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International Journal of Management (IJM)
Volume 7, Issue 7, November–December 2016, pp.191–203, Article ID: IJM_07_07_020
Available online at
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ISSN Print: 0976-6502 and ISSN Online: 0976-6510
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STUDY OF SUPPLIER PERFORMANCE SCORECARD
SYSTEMS OF CAR MANUFACTURING COMPANIES
IN INDIA: A LITERATURE REVIEW
Anand Patil
PhD Research Scholar, Organizational Management, Vishwakarma Institute of Management & Research,
Pune University, Pune, India
Dr. Jyoti Gogte
PhD Research Guide, Vishwakarma Institute of Management & Research,
Pune University, Pune, India
ABSTRACT
“The constant pressures of Globalization and Competitive advantage have influenced
organization to attain goal of low cost, high quality, flexibility and more customer satisfaction.”
(Patil A.N., 2014). Good supplier base has become important part of strategies in gaining
competitive advantage. For this effective supplier evaluation in terms of measurement and
monitoring plays a vital role. “Choosing the right supplier plays an important role in making
organizations profitable and keeping them focused on their potential strengths. Therefore,
evaluating the quality of suppliers carefully is vital for any company”. (Thesis A. 2012).
Measuring performance of supplier is complex task due to numerous factors including regional
organizational culture, Industry trends and issues. In this paper, study is made for exploring
supplier evaluation based on: (1) Evaluation parameters identified by 161 researchers from 1966
to 2012 (2) Scorecards used by Indian car manufacturing companies for evaluation of their
suppliers and (3) International standard ISO/TS16949.
Based on the result of the study of literature, we conclude that supplier evaluation parameters
are no longer fixed and will continue to change, based on industry dynamics.
Supplier evaluation parameters include both, traditional parameters (like cost, quality,
delivery) and nontraditional parameters (technical capability, reputation and position in industry
etc). Experience and studies have shown that there is no best way for evaluating suppliers; it varies
from country to country, also from one company to other. “Increased competition and
globalization of markets facilitated by Internet-based technologies have combined to dramatically
change the ranking of factors while introducing new criteria to the supplier evaluation process.”
(S. Hossein Cheragh, Mohammad Dadashzadeh, Muthu Subramanian, 2004)
JEL Classification: L2, L20, L21, L25, L6, L60, L62, L25, M10, M11, M19
Key words: Supplier evaluation, Supplier performance, Scorecards, Performance measurement,
Supplier evaluation parameters, Car Manufacturing Companies in India
Anand Patil and Dr. Jyoti Gogte
http://www.iaeme.com/IJM/index.asp 192 editor@iaeme.com
Cite this Article: Anand Patil and Dr. Jyoti Gogte. Study of Supplier Performance Scorecard
Systems of Car Manufacturing companies in India: A Literature Review. International Journal of
Management, 7(7), 2016, pp. 191–203.
http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=7&IType=7
1. INTRODUCTION
1.1. Rising Indigenization Industry
The Indian automobile market is at 5
th
position in the world with highest growth rate of 7.64% in year
2015. India is expected to become the fourth largest automobiles producer globally by 2020 after China,
US and Japan. (IBEF, SIAM 2016)
Table 1
Source:http://www.livemint.com/Industry/bulpIdEod7tk9HTftdo9bL/At-764-growth-India-fastest-growing-
passenger-car-market.html (Siam / OICA)
Indian Car Industry will continue to excel through - Robust demand, Export opportunities and
competitive cost advantages - relative to operations in Europe and Latin America. Added advantage for
India is presence of a large pool of skilled and semi-skilled workforce amidst a strong educational system
and India is third largest steel producer globally hence a cost advantage. (IBEF 2016)
In current competitive atmosphere Industry has challenges to meet cost and quality objectives. On one
side cost to be kept lower while Quality has to be match international levels. Additionally there is huge
competition among developing countries like China, India, Brazil and South Africa etc.
Although Indian automotive industry has gone through several reforms to improve their performance,
Industry has to put efforts in improving organizational culture, systems, and infrastructure etc. This is not
only required for OEM’s but more efforts are required at Tier 1 and Tier 2 suppliers to bring them up to
meet these standards. In fact biggest challenge is on supplier side.
With companies outsourcing their manufacturing to suppliers, the supply chains are becoming longer.
