by supplier

𝑄𝑅 =(𝑄1 + 0.75 × 𝑄2 + 0 × 𝑄3) × 60

𝑄

where,

Q =Quantity inspected

of 42

Q1 =Quantity accepted

Q2 =Quantity accepted with concession / deviation/ rectification

Q3 =Quantity rejected

The pre-inspection report (at supplier’s works) includes the quantity accepted after

rework in Q2 category.

Delivery Rating (DR) is given 30% weightage

Supplier is rated on delivery parameters as follows.

Adherence to P.O delivery date 30

One mark is deducted for each day’s delay.

Service Rating (SR) is given 10% weightage

Service Rating is given on the basis of the following criteria.

SR

Cooperation and readiness to help in emergency, submission of Support documents such as GA Drawings, TC,GC etc. as applicable, submission of final technical documents, O&M Manuals and as built drawings complete and in time.

5

Promptness in reply/attending quality problems at site/shop 5

Thus, the Supplier Performance Rating (SPR) = QR+DR+SR

The period for calculation of SPR is previous year plus elapsed period of current year or

period for last three executed purchase orders whichever is more.

There is a system of FEEDBACK FROM SHOP FLOOR at BHEL. If non-

conformance/defects in components are noted while processing at shop floor overall

of 42

performance rating will be multiplied by demerit factor (DF). The demerit factor is

calculated in the following manner:

DF

Components used after rectification 0.9

Components replaced by supplier 0.8

Supplier does not rectify/ replace/respond 0.0

Supplier Rating

Now based on total score the supplier performance is rated.

of 42

Total Score Rating Action

98-100 A1 Supplier can be considered as Preferred Supplier for self –certification and long term contract.

90 to less than 98 A Supplier can be considered for self –certification 100% Quality Rating consistently.

Supplier can be considered for reduced witness points during inspection. Supplier can be considered for long-term contracts.

75 to less than 90 B Supplier to be informed about deficiency for immediate corrective and preventive action.

Supplier can be considered for long-term contracts.

60 to less than 75 C Supplier to be informed about deficiency for immediate corrective and preventive action. Response to be obtained from supplier. Necessary technical help may be provided to the supplier.

Inspection stages may be reviewed for tightened inspection.

Enquiry to be sent only after approval at higher level.

Less than 60 D Supplier to be put under hold and informed.

In order to provide motivation to A1 and A category rating supplier, BHEL has suggested

the following steps,

a) May be considered for self-certification

b) May be preferred for long term contracts

c) In tenders, where quantity is to be split amongst suppliers, 10% quantity may

be reserved for A1 category supplier in addition to normal distribution of

remaining 90% quantity as per normal practice.

d) Appreciation/commendation in structured get-together/suppliers meets.

of 42

The feed back to the supplier is given annually in a prescribed format. The system at

BHEL is very structured, and has transparency inbuilt. It is done so as it is a Public

Sector Unit subjected to various statutory audits, investigations etc.

1.4.2 ABB

ABB is a multinational corporation headquartered in Zurich, Switzerland, operating in

robotics and mainly in the power and automation technology areas. It ranked 143rd in

Forbes Ranking (2010). ABB is one of the largest engineering companies as well as one

of the largest conglomerates in the world. ABB has operations in around 100 countries,

with approximately 145,000 employees in June 2012, and reported global revenue of $40

billion for 2011. The supplier evaluation at ABB has both formal and informal methods.

Purchase items are classified according to Kraljic’s model. They have a fairly simple

supplier qualification and assessment system.

Supplier Qualification Status

Suppliers can determine their potential qualification status by looking at the Summary

Sheet of the Supplier Qualification Questionnaire. According to the qualification level

achieved they can see below the actions that need to be taken.

Rejected: Their score is under 20%: Their Company is too far from ABB requirements.

If and when they have implemented corrective actions which permit them to reach a score

of more than 20%, they can get in touch with ABB again.

Under Development: Their score is between 20% and 50%: they can be part of the ABB

Supplier List, provided their Quality, Costs and Delivery (QCD) performance is best in

class and they have a plan to reach 50% within one year.

Qualified: Their score is above 50%: they can be part of the ABB Supplier List, provided

their Quality, Costs and Delivery (QCD) performance is best in class. The decision to

http://en.wikipedia.org/wiki/Forbes

of 42

include a supplier on the ABB supplier list will be based on the combination of the score

and the action plan to address weak areas.

Supplier Scorecard

Suppliers’ overall performance is measured on quality, on-time delivery and cooperation.

The relative importance depends on division to division. In general most important is on-

time delivery in which supplier receives 40-60% of the points, quality as second most

important with 20-40% points and cooperation is last. The supplier’s objective is:

Measurement Suppliers’ Objective

On-Time Delivery 100% on-time

As-Received Quality Zero defects

1.4.3 VOLVO

The Volvo Group is one of the world’s leading manufacturers of trucks, buses,

construction equipment and marine and industrial engines. The Group also provides

complete solutions for financing and service. The Volvo Group, which employs about

115,000 people, has production facilities in 19 countries and sells its products in more

than 190 markets. In 2012 the Volvo Group’s sales amounted to about USD 45 billion.

The Volvo Group is a publicly-held company headquartered in Göteborg, Sweden.

In their Supplier Quality Assurance Manual Edition 06-2010, Volvo has stated their goal

as “PREMIUM SUPPLIERS FOR PREMIUM BRAND, our effort is directed towards

selecting the best suppliers based on capability and performance. Once selected, our

goal is to work with these suppliers to develop a strong, long-term, structured

relationship with them.”

The objectives are well defined for the suppliers. The targets are mentioned in the table

below:

of 42

Measurement GENERAL TARGET

PPM- Rejected Part Per Million

(Safety critical characteristics excluded)

Explanation: The PPM value is defined as the number of rejected parts divided by the total quantity delivered multiplied by 1000000.

