Automotive parts and components manufacturers compete on a set of criteria to the satisfaction of their customers and some of the more critical ones are; cost or selling price, quality, logistic, responsive and R&D capabilities.
Quality and logistics are important criteria for most OEMs when assessing their vendors. Evaluation of quality will be much dependent on the quality systems, such as ISO/TS16949, being adopted. In addition the capability of a vendor in terms of quality is often assessed on the amount of rejects attained on delivery and the amount of rework undertaken within a defined volume produced.
Although the quantum of rejects and rework may vary from process to process, a world class vendors are considered to be in the order of 200 parts-per-million (ppm) in their rejects on delivery and 1.2 per cents parts are reworked. Quantity of rejects prior to delivery, or scrap, has also been taken into account to reflect the capability of the vendors.
R&D capability provides a clear indication of the personnel intellectual capacity within the vendor’s manpower structure which renders high confidence in the OEMs to procure their required parts from the vendor.
Above all the true benchmark adopted by most OEMs in selecting their suppliers is cost, and the cost competition is severe in any procurement exercises.
To enter the regional or global supply chain, it is necessary for the local vendors to ascertain their level of competitiveness through a benchmarking exercise against world class manufacturers. In this respect Malaysia Automotive Institute has taken the initiative to implement a programme known as “Automotive Supplier Excellence Programme”, or ASEP.
The Programme aims to assist the Malaysian automotive supply base to establish their levels of competitiveness through an established competency assessment framework. Thereon prioritised series of improvement projects are planned and implemented to raise the vendors’ capability to a globally competitive standard.
These aims are pursued through a three-stage process to ensure the use of limited resources in achieving maximum benefit for the vendors.
Stage 1 of the programme is to define the vendors’ performance criteria and was approached through a combination of surveys and workshops. It was determined that the benchmarking exercise shall examine 11 competency areas of the vendors, namely; management and Leadership, financial systems and practices, cost structures and analysis tools, global sourcing and marketing strategies, supply chain Integration, customer focus, new model introduction capability, manufacturing and quality, safety, technology investment, and people and performance.
Measuring of the vendors’ performance, based on the above performance criteria is carried out in stage 2 to determine their current performance levels and particularly where the gaps were in relation to global best practice.