On the other side, many of these manufacturers have streamlined their supply chain and implemented lean
inventory techniques. As a result, any issue in supplier quality can quickly results in stock out. Hence
managing own suppliers is very high on the agenda of these companies. Supplier Performance Scorecard
Study of Supplier Performance Scorecard Systems of Car Manufacturing companies in India: A Literature Review
http://www.iaeme.com/IJM/index.asp 193 editor@iaeme.com
System plays very vital role in this process. This not only helps in evaluating & improving supplier
performance but also guides in selecting / delisting the suppliers.
Therefore on this background, present study about Supplier Performance Scorecard System in Indian
car manufacturing industry is taken as research topic. This will be helpful for stake holders of car
manufacturing industry in India to:
Understand perceptions in industry
Identify the key supplier performance parameters
Improve supplier evaluation methods
Improve supplier performance
Build competitive advantage on supplier base
2. LITERATURE REVIEW
Literature review on supplier evaluation parameters is done from following three sources -
1. Based on Research papers, Journals – to understand base concept at origin and evaluation over
period of time
2. Scorecards from Indian Car Manufacturing Organizations – to understand the current evaluation
parameters used by these companies.
3. International standard ISO/TS16949 – to understand the requirement of this international standard.
2.1. Literature Review Based on Research papers, Journals
The analysis criterion for supplier selection and measurement of supplier performance was in focus of
many scientists and purchasing professionals since 1960s. Researchers were working on developing
performance criteria based on which supplier can be evaluated. (Macedonia, E. V. N., Skopje, A. D. 2013).
“Dickson (1966) firstly performed an extensive study to determine, identify and analyze what criteria
were used in the selection of a firm as a supplier. Dickson's (1966) study was based on a questionnaire sent
to 273 purchasing agents and managers selected from the membership list of the National Association of
Purchasing Managers. The list included purchasing agents and managers from the United States and
Canada, which was a total of 170 (62.3 of Dickson's study) regarding the importance of 23 criteria for
supplier (vendor) selection as shown in Table 3. Dickson asked the respondents to assess the importance of
each criterion on a five point scale of: extreme, considerable, average, slight and of no importance. Based
on respondents' reply quality is the most important criterion followed by delivery and performance
history”. (Tahriri, F., Osman, M. R., Ali, A., Yusuff, R. M., & Esfandiary, A. 2013; Mohit Maheshwarkar,
N. Sohani 2012; S Yahya & B Kingsman 1999).
“Dickson reconfirmed his earlier observation that price was not a consistently important factor in the
vendor selection process. Similarly, technical capability, production capacity, and warranties while
considered by the respondents to be very important for some of the purchases were also deemed unworthy
of much consideration inother instances. He finally concluded that three factors were crucial in the choice
of vendors: the ability to meet quality standards, the ability to deliver the product on time, and performance
history” (S. Hossein Cheragh, Mohammad Dadashzadeh, Muthu Subramanian, 2004)
Anand Patil and Dr. Jyoti Gogte
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Table 3
This is the first study that concentrated to identify the main criteria that affect vendors’ selection
process and Dickson’s 23 criteria for supplier (vendor) selection is used as basis for most of the future
studies. But yet, it must be clear that since that period of time new strategies are formulated and new
studies have been published regarding this topic since the contemporary conditions have improved and
better approaches are available. (Macedonia, E. V. N., Skopje, A. D. 2013).
Figure 2 below shows that how supplier evaluation parameters are increasing over period of time. From
2001 onwards it is showing more number of additions of new parameters resulting in proportionate
increase the total number of active parameters from 23 in year 1966 to 39 in year 2011-2012
Study of Supplier Performance Scorecard Systems of Car Manufacturing companies in India: A Literature Review
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Figure 2
Table 4 below shows the comparison between 23 supplier evaluation criteria ranks obtained by
Dickson in 1966 vs. ranks obtained based on performance criteria identified by 161 research papers from
1966 to 2012. (Patil, A. N. 2014; Supervisor, G., & Lundquist, J. 2011; Thesis. A. 2012). Table indicates
that ranks are not the same as identified by Dickson and has changed over years. Parameters like Desire
for business, Operation control, Packing ability, Amount of pass business, Training aids which were
identified by Dickson in first 23 criteria rank were not identified in first 23 ranks by most of the
researchers. New Parameters like Relationship closeness / Effort for cooperation, Response to customer
request, Production facility and capacity, Flexibility, Technical support found place in first 23 ranks.
Additional 38 New parameters identified which was not the part of 23 parameters identified by Dickson.
Table 4 also shows that although there are changes in supplier evaluation parameters over period of time,
18 criteria’s from Dickson’s 23 parameters continue to be part of supplier evaluation criteria in first 23
parameters till 2012. New rank is based on reference of evaluation parameter in number of papers.