10 PPM

QPM- Quality Performance Measurement

Calculated at Supplier manufacturing Parma level

Explanation: Compound quality grading from 0 point (Outstanding) to 100 (worst case)

30

Fault Frequency

Explanation: The number of Warranty Claims per vehicle within the first 12 months of use (after zero Km/miles)

0 % for safety features

Unless otherwise specified in the technical specifications, fault frequency targets shall be:

Below 0.0005% for fasteners , brackets and similar parts

Below 0.005% for other components

Service campaign

Explanation: The number of vehicle recalled after zero KM/miles due to a reliability/warranty problem

0

Safety recall

Explanation; The number of trucks recalled after zero km/miles due to a safety problem

0

This is a MUST (non-negotiable)

Delivery precision

Explanation: A percentage: The quantity of parts delivered on time divided by the total delivered.

98% as minimum requirement.

100% For delivery in sequence.

of 42

For managing performance, the following performance parameters are monitored,

Quality Performance Measurement Level, Field Failure, Delivery Precision, Rejected

Parts Per Million Level, Breakdown Failure, Unplanned Stop, Production Feedback,

Warranty Claims and Safety Problem.

The scorecard for suppliers is used for monitoring the quality trends and acts as alert for

low performing supplier. A low performing supplier (LPS) is identified and quality

improvement activities are initiated. There is a unique system of exit criteria of a four

stage performance improvement elevation process.

1.4.4 ALCOA HOWMET

Headquartered in Cleveland, Ohio, Alcoa Howmet is a world leader in the investment

casting of superalloys, aluminum and titanium primarily for jet aircraft engines and

airframes as well as Industrial Gas Turbine (IGT) engine components. Alcoa Howmet

also provides hot isostatic pressing, precision machining and protective coating services.

An important supplier of superalloy metals, titanium ingots, ceramic products and

advanced tooling, Alcoa Howmet conducts extensive research to aid development of its

material, product and process technologies.

Alcoa Howmet and affiliates operate 27 manufacturing facilities in the United States,

Canada, France, the United Kingdom and Japan.

Howmet uses a computer database to evaluate suppliers’ performance in the areas of:

Quality

Delivery

Service

Total Cost

of 42

A combination of data from each category determines total overall performance. The

Supplier Price Index (SPI) factors rework and other quality and delivery issues to

calculate the real cost of a purchase to Howmet. The information is used for negotiating

contracts and awarding new business.

The company has the following Performance Categories for suppliers

Preferred

Suppliers that sustain composite performance levels of 94% to 100% will receive

preference for new and follow-on business.

Certified

Suppliers that sustain composite performance levels of 90% to 93.9% will be awarded

business based on the supplier’s ability to provide products, materials or services in

accordance with the Supplier Certification Control plan.

Acceptable


business before those in lesser performance categories.

Marginal


business that has not already gone to preferred and acceptable suppliers.

Measurement Criteria

Quality = 55% of Performance Measurement

Formula

(Receipt Rejected / Total Monthly Receipts) – (Reason Code weight + Point of Location

weight / Total Monthly Receipts) = Point Loss

of 42

The result is subtracted from the available supplier’s quality percentage points.

Quality ratings for high volume components are different, for a specific month the

following formula is used, based on parts per million (PPM):

PPM Criteria Quality Performance Measurement Score

000-800 100 Points

800-1600 95 Points

1600-1800 90 Points

1800-2400 85 Points

2400 or greater 0 Points

Delivery = 35% of Performance Measurement

Suppliers are penalized for deviations in delivery dates and quantities. Within 6-day

delivery window, 100 points are credited and late beyond 5 days as 0.

Service = 10% of Performance Measurement

The service rating reflects a few factors: like how well the suppliers carry out the

purchase order; their support systems and ethical conduct.

Rating Service Performance Level Credit (% Points)

Good Competent, meets expectations 90.0 –100.0

Acceptable Tolerable but below expectations 80.0 – 89.9

Unacceptable Results are not adequate 70.0 –79.9

Rating Ethics Performance Level Credit (% Points)

Acceptable Has an Ethics program 100.0

Unacceptable Does not have an Ethics program 0.0

of 42

1.4.5 General Dynamics Land Systems

General Dynamics is a market leader in business aviation; combat vehicles, weapons

systems and munitions; shipbuilding and marine systems; and mission-critical

information systems and technology. It has integrated more than 60 businesses, including

six in 2011. The gross revenue was approximately $32 billion in 2011 and the workforce

is about 95,000 employees. The company is organized into four business groups:

Aerospace, Combat Systems, Information Systems and Technology and Marine Systems.

General Dynamic Land Systems is one of its divisions. It rates suppliers in relation to

various performance factors. The company strives to identify problem areas and work

with the supply base to improve their performance ratings with the various General

Dynamics Land Systems locations. The Monthly Supplier Performance Report includes

the following performance ratings.

Metric Definition Goal Weight Factor

Performance Ranges

Red Yellow Green

Delivery 100% of score based on:

On-Time Delivery of Shipments to the “ Promise Date” /”Need by Date”

100% 40% <85% 85%-95%

>95%

Quality 100% of score based on;

Quality Acceptance Percentage of parts Received

100% 30% 98% 98%-99.9%

100%

Financial stability

100% of score based on:

Current Dun and Bradstreet (D&B)

Supplier Evaluation of Risk (SER) Score

SER of 1, 2 or 3 = 100%

SER of 4, 5,or 6 = 75%

SER of 7 or 8 = 25%

SER of 9 = 0%

100% 10% <=25% 75% 100%

of 42

Compliance 50% of score based on:

Supplier adherence to iSupplier Activity Requirements

50% of Score based on:

Supplier adherence to Barcode Requirements

100% 20% 0% 50% 100%

Overall Combination of Delivery, Quality , Financial Stability, and Compliance

100% 100% <71.5% 71.5-93.5%

>93.5%

The key attributes of performance are

1. Delivery

2. Cost

3. Quality

They have a structured supplier development process.

