Premium Essay

Supplier-Selection-Criteria-and-Methods-in-Supply-Chains-a-Review

In: Business and Management

Submitted By ChrisLIan
Words 6221
Pages 25
World Academy of Science, Engineering and Technology
International Journal of Social, Behavioral, Educational, Economic and Management Engineering Vol:7, No:10, 2013

Supplier Selection Criteria and Methods in Supply
Chains: A Review
Om Pal, Amit Kumar Gupta, R. K. Garg

International Science Index Vol:7, No:10, 2013 waset.org/Publication/16944

Abstract—An effective supplier selection process is very important to the success of any manufacturing organization. The main objective of supplier selection process is to reduce purchase risk, maximize overall value to the purchaser, and develop closeness and long-term relationships between buyers and suppliers in today’s competitive industrial scenario. The literature on supplier selection criteria and methods is full of various analytical and heuristic approaches. Some researchers have developed hybrid models by combining more than one type of selection methods. It is felt that supplier selection criteria and method is still a critical issue for the manufacturing industries therefore in the present paper the literature has been thoroughly reviewed and critically analyzed to address the issue. Keywords—Supplier selection,
Mathematical Programming.

AHP,

ANP,

TOPSIS,

I. INTRODUCTION

I

N most industries, the cost of raw materials and component parts represents the largest percentage of the total product cost. For instance, in high technology firms, purchased materials and services account for up to 80% of the total product cost. Therefore, selecting the right suppliers is the key to procurement process and represents a major opportunity for companies to reduce costs across its entire supply chain.
Choosing the right method for supplier selection effectively leads to a reduction in purchase risk and increases the number of JIT suppliers and TQM production. Supplier selection problem has become one of the most important...

Similar Documents

Free Essay

An Ahp Framework of Supplier Evaluation with Reference to High Value and Critical Items: a Case Study

... An AHP framework of supplier evaluation with reference to high-value and critical items: a case study Debadyuti Das* Faculty of Management Studies University of Delhi 110 007 Delhi, India E-mail: debadyuti_das@yahoo.co.in *Corresponding author Deepak Barman Faculty of Management Studies Banaras Hindu University 221 005 Varanasi, India E-mail: dbarmanbhu@rediffmail.com Abstract: This study developed a simple two-stage decision framework for evaluating suppliers of high-value and critical items with reference to a heavy engineering organisation by employing the Analytic Hierarchy Process (AHP). The first stage involved examining the qualifying criteria of the items on quality, while the second stage was concerned with identifying all other relevant attributes, including quality concerning high-value and critical items applicable to the organisation under study, and with finding out the relative importance of the same. The attributes were organised in a two-tier hierarchy showing four major criteria in the first tier and 17 subcriteria in the second tier. This enabled us to employ AHP to find out the relative importance of each individual subcriterion through pair-wise comparison between all major criteria and subcriteria by eliciting opinions from three experts. The findings indicated the quality/reliability of the items to be the most important criterion, followed by price and then technological capability of the suppliers. A group of five suppliers was evaluated on......

Words: 7789 - Pages: 32

Premium Essay

Ducati Cost Analysis

...be an analysis report of the three aspects of the purchasing management. Firstly, the supplier selection criteria and supplier evaluation system, which includes the purchasing goals, the needs of the organization as well as the purchasing cost analysis. Secondly, the usage of ICT (Information and Communication Technologies) for purchasing operations. Lastly, for the purchasing operations and management will be covered in this essay. Ducati first succeeded in manufacturing the fastest 250cc production bike in 1960 called the Mach 1, which was lightweight and a true sports bike design. From this initial success...

Words: 2017 - Pages: 9

Premium Essay

Literature Review Literature On Sourcing Performance

...Literature review This section includes prior studies which were done on the research variables identified. Accordingly, sourcing strategy refer to sourcing strategy encompasses a variety of factors, including the number of suppliers that will be contracted, the type of relationship that will be pursued with suppliers, and the type and conditions of contracts that will be negotiated (Van Weele, 2009 cited from Rijpkema et. al 2004). Whilst partnership quality refers to a reciprocal interactive, inter-organizational relationship to achieve shared goals’. (Lee and Kim (1999), Lee (2001) and Byramjee et al., (2010). Sourcing performance can be defined as quality of buying products/materials at the right quality, in the right time and right place,...

