The Application Of Activity-based Costing In The Supplier Evaluation

In current automobile industry, supply chain plays a more and more important role. How to manage suppliers is becoming a major problem for customers in the whole supply chain. Enterprises always seek for profit maximization. How to control purchasing cost, especially to minimize unnecessary quality cost is a new thinking and method to evaluate suppliers. Traditional evaluation methods are one-sided and subjective without considering extra costs caused by different failure mode. However, Activity-Based Costing covers these defects.This thesis took Activity-Based Costing as basis of supplier evaluation. Through analysis and study of operational process, possible failure mode in different process have been work out. And cost drivers of failure mode from all kinds of suppliers and parts are clearly defined. Base on the study, the concept of “Failure Mode Coefficient E” was raised, which is a new supplier evaluation method. And cause of typical high E value, appearance of several failure modes and frequent appearance of single failure mode were analyzed intensively.In the end of this thesis, according to this method, actual supplier performance in the enterprise was integrated in statistical data calculation, which realized application of activity-based costing in supplier evaluation in the enterprise. After deep analysis of actual evaluation results, root cause of failure mode was founded which reflected feasibility, practicability and guiding purpose of this evaluation method.