1.4.6 Ordnance Factories Board (OFB)

Ordnance Factories Board (OFB), consisting of the Indian Ordnance Factories is an

industrial setup functioning under the Department of Defence Production, Ministry of

Defence, Government of India. It is engaged in production, testing, logistics, research,

development and marketing of a comprehensive product range in the areas of land, air

and sea systems. The Headquarter is at Kolkata, it consists of forty-one Factories, nine

Training Institutes, three Regional Marketing Centres and four Regional Controllerates of

Safety. OFB is the world's largest government operated production organization. It has a

total workforce of about 164,000. Its total sales were at $2.6 billion.

OFB has issued a detailed procedure for vendor registration and monitoring called

VENDOR REGISTRATION SOP Ver 2.2. The suppliers are short-listed by a Capacity

Verification Team. The performance of successful established suppliers is monitored

regularly against every completed order based on Vendor Rating System. Following

parameters are used for Vendor Rating System:

1. Quality Rating

of 42

2. Delivery Rating

3. Price Rating

4. Service Rating.

There are formulae suggested for the different parameters.

QUALITY RATING

𝑉𝑅𝑄 = {(𝑄1 + (0.7 × 𝑄2) + (0.3 × 𝑄3) + (0 × 𝑄4)}/ 𝑄

where

Q1 = Quantity Accepted Conforming to Specification,

Q2 = Quantity accepted with deviation

Q3 = Quantity accepted after rectification

Q4 = Quantity rejected and

Q = Total quantity offered for inspection (Q1 + Q2 + Q3 + Q4 )

DELIVERY RATING

𝑉𝑅𝐷 = (𝑄𝑎 / 𝑄𝑐) + {𝑄𝑏 /𝑄𝑐} × {𝑇𝑐 /𝑇𝑎} × 0.5

where

Qa = Quantity Supplied on Time,

Qc = Quantity Ordered,

Qb = Quantity supplied late beyond delivery period

Tc = Delivery period as per supply order in days,

Ta = Total Time taken to complete the supplies, including late deliveries in

number of days.

PRICE RATING

of 42

𝑉𝑅𝑃 = 𝑃𝐿/𝑃𝑄

where,

PL = Lowest price quoted by any Supplier against that tender

PQ = Price quoted by the Supplier.

SERVICE RATING

The Index/Score for performance with respect to service is determined jointly by the

production/user and the materials management department. They use the service rating

break-up as per IS 12040:2001,

PARAMETER MAXIMUM SCORE

Co-cooperativeness and readiness to help in emergencies 30

Readiness to replace rejected material 20

Providing support documents in time 10

Promptness in reply 10

Co-operation in delivering and implementing measures or

avoiding recurrence of defects/complaints

30

TOTAL 100

COMPOSITE INDEX FOR PERFORMANCE OR OVERALL RATING.

𝑉𝑅𝐼 = 𝐴 × 𝑉𝑅𝑄 + 𝐵 × 𝑉𝑅𝐷 + 𝐶 × 𝑉𝑅𝑃 + 𝐷 × 𝑉𝑅𝑆

where,

A, B, C, D are the weightage for parameters of quality, delivery, price and service

respectively. The values of which are given in succeeding paragraph.

In case an established source fails to secure any order in the last three years, it shall

continue to be an established supplier subject to its renewal of registration.

of 42

Following weightage factor have been suggested for different parameters,

Weightage for Quality - 60%

Weightage for Delivery - 25%

Weightage for Price - 10%

Weightage for Service - 05%

The overall rating of selected established suppliers is worked out using the above

formulae against the orders placed on the firm. The firms getting average overall rating

of less than 70% against orders completed in last three years shall not be considered for

issue of LTE thereafter for a period of one year. After the reinstatement, their rating will

be monitored afresh as above. Second such occasion of rating falling below 70% will

permanently disqualify a firm from the status of established suppliers.

OFB has a system for INSPECTION CATEGORIZATION of firms, Self-Certification

category inspection status is be awarded to Firms securing more than 95% vendor rating

apart from other requirements mentioned in SOP for input material Inspection. This

categorization is valid for a period of one year. After the expiry of validity period it is

reviewed again.

For “Inspection at Firm premises” category inspection status, Firm should secure more

than 85% marks in vendor rating apart from other requirements mentioned in SOP for

input material Inspection. “Inspection on receipt” category inspection shall be applied to

the firms securing 70% to 85% marks in vendor rating apart from other requirements

mentioned in SOP for input material Inspection.

1.4.7 RAIL COACH FACTORY - INDIAN RAILWAYS

Established in 1986, Rail Coach Factory (RCF) is a coach manufacturing unit of Indian

Railways. It has manufactured around 16000 passenger coaches of 51 different types

including Self Propelled passenger vehicles which constitute over 35% of the total

population of coaches on Indian Railways. It is located in near Jalandhar, Punjab, India.

of 42

The overall SUPPLIER RATING (Sr) has been defined as

𝑆𝑟 = 0.6 𝑄𝑟 + 0.4 𝐷𝑟

Where Sr = Supplier’s rating for a Purchase Order.

Dr = Delivery rating and Qr = Quality rating.

Delivery rating (Dr) is computed for each Purchase Order as under:

𝐷𝑟 =𝑄𝑡 + ∑ 𝑄𝑑(1 − 𝐾 ×

𝑇𝑑𝑇 )

𝑄

where, Q = Qty ordered.

T = Promised delivery time

Qt = Qty supplied in time

Qd = Qty delayed

Td = time delay for quantity delayed.

K = Constant with value as 2.

Quality rating (Qr) is computed for each PO as under:

𝑄𝑟 = 𝑄𝑎/𝑄𝑠

where, Qs= Total quantity supplied/ offered for inspection = (Qa+Qrr+Qcr)

Qa = Quantity accepted

Qrr = Quantity rejected during RITES(Third Party) inspection

Qcr = Quantity rejected during consignee inspection

of 42

Some other conditions have also been specified by RCF,

1. If quantity accepted is < 50% of the PO quantity and original Delivery Period has

expired, then Quality Rating (Qr) is taken as “zero” for that PO.