Words: 994 - Pages: 4

Premium Essay

Impact of Purchasing Capability

...Astrid Hanghøj Risskov, Denmark, astridhanghoej@gmail.com This article aims to integrate capability-based theory into purchasing management. The research model presented in the article focuses on the effect of supplier evaluation capability and risk management capability on delivery performance. Further, the article explores the moderating effect of demand and technological uncertainty. The methodology relies on a multiple informant survey design with responses from purchasing and production managers in Danish manufacturing companies. Hypotheses are tested using regression analysis based on data collected from 197 firms. Risk management capability is found to increase delivery performance. Unexpectedly, supplier evaluation capability was found to decrease delivery performance. Demand uncertainty has a negative effect on delivery performance. Technological uncertainty had no effect on delivery performance. The results are discussed in detail in the final section of the article. Keywords: purchasing capabilities, delivery performance, environmental uncertainty Supply Chain Forum An International Journal © Copyright KEDGE BS ISSN print 1625-8312 ISSN online1624-6039 Supply Chain Forum An International Journal Purchasing and supply management (PSM) continues to become an increasingly more important activity for firms. Purchasing managers need to demonstrate that they make a valuable contribution to the bottom line (Carr & Pearson, 1999)......

Words: 7735 - Pages: 31

Premium Essay

Global Supply Chain Design

...Part E 41 (2005) 531–550 www.elsevier.com/locate/tre Global supply chain design: A literature review and critique Mary J. Meixell a a,* , Vidyaranya B. Gargeya b,1 School of Management, Enterprise Hall, MSN 5F4, George Mason University, Fairfax, VA 22030-4444, United States b Information Systems and Operations Management Department, 479, Bryan Building, The University of North Carolina at Greensboro, Greensboro, NC 27402, United States Abstract In this paper, we review decision support models for the design of global supply chains, and assess the fit between the research literature in this area and the practical issues of global supply chain design. The classification scheme for this review is based on ongoing and emerging issues in global supply chain management and includes review dimensions for (1) decisions addressed in the model, (2) performance metrics, (3) the degree to which the model supports integrated decision processes, and (4) globalization considerations. We conclude that although most models resolve a difficult feature associated with globalization, few models address the practical global supply chain design problem in its entirety. We close the paper with recommendations for future research in global supply chain modeling that is both forward-looking and practically oriented. Ó 2005 Elsevier Ltd. All rights reserved. Keywords: Supply chain design; Globalization; Outsourcing; Supply chain integration; International sourcing 1. Introduction......

Words: 10148 - Pages: 41

Premium Essay

Global Supply Chain Design: a Literature Review and Critique

...Part E 41 (2005) 531–550 www.elsevier.com/locate/tre Global supply chain design: A literature review and critique Mary J. Meixell a a,* , Vidyaranya B. Gargeya b,1 School of Management, Enterprise Hall, MSN 5F4, George Mason University, Fairfax, VA 22030-4444, United States b Information Systems and Operations Management Department, 479, Bryan Building, The University of North Carolina at Greensboro, Greensboro, NC 27402, United States Abstract In this paper, we review decision support models for the design of global supply chains, and assess the fit between the research literature in this area and the practical issues of global supply chain design. The classification scheme for this review is based on ongoing and emerging issues in global supply chain management and includes review dimensions for (1) decisions addressed in the model, (2) performance metrics, (3) the degree to which the model supports integrated decision processes, and (4) globalization considerations. We conclude that although most models resolve a difficult feature associated with globalization, few models address the practical global supply chain design problem in its entirety. We close the paper with recommendations for future research in global supply chain modeling that is both forward-looking and practically oriented. Ó 2005 Elsevier Ltd. All rights reserved. Keywords: Supply chain design; Globalization; Outsourcing; Supply chain integration; International sourcing 1. Introduction......

