Supplier performance assessment tool in automotive industry using multivariate analysis

Abstract

The supplier evaluation process is complicated because a variety of criteria must be simultaneously considered. In some approaches to supplier evaluation, only quantitative factors are allowed in the model, or qualitative factors can be used in the model but the data are replaced by the assigned numbers. In practice, different goals, multiple criteria, constraints and parameters that involve conflicting quantitative and qualitative criteria make the decision making complicated. This thesis presents a development of a supplier performance assessment tool to evaluate automotive suppliers based on multivariate analysis. A questionnaire was prepared and sent to 278 companies from automotive sector in Malaysia. 5 forms were provided for each of the company to perform total of 1390 recipients, thus giving 24.3 percent response rate. Attempts were made to find the extent of practices in 5 different factors; quality system, in-process quality, logistics and management, shipping and delivery, and after sales services. The results were analyzed using the SPSS software. Factor Analysis, one of the tools for multivariate analysis was used to design the assessment tool for Supplier Performance Assessment and Evaluation. It can also be used for Supplier Control. The procedure utilizes a proposed assessment tool; constructed from factor analysis to do the evaluation. Since the supplier evaluation is a decision problem combining multiple criteria or attributes into a single measure of supplier performance, the objective is to find a method that can be used to objectively evaluate the best supplier. It was also found that it is advantageous to use the proposed instrument as it requires minimal manual interferences. If the proposed instrument is executed and controlled regularly, the performance level of automotive suppliers may be improved continuously. As a conclusion, this study may be able to assist automotive suppliers to maintain and improve their performance. This will support our Malaysian automotive industry as a whole.