2. When a lot is accepted with improvement advice to the vendor, Qr for that lot is

considered as 75% only.

3. When a rejected lot is used in distress, the use is condoned by the competent

authority, but such a lot is assigned zero quality rating (Qr).

4. En-route detachment of a coach from a train due to failure of a component/

assembly is a serious failure. If it happens within the warranty period, a severe

penalty is imposed by way of reduction in quality rating of the vendor for that

group of items. The overall supplier rating (Sr) is reduced by 15% for every

instance reported during the period of review.

5. In case of delays in executing warranty claims, the Quality rating is reduced with

the following scheme.

Days taken to attend the failure

11-20 21-30 31-40 41-50 51-60 >60

Reduction in Qr 5 10 20 40 60 100

6. For two consecutive rejections of the same item at consignee’s end, a vendor is

delisted for that item/group of items. However in case there are three or less

approved vendors left (Part-I and Part-II combined), for that item/ group of items,

he can be considered for retention as a Part-II vendor only.

1.4.8 COAL INDIA LIMITED

Coal India Limited (CIL) is a state owned coal mining corporate. CIL is the single

largest coal producer in the world. Operating through 81 mining areas CIL is an apex

of 42

body with 7 wholly owned coal producing subsidiaries and one mine planning and

Consultancy Company spread over 8 states of India. CIL having fulfilled the financial

and other prerequisites was granted the Maharatna recognition in April 2011. It is a

privileged status conferred by Government of India to select state owned enterprises in

order to empower them to expand their operations and emerge as global giants. It

produces around 81.1% of India's overall coal production. It produces over 400 Million

tonnes of Coal annually.

Coal India has issued a Purchase manual which has detailed out the procedure to be

followed by all its units. It has laid emphasis on objective assessment of vendor

performance. The performance is to be measured on following three parameters:

1. Quality

2. Delivery

3. Price

The Quality performance is measured by a formula,

Quality Performance Index (QPI) = (𝑄𝑎+0.5×𝑄𝑟)×100

𝑄𝑠

where,

Qa = Quantity accepted as per specifications

Qr = Quantity accepted after replacement

Qs = Quantity supplied

There is a provision of acceptance of material after rectification, in which case weightage

is taken as 50% and not 100%.

For delivery performance, there are two conditions:

1. In case of completed supply,

Delivery Performance Index (DPI) =

of 42

{𝑄𝑎

𝑄𝑐+ (

𝑄𝑏

𝑄𝑐×

𝑇𝑐

𝑇𝑎)} × 100

2. In case of incomplete supply, after expiry of extended delivery period

Delivery Performance Index (DPI) =

{𝑄𝑎

𝑄𝑐+ (

𝑄𝑏

𝑄𝑐×

𝑇𝑐

𝑇𝑎× 0.5)} × 100

Here, index is given 50% weightage as delivery is not completed even after extension of

delivery period.

where,

Qa = Quantity supplied in time

Qc = Quantity ordered

Qb = Quantity supplied beyond delivery period

Tc = Original delivery period in days

Ta = Number of days taken to complete supply, including delayed supply

For price performance of the supplier, the Price Performance Index (PPI) =

(2 −𝑄𝑝

𝑂𝑝) × 100

Qp = Quoted price

Op = Ordered price

If the PPI is less than zero, the value is taken as zero. Suppliers quoting twice or more

will score zero.

The Composite index is obtained by giving weightage to the three performance

parameters.

1. Quality 40%

of 42

2. Delivery 20%

3. Price 40%

Thus the Composite Performance Index = (0.4×QPI + 0.4×PPI + 0.2×DPI)

The suppliers are classified into four groups

CPI Group

80-100 A

50-79 B

30-49 C

Less than 30 D

It is obvious that preference is given to “A” group suppliers. Supplier in “D” group for

two consecutive years will be deregistered or removed from the approved list.

1.4.9 STEEL AUTHORITY OF INDIA LTD (SAIL)

SAIL is India's largest steel producing company. With a turnover of Rs. 49,350 crore, the

company is among the seven Maharatnas of the country's Central Public Sector

Enterprises. SAIL has five integrated steel plants, three special plants, and one subsidiary

in different parts of the country.

Vendor Rating shall be based on the following factors:

a) Quality

b) Delivery

c) Price

Quality Factor

Quality Rating (QR) for an item in a lot/consignment/Goods Receipt Note (GRN), as

applicable, will be determined by the following formula:

of 42

𝑄𝑅 =𝑞 + 𝑥1 × 𝑞1 + 𝑥2 × 𝑞2

𝑄× 𝑊𝑄

where,

q = quantity accepted

q1 = quantity accepted with deviation

q2 = quantity accepted with rectification

q3 = quantity rejected

Q = total quantity offered for inspection = (q + q1 + q

2 + q

3)

x1 = 0.5 (demerit factor for deviation)

x2 = 0.4 (demerit factor for rectification)

WQ = 50 (weightage for quality factor)

Delivery Factor

Delivery Rating (DR) will be calculated by the following formula:

𝐷𝑅 =𝑞1 + 0.8𝑞2 + 0.6𝑞3

𝑄× 𝑊𝐷

where,

q1 = quantity accepted within delivery period (DP)

q2 = quantity supplied beyond delivery period but within 10% of the

scheduled DP

q3 = quantity supplied beyond 10% of the scheduled DP but within 25% of

scheduled DP

Q = quantity to be supplied by that time as per PO

WD = 35 (weightage for delivery factor)

of 42

Price Factor

Price Rating (PR) for an item will be calculated by the following formula:

𝑃𝑅 =𝑃𝐿

𝑃× 𝑊𝑃

Where

PL = lowest of the prices quoted by vendors for the item

P = price quoted by the vendor being rated

WP = 15 (weightage for price factor)

Price will mean the final cost worked out for tender evaluation which shall be the landed

cost.

