Global Procurement Strategy & Risk Management

Global Procurement Strategy & Risk Management

Identifying and pre-screening low-cost electric-drive component suppliers in China and North America

Ricardo Strategic Consulting (RSC) supports a large global automotive OEM to expand its low-cost supply base with manufacturing in China and North America for a next-generation hybrid transmission program.


Automotive OEMs are looking for new supply chain strategies to maintain and increase competitiveness while introducing new propulsion technologies. The retail prices in the hybrid vehicle segment are falling as OEMs struggle to deliver competitive performance while maintaining profitability.

The client challenges RSC to explore cost-saving opportunities within the electric drive component supply base. To meet this challenge, RSC utilizes decades of global procurement expertise to identify ideal supply chain opportunities and thus open new cost-saving options. RSC generates a list of candidate suppliers with essential technical capability to develop solutions and work collaboratively to provide low-cost electric drive components.

Suppliers must meet stringent quality and performance metrics for inclusion in the client’s supply base.  RSC evaluates candidate suppliers based on operational stability, experienced R&D capability, region-specific manufacturing footprint, and growth potential.


RSC uses various research methods to provide a comprehensive list to the client, such as:

  • Proprietary internal manufacturer databases
  • Ricardo’s global supplier database and collaboration experience
  • Industry trade groups, events, and conferences
  • Publicly available financial documents and databases
  • Vehicle system and sub-system teardown benchmarking studies

RSC selects high-potential low-cost supplier candidates that meet the client’s stringent regional requirements and screens for quality manufacturing and technical capability.
Finally, RSC creates a supplier dossier of each pertinent regional supplier to guide and inform the client on the next phase of the supply base development process, including on-site assessments.


RSC identifies over 600 (long list) suppliers capable of manufacturing the targeted hybrid transmission commodities in China and North America. Each supplier was screened and evaluated based on a set of client requirements utilizing RSC’s diverse procurement capabilities and experience. Approximately 100 (short-list) suppliers met the requirements and were identified as high-potential and credible short-listed suppliers.

RSC creates a detailed dossier with key supplier characteristics to provide the client with prioritization as the client plans to engage these manufacturers as part of the supplier qualification and development process culminating in a competitive sourcing exercise. The next phase will include requests for information from suppliers and a follow-up on-site assessment to validate and confirm supplier responses.


The client receives a detailed long list of new suppliers, each with a comprehensive evaluation including but limited to the following:

  • Revenue, R&D focus, manufacturing capability, regional footprint, growth potential

This project enables the client to achieve four key strategic supply chain evaluation milestones quickly:

  1. Identify qualified suppliers as potential supply base partners in regions of interest
  2. Curate and prioritize a list of potential suppliers based on a balanced scorecard methodology
  3. Efficiently add capacity to new supplier identification and inclusion process
  4. Add new low-cost supplier solutions to targeted electric drive components to increase competitiveness