Enhancing Supplier Accountability in Automotive Spare Parts Division

Abstract

Automobile manufacturing firms rely heavily on their suppliers for timely production of vehicles. Hence, the ownership and responsibility of the suppliers’ delivery to the firm increases. However, following the 80-20 rule, suppliers too tend to cater to the firms that give them a fair share of business, along with a continuous flow. Some suppliers are able to adhere to these norms of providing the parts the purchasing firm demands; however, several are unable to do so. The issues of line stoppage, delays, and non-conformance of production arise because of delays, deficits, and no-show of critical parts. Thus, many firms not only resort to the ABC (Activity-Based Classification) of parts to test their inventories, but also classify their suppliers on a similar categorisation, depending on several parameters of deliverability, quality, and costs. This paper aims to highlight the poor performing suppliers’ reasons for poor performance, and suggests several solutions for improvement, after performing a historical analysis and performing gemba. The short-term solutions of alterations in plans and vendors allow room to achieve 100% delivery from the vendors, while long-term solutions of system ERP requirements allow management intervention to seek system software that eliminate non-value added (NVA) activities that are manual and are moved to an ERP system instead.

Keywords: Spare Parts Division, Product Lifecycle, Vendor Opportunity Loss

View PDF