VENDOR RATING

The formula given above shall be applied to one complete order at a time.

The composite Vendor Rating (VR) score shall be calculated by the following formula:

𝑉𝑅 = 𝑄𝑅 + 𝐷𝑅 + 𝑃𝑅

CLASSIFICATION OF VENDORS

Based on the Vendor Rating scores calculated for each executed order, average VR score

will be worked out by the following formula:

𝐴𝑅 =𝑉𝑅1 + 𝑉𝑅2 + . . . . . . . . 𝑉𝑅𝑛

𝑛

where

AR = average VR score

of 42

VRn = VR score for the nth order

n = number of rated orders

Vendor Ratings are done every financial year and the data is maintained for five years

including the current year. Based on the AR

score, vendors shall be classified into three

categories as follows:

AR obtained Class of Vendor

Above 75 A

66 to 75 B

55 to 65 C

Where a vendor obtains AR below 55, his performance will be highlighted to the Head of

Purchase Department for decision on issuing intimation to the vendor.

1.4.10 LOCKHEED MARTIN AERONAUTICS

Lockheed Martin Aeronautics Company designs and manufactures military aircrafts such

as F-16 Fighting Falcon, F/A-22 Super Hercules, and F-117 Nighthawk. It is the largest

supplier to USA’s Defense Department. Lockheed Martin Aeronautics Company is a

subsidiary of Lockheed Martin Corporation. It has a workforce of nearly 25,000. Since it

is a high precision industry, the suppliers ought to maintain extremely high quality in

supplies.

A New Supplier Quality Rating formula has been given in its Vendor Quality Rating

guide.

Quality Rating = 100 – (P1 + P2 + P3 + P4 + P5)

Where,

P1 = Pre-Install defects

P2 = Line rejections

P3 = Corrective Action Request (CAR) Quantity

of 42

P4 = CAR Responsiveness

P5 = Customer Escapes due to Supplier

The vendor quality rating used by Lockheed Martin Aeronautics consists of five

elements. These are referred to as P1, P2, P3, P4 and P5.

The maximum deduction for each element has also been defined

1 The first element of the formula, P1, is referred to as the “yield” portion of the

formula and consists of a possible 30 points.

2 The second element of the formula, P2, is also referred to as the “stick factor”

3 The third element of the formula, P3, is Corrective Action Request portion of the

formula and consists of a possible 10 points

4 The fourth element of the formula, P4, is CAR Responsiveness and consists of a

possible 20 points

5 The fifth element of the formula, P5, is Customer Escapes due to supplier issues

1.4.11 UNITED TECHNOLOGIES CORPORATION

United Technologies Corporation (UTC) is a diversified company that provides a broad

range of high-technology products and services to the global aerospace and building

systems industries. Its main businesses are Otis elevators and escalators and UTC

Climate, Controls & Security, aerospace businesses like Sikorsky aircraft and the new

UTC Propulsion & Aerospace Systems, which includes Pratt & Whitney aircraft engines

and UTC Aerospace Systems aerospace products. It employs 218,300 employees (2012),

has net sales of $57.7 billion (2012) of which Sales To U.S. Government are of the order

of $10.1 billion (2012).

It has a scheme called SUPPLIER GOLD PROGRAM. As per its manual, the supplier

gold program is a program that facilitates superior performance by its suppliers. It

recognizes supplier excellence.

of 42

Four performance levels have been defined,

Quality Delivery Customer Satisfaction

Supplier Health

High Volume (PPM)

Low volume (Escapes)

Gold 0* 0* 100%* ≥6.0 ≥80% for 4 categories +pass all Gold questions

Performing <500 ≤5 ≥95%

Progressing <1,500 ≤15 ≥85%

Under performing

≥1,500 >15 <85%

UTC Goal is have its entire supplier base attain Performing or Gold Status. A supplier

scorecard is maintained at its website (http://supplierscorecard.utc.com/) which gives

real-time supplier health status. It has Quality, Delivery, Lean and Customer Satisfaction

shown on the board and the needle indicates performing, progressing and

underperforming status.

The Complete Supplier Health assessment is done at three levels:

1. Manufacturer

2. Service Provider

3. Distributor

UTC has link to Hiperos System, which is a third party management system. It has a set

of Gap closure tools and supplier resources for improving the supplier. Thus UTC

basically has a collaborative approach to it suppliers and considers them a s part of

system.

1.4.12 SCHAEFFLER TECHNOLOGIES AG & CO. KG

Schaeffler is a leading manufacturer of bearings worldwide and a renowned supplier to

the automotive industry. The company had sales of 11.1 billion Euros in 2012. It has

of 42

approximately 76,000 employees worldwide, with 180 locations in over 50 countries. The

main brands ate INA, LuK, and FAG. It is a high precision industry.

The Overall Performance Indicator GKZ for the Supplier Evaluation comprises the two

main criteria of Quality Performance QZ and Delivery Performance LZ, which are

weighted as follows:

Abbreviation Main criterion Weighting

QZ Quality Performance 65%

LZ Delivery Performance 35%

The Overall Performance Indicator GKZ is defined as

𝐺𝐾𝑍 = 0.65 × 𝑄𝑍 + 0.35 × 𝐿𝑍 𝑉𝑅

Quality Performance QZ

The main criterion of Quality Performance QZ comprises the four sub-criteria QZ 1 to

QZ 4 illustrated in the following overview that each has different weightings:

Abbreviation Sub-criterion Weighting Type(s) of claim

QZ 1 Mass Production Quality

50 % Complaint for mass production

QZ 2 Defective Quantity (ppm)

30 % Complaint for accumulated scrap

QZ 3 Certification 10 % -

QZ 4 Sample Quality 10 %

Complaint for samples

M4, M5 and M6

The formula for calculating the criterion Quality Performance QZ is as follows:

𝑄𝑍 = 0.5 × 𝑄𝑍 1 + 0.3 × 𝑄𝑍 2 + 0.1 × 𝑄𝑍 3 + 0.1 × 𝑄𝑍 4

of 42

The quality criteria QZ 1, QZ 2 and QZ 4 are determined by evaluating the justified

complaints (with status either open or closed) occurring within a defined assessment

period.

