How to choose and evaluate suppliers in the automotive industry

28 September, 2022 logistics trends

The automotive industry supply chain is one of the largest and most complex at a global level, and its infrastructure and ability to meet demand depends largely on the quality of its suppliers.The automotive industry requires a strong base of distributors, both domestic and international, shaping and underpinning their supply chains.

Hence, the requirements for such providers are particularly rigorous. They often need to assume risks, costs, and time, since it is about long production cycles. They must have the capacity to serve customers 24/7, because the automotive production plants do not stop; they must have financial capacity to take up the operating costs in that context; and, above all, to comply with all required regulations and desired standards, thus contributing as much as possible to building optimal supply chains for the automotive industry.

And to optimize the supply chain in this industry, it is necessary to minimize waste of time and resources, focus efforts on quality, carry out continuous improvement processes through quality alert systems and certification programs for operating personnel, for example, and use tools to measure customer satisfaction.

The incorporation of technologies that facilitate and improve processes is also key in this industry, as well as constant innovation to keep streamlining the chain.

All of the above, in addition to being part of the desirable strategy for the industry itself, are also appropriate criteria for scrutinizing current suppliers, or criteria for selecting new suppliers, based on specific data to constantly verify the quality of the services provided, and to determine whether they are companies worth collaborating with.

The selection process

To choose the right providers, you may start by identifying and researching the available companies, their services, activities, and capabilities, as well as their business policy and customer service level provided. It is also convenient to investigate if they have or have had problems in their operations or services.

Relevant financial aspects should not be neglected to establish satisfactory terms of cooperation and anticipate risk factors, and also environmental and social responsibility aspects, beyond mandatory regulatory compliance.

The evaluation process

Other relevant aspects to choose the right partners are their delivery times and punctuality: the quality of the products and services offered, their quality certifications, reputation, specific certifications according to their field, etc.

Likewise, the profile of the supplier companies, their experience, and collaborations with other companies in the industry must be considered.

Of course, the payment conditions with which they work or can offer are also important.

The analysis must be detailed and well-supported. Thoroughly analyzing the relevant indicators will help to minimize risks. It should be remembered that recurrent suppliers changes or having cooperation problems with them can disrupt the supply chain and decrease company's efficiency, or even cause losses and instability.

On the other hand, carrying out a continuous supplier evaluation will help to maintain high quality levels.

And finally, a good selection of suppliers in this industry, as in any other, ultimately is translated into greater efficiency and profitability.

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