Supplier Selection Based on Process Capability and Price Analysis

Supplier selection is an important part of supply chain management. Among the numerous methods that have been proposed, process capability index is considered to be the most effective technique for identifying quality parts. However, supplier selection should be carried out on the basis of quality and cost together. There is no easy tool available to evaluate the price and quality in an integrated manner. In this article, a new approach to supplier selection using capability index and price comparison (CPC) chart is presented. The CPC chart integrates the process capability and price information of multiple suppliers and presents them in a single chart. It provides a simple but effective method to consider quality and price simultaneously in the supplier selection process.