Mass Production Quality QZ 1

The criterion of Mass Production Quality QZ 1 is generated from the ratio between the

number of complaints on mass production parts and the number of goods receipt items

The formula for calculating the criterion QZ 1 is as follows:

𝑄𝑍 1 = 100 – 1000 ×Number of complaints (number of cases) mass production

Number of goods receipt items in total

If the calculated value is less than 1, a value of 1 is always assigned in accordance with

the definition to QZ 1 for technical reasons. If 10% of deliveries are the subject of

concerns, the QZ 1 value is therefore 1 instead of 0.

Defective Quantity QZ 2 (ppm)

The standard formula for determining ppm values on the basis of quantity is defined as:

𝑝𝑝𝑚 𝑣𝑎𝑙𝑢𝑒 =Rejected quantity delivered

Total quantity delivered× 1000000

(ppm=parts per million)

The following applies to the formula for calculating the criterion QZ 2:

𝑄𝑍 2 = 100 – 𝐵 × 𝑝𝑝𝑚 𝑣𝑎𝑙𝑢𝑒

100

The commodity factor B, (the evaluation parameters underlying the calculation formulae

are listed in a table, e.g. B=1 for tube) is used when calculating the defective quantity in

order to compensate for the differing requirements specific to technologies or product

groups. If the calculated value is less than 1, a value of 1 is always assigned in

accordance with the definition to QZ 2 for technical reasons.

of 42

Certification QZ 3

In line with the requirements of its customers, Schaeffler has introduced quality

management systems to ISO/TS 16949 (Automotive), IRIS (Rail) and AS 9100

(Aerospace), as well as an environmental management system to ISO 14001 and requests

appropriate certificates from its suppliers.

For the Schaeffler certificate(s) held by the supplier, points are awarded as follows for the

criterion Certification QZ 3 :

Certification Points

(1) (2)

ISO/TS 16949, AS 9100, NADCAP or IRIS plus environmental certification in accordance with ISO 14001 or EMAS

100 100

ISO 9001 plus environmental certification in accordance with ISO 14001 or EMAS

90 100

ISO/TS 16949, AS 9100, NADCAP or IRIS 80 90

ISO 9001 70 80

Escalation status New Business Hold 1 1

No QM system present or quality certificate expired 3) 1 1

Sample Quality QZ 4

The procedure for the criterion Sample Quality QZ 4 is the same as for the criterion Mass

Production Quality QZ 1.

𝑄𝑍 4 = 100 – 500 ×Number of complaints (number of cases) on samples


If the calculated value is less than 1, a value of 1 is always assigned in accordance with

the definition to QZ 4. If 20 % of sample deliveries are the subject of concerns, the QZ 4

value is therefore 1 instead of 0.

Main criterion Delivery Performance LZ

The second main criterion of the Supplier Evaluation, Delivery Performance LZ,

comprises three sub-criteria that have different weightings:

of 42

Abbreviation Sub-criterion

Weighting

Type of claim 1) 2) 3)

LZ 1 Date Reliability 40 % 0 % 40 % -

LZ 2 Quantity Reliability

40 % 0 % 0 % -

LZ 3 Logistics Quality 20 % 100 % 20 % Complaint on logistics

The formula for calculating the criterion Delivery Performance LZ is:

𝐿𝑍 = 0.4 × 𝐿𝑍 1 + 0.4 × 𝐿𝑍 2 + 0.2 × 𝐿𝑍 3

0.4 + 0.4 + 0.2

Should individual partial criteria not be used for the purposes of evaluation, the weighting

of the remaining criteria is adapted.

Date Reliability (LZ 1) and Quantity Reliability (LZ 2)

The criteria for Date Reliability LZ 1 and Quantity Reliability LZ 2 are generally

calculated in accordance with a standardised evaluation scheme.

Logistics Quality LZ 3

The criterion Logistics Quality LZ 3 is calculated on the same basis as QZ 1 using

logistics complaints occurring within the evaluation period in relation to volume

products.

The following applies to the calculation of the criterion Logistics Quality LZ 3:

𝐿𝑍 3 = 100 – 1000 ×Number of logistics complaints (number of cases)


The system at FAG is very exhaustive and several parameters have to be quantified.

of 42

1.4.13 BUREAU OF INDIAN STANDARDS, IS 12040:2001

The Bureau of Indian Standards, New Delhi has issued a comprehensive standard IS

12040:2001 on “Guidelines for development of Supplier Rating System”. The purpose

was to give guidelines to organizations in India on methodology for supplier rating.

The overall supplier rating system comprises of

1. Supplier rating

2. Supplier grading

3. Supplier preferences

4. Rewards system

As per the standards, the suppliers can be rated based on any or all of the following

factors:

a) Quality

b) Delivery

c) Price

d) Service

e) System

For Quality Rating, a standard formula has been devised; it also defines Quality rating for

variable parameter of the product. It has also given table of the calculated values of

tolerance for various clauses.

For Price Rating (𝑃𝑅), the formula is,

𝑃𝑅 =𝑃𝑈 − 𝑃

𝑃𝑈 − 𝑃𝐿× 100

Where,

PL = lowest of the price quoted by suppliers

PU = highest price quoted

of 42

P = price quoted by the supplier being rated

The standard also defines rating using life cycle costs.

The delivery rating (𝐷𝑅) for a consignment depends upon the quantity supplied within

delivery time and some other factors, the standard has defined.

𝐷𝑅 =𝑄1

𝑄×

𝑇

𝑇 ×𝑄1

𝑄 + 𝑇1 × (1 −𝑄1

𝑄 )

Where,

Q = quantity agreed to be supplied within the stipulated delivery time

Q1 = actual quantity supplied

T = agreed delivery time for full consignment

T1 = actual delivery time for full consignment

The Service rating has been recommended based on following parameters,

Cooperativeness and readiness in help in emergencies S1

Readiness to replace rejected material S2

Providing support documents in time S3

Cooperation in delivering and implementing measures or

avoiding recurrence of defects/complaints S4

The System Rating is based on several criteria which are judgement based, and the

standard mentions the ISO 9004 to be referred for guidance.

The composite supplier rating is obtained by giving weightages for the individual ratings.

Rating Weightage

Quality, QR W1

of 42

Delivery, DR W2

Price, PR W3

Service, SR W4

System, SY W5

Total 100

𝑆𝑅 =𝑊1𝑄𝑅 + 𝑊2𝐷𝑅+ 𝑊3𝑃𝑅+ 𝑊4𝑆𝑅+ 𝑊5𝑆𝑌

100

The standard has mentioned that weights of the factors are to be decided by the

management based on experience and opinion. It may be based on criticality of the

product with respect to quality and delivery. It has recommended that W5 may be kept 30.

It has also given a table indicating weights of individual factors based on criticality.

The standard has illustrated a classification scheme.

Rating Class Remarks

Above 90 A Efforts must be made for long term relationship.

75-90 B If price of A is higher then, limited order on B must be given

50-75 C This class must be provided help to upgrade.

Upto 50 D Not to be considered.

The standard also emphasizes the role of reward systems. It has also published annexure

as proforma for supplier capability report and appraisal report.

of 42

The study of various systems at national and international companies brings out the fact

that criteria for supplier evaluation are more or less common. Some companies have

exhaustive and very scientific methods to assess the performance. They have formal

feedback systems also. The four factors namely, quality, delivery, price and service are

the criteria for assessing supplier performance by all organizations.

of 42

1.5 References

Airbus SAS, Procurement Organization, http://www.airbus.com/fileadmin/ media_gallery/ files/

supply_world/ Procurement- Organisation- Major Suppliers_261110.pdf (accessed 5 August 2013)

ALCOA Howmett Castings, Supplier Performance, (2001),

http://www.alcoa.com/howmet/en/info_page/pdf/suplperf.pdf (accessed 5 August 2013)

Asea Brown Boveri, ABB Supplier Requirements, 9AKK102949, Rev C

Behzadian, M., Khanmohammadi O. S., Yazdani, M., and Ignatius, J. (2012), A state-of the-art survey of

TOPSIS applications, Expert Systems with Applications, 39(17), 13051-13069.

Bharat Heavy Electricals Limited (BHEL), SUPPLIER EVALUATION, APPROVAL & REVIEW

PROCEDURE (2010)

Boran, F. E., Genç, S., Kurt, M., Akay, D. (2009), A multi-criteria intuitionistic fuzzy group decision

making for supplier selection with TOPSIS method, Expert Systems with Applications, 36(8), 11363–

11368.

Bureau of Indian Standards, New Delhi, Standard IS 12040:2001 on “Guidelines for development of

Supplier Rating System”.

Chai, J., Liu, J.N.K., Ngai, E.W.T. (2013), Application of decision-making techniques in supplier selection:

A systematic review of literature, Expert Systems with Applications: An International Journal, Volume

40 Issue 10, 3872-3885

Chan, F. T. S., Kumar, N., Tiwari, M. K., Lau, H. C. W., Choy, K. L. (2008), Global supplier selection: A

fuzzy-AHP approach. International Journal of Production Research, 46(14), 3825–3857.

Chen, Y., Wang, T., Wu, C. (2011), Strategic decisions using the fuzzy PROMETHEE for IS outsourcing.

Expert Systems with Applications, 38(10), 13216–13222.

Chou, S., Chang, Y. (2008), A decision support system for supplier selection based on a strategy-aligned

fuzzy SMART approach. Expert Systems with Applications, 34(4), 2241–2253.

Coal India Ltd, Purchase Manual, http://www.coalindia.in/Documents/ Manuals/purchase.pdf (accessed 25

July 2013)

Dalalah, D., Hayajneh, M., Batieha, F. (2011), A fuzzy multi-criteria decision making model for supplier

selection. Expert Systems with Applications, 38(7), 8384–8391.

De Boer, L., Labro, E., Morlacchi, P., (2001), A review of methods supporting supplier selection.

European Journal of Purchasing and Supply Management, 7, 75–89

De Boer, L., Van der Wegen, A., Telgen, J., (1998), Outranking methods in support of supplier selection.

European Journal of Purchasing and Supply Management, 4 (2/3), 109–118

Electromotive Diesels, Supplier Quality Assurance Manual, Rev New - 7/1/08

Falagario, M., Sciancalepore, F., Costantino, N., Pietroforte, R. (2012), Using a DEA-cross efficiency

approach in public procurement tenders. European Journal of Operational Research, 218(2), 523–529.

General Dynamics Land Systems, GDLS – SCM Supplier Manual, Document Number SCM037, Revision

Date: 29 May 2012

Gupta, S. M., Pochampally, K. K., (2008), A Taguchi loss approach to selection of collection centers for

reverse supply chain design, Paper 15, Proceedings of the 2008 Northeast Decision Sciences Institute

Conference, Brooklyn, New York, March 28-30

Ho, W., Dey, P. K., Lockström, M., (2011), Strategic sourcing: A combined QFD and AHP approach in

manufacturing. Supply Chain Management, 16(6), 446–461.

of 42

Ho, W., Xu, X., Dey, P. K. (2010), Multi-criteria decision making approaches for supplier evaluation and

selection: A literature review. European Journal of Operational Research, 202(1), 16–24

Honda Motor Co Ltd, Supplier’s Guide on http://www.hondasupplyteam.com/

j_pstat/html/honda_howto_supplier.htm. (accessed 6 August 2013)

Horng, T. C. (2006), A comparative analysis of supply chain management practices by Boeing and Airbus:

long-term strategic implications (Doctoral dissertation, Massachusetts Institute of Technology)

Horng, T.C., Bozdogan, K., (2007), Comparative Analysis of Supply Chain Management Practices by

Boeing and Airbus: Long-Term Strategic Implications, MIT Lean Institute presentation

Hwang, C.L. and Yoon, K. (1981), Multiple Attribute Decision Making: Methods and Applications,

Springer-Verlag, New York.

Lee, A. H., Chang, H. J., & Lin, C. Y. (2009), An evaluation model of buyer–supplier relationships in high-

tech industry—The case of an electronic components manufacturer in Taiwan. Computers & Industrial

Engineering,57(4), 1417-1430.

Liao, C., Kao, H., (2010), Supplier selection model using Taguchi loss function, analytical hierarchy

process and multi-choice goal programming, Computers and Industrial Engineering, Volume 58, Issue

4, 571-577

Liao, C., Kao, H., (2011), An integrated fuzzy TOPSIS and MCGP approach to supplier selection in supply

chain management, Expert Systems with Applications, 38(9), 10803–10811.

Lockheed Martin, http://www.lockheedmartin.com/ content/dam/ lockheed/ data/ aero/ documents/ scm/

quality/ Supplier %20Quality %20 Management %20System/ supplier_quality_rating.pdf (accessed 16

August 2013)

Maruti Suzuki India Ltd., http://indiatransportportal.com/2010/12/a-peek-into-maruti%E2%80%99s-

supply-chain-management/ (accessed 10 August 2013)

Narasimhan, R., Talluri, S., Mendez, D., (2001), Supplier Evaluation and Rationalization via Data

Envelopment Analysis: An Empirical Examination, Journal of Supply Chain Management, 37(3), 28-

37

Nissan Motor Co Ltd, Renault Nissan Purchasing Way, http://www.nissan-

global.com/EN/DOCUMENT/PDF/SR/Renault_Nissan_Purchasing_Way_English.pdf (accessed 5

August 2013)

Onüt, S., Kara, S. S., IsSik, E., (2009), Long term supplier selection using a combined fuzzy MCDM

approach: A case study for a telecommunication company, Expert Systems with Applications, 36(2),

3887–3895.

Opricovic, S., Tzeng, G. H., (2004), Compromise solution by MCDM methods: A comparative analysis of

VIKOR and TOPSIS, European Journal of Operational Research, 156, 445–455.

Ordoobadi, S. M., (2010), Application of AHP and Taguchi loss functions in supply chain. Industrial

Management and Data Systems, 110(8), 1251–1269.

Ordoobadi, S.M., (2009), Application of Taguchi loss functions for supplier selection, Supply Chain

Management: An International Journal, Vol. 14(1), 22-30

Petroni, A., Braglia, M., (2000), Vendor Selection Using Principal Component Analysis, Journal of Supply

Chain Management, Vol 36, 63–69

Philips, Global Supplier Rating System, http://www.philips.com/ shared/ assets/ company_profile/

downloads/ Supplier_Rating.pdf (accessed 20 August 2013)

Pi, W., Low, C., (2005), Supplier evaluation and selection using Taguchi loss functions, The International

Journal of Advanced Manufacturing Technology, Volume 26, Numbers 1-2, 155-160

of 42

Pi, W., Low, C., (2006), Supplier evaluation and selection via Taguchi loss functions and an AHP , The

International Journal of Advanced Manufacturing Technology, Volume 27, 625-630

Rail Coach Factory, Kapurthala, India, Supplier’s Performance Rating,

http://www.rcf.indianrailways.gov.in/works/uploads/files/vendor_rating/formulae_for_vendor_rating.p

df (accessed 25 August 2013)

Saaty, T. L. (1990), How to make a decision: the analytic hierarchy process, European Journal of

Operational Research, 48(1), 9-26.

Sadigh, A.N., Zulkifli, N., Hong, T.S., Abdolshah, M., (2009), Supplier Evaluation and Selection using

Revised Taguchi Loss Function, Journal of Applied Sciences, 9, 4240-4246

Sako, M., (2004), Supplier development at Honda, Nissan and Toyota: comparative case studies of

organizational capability enhancement, Industrial and Corporate Change, Oxford, 13 (2), 281-308

Sarkar A., Mohapatra Pratap K.J. (2006), Evaluation of supplier capability and performance: A method for

supply base reduction, Journal of Purchasing and Supply Management, Volume 12, Issue 3, 148-163

Schaeffler Technologies AG & Co. KG · Germany, Quality Assurance Agreement with Production

Material Suppliers, S 296001 Part 5 Appendix 1, Ver 2013

Sevkli, M. (2010), An application of the fuzzy ELECTRE method for supplier selection. International

Journal of Production Research, 48(12), 3393–3405.

Steel Authority of India, SAIL, Guide on Vendor Rating, 1st Version, http://206.183.111.116/ipss/3-01-

003-01.pdf (accessed 20 August 2013)

Taguchi, G., Chowdhury S., Wu, Y., (2004), Taguchi's Quality Engineering Handbook, Wiley, ISBN: 978-

0-471-41334-9, Hardcover

Tavana, M., Hatami-Marbini, A., (2011), A group AHP-TOPSIS framework for human spaceflight mission

planning at NASA, Expert Systems with Applications, Volume 38, Issue 11, 13588-13603

Toyota Global, http://www.toyota-global.com/ sustainability/ csr_initiatives/

stakeholders/partners/#supplier (accessed 23 August 2013)

Volvo Group, http://www.volvogroup.com, Supplier Quality Assurance Manual edition 2010 (accessed 26

August 2013)

Wu, D., (2009), Supplier selection: A hybrid model using DEA, decision tree and neural network, Expert

Systems with Applications, 36(5), 9105–9112

Wu, T., Blackhurst, J. (2009), Supplier evaluation and selection: An augmented DEA approach,

International Journal of Production Research, 47(16), 4593– 4608.

Dec 2013

Vadodara