Words: 10148 - Pages: 41

Premium Essay

Summary Logistics

...4 1.2. Logistics 4 1.3. Operations management 5 1.4. Supply chain management 5 2. Lesson 2, Operations and supply chain strategies (chapter 2) 8 2.1. Chapter objectives 8 2.2. Relationship and difference (point 1) 8 2.3. Core competencies (point 2) 9 2.4. Strategic alignment (point 3) 9 2.5. Supply chain operations and decision categories (point 4) 10 2.6. Customer value and value index calculations (point 5) 11 2.7. Trade-offs among performance dimensions (point 6) 11 2.8. Order winners versus and order qualifiers (point 7) 12 7. Lesson 3, Supply management (chapter 7) 13 7.1. Chapter objectives 13 7.2. Identify and describe the various steps of the strategic sourcing process. 13 7.3. Spend analysis (point 2) 14 7.4. Differences between insourcing and outsourcing (point 4) 15 7.5. Portfolio analysis (point 3) 16 7.6. Multi criteria decision (point 6) 17 7.7. Negotiations and the purpose of contracts (point 7) 18 7.8. Procure-to-pay cycle (point 8) 18 8. Lesson 4 Logistics (chapter 8) 19 8.1. Chapter objectives 19 8.2. Logistics management (point 1) 19 8.3. Transportation modes (point 2) 19 8.4. Warehousing (point 3) 21 8.5. Logistics strategy (point 4) 22 8.6. Measuring logistics performance (point 5) 23 8.7. Landed costs (point 6) 23 8.8. Reverse logistics systems (point 7) 24 8.9. Weighted center of gravity method (point 8) 25 11. Lesson 5, Managing inventory throughout the supply chain (chapter 11) 26 11.1. Chapter objectives 26 11.2.......

Words: 6216 - Pages: 25

Premium Essay

Analysis

...open and transparent purchasing practices which comply with all applicable federal and provincial legislation and trade agreements, resulting in the highest quality service delivery. Policies 1. All purchases made by the Hospital will be compliant with the hospital’s policies and procedures. These policies and procedures will be aligned with the Ontario Supply Chain Guideline. All purchase orders and contracts will be executed according to this policy and the Hospital’s Signing Authority Policy ( insert link). Single/sole sourced purchases are acceptable only under circumstances defined in the associated purchasing procedures, and must be executed in accordance with the Agreement on Internal Trade. Vendors of Record (VOR), or preferred supplier arrangements, may be established for the supply of a certain category of goods, services or construction where strategic relationships with a small group of suppliers will result in greater value for the hospital. VOR’s must be set up through an open and competitive purchasing process. All purchasing related activities will be transacted in compliance with the Supply Chain Code of Ethics and the Conflict of Interest policies of the hospital. NB: All processes are detailed in the Purchasing Procedures. Exceptions Any exceptions to these policies require written justification and the approval of the Vice-President, Finance. Scope The Purchasing Policy applies to all individuals involved with purchasing...

Words: 17672 - Pages: 71

Premium Essay

Outline

...Supply Chain Management Certificate This “practical” interactive certificate series is designed to provide participants with a detailed look at global supply chain management with a focus on Purchasing, Inventory, and Warehousing. This certificate addresses issues in terms of today’s global supply chain and its supply chain streams and flow process, so practitioners can know how to make the most of this powerful tool. You will have the opportunity to explore a variety of global supply chain management areas in depth, extrapolate their logistics meanings, and apply the techniques needed to make it all work for your organization. Mastering the supply chain’s dynamics is no longer extraneous to survival in today's global environment—it's essential. Because logistics affects 30% or more of the value added to your product, it offers abundant areas of opportunity and exciting possibilities for lowering the bottom line. Where you may not be able to control the outside influences, ambiguities, and contradictions of the global economy at large, you can have a profound influence on controlling those internal logistics factors that substantially affect your profitability or cost containment efforts. Course Schedule Global Supply Chain Basics and Technology (Day 1) Global Logistics Basics and Functionality (Day 2) Essential Aspects of Purchasing (Day 3) Inventory ManagementPractices (Day 4) Mastering Warehouse Mechanics (Day 5) WHO SHOULD ATTEND • Logistics, supply chain,......

Words: 1621 - Pages: 7

Premium Essay

Decision Sciences Research in China

...Propositions for Research in Supply Chain Management, Logistics, and Quality Management∗ Xiande Zhao Department of Decision Sciences and Managerial Economics, Chinese University of Hong Kong, Shantin, NT Hong Kong, e-mail: Xiande@baf.msmail.cuhk.edu.hk Barbara B. Flynn† Kelley School of Business, Indiana University, 801 W. Michigan St., BS 4010, Indianapolis, IN 46033, e-mail: bbflynn@iupui.edu Aleda V. Roth Department of Management, College of Business and Behavioral Sciences, Clemson University, 343A Sirrine Hall, Clemson, SC 29634, e-mail: aroth@clemson.edu ABSTRACT As China becomes increasingly important to the global economy, it is critical to conduct high-quality research on important decision sciences issues there. This article provides an extensive review and critique of the extant China-based literature on supply chain management, logistics, and quality management, based on the foundation established by Zhao, Flynn, and Roth (2006). In general, decision sciences research in China is in its infancy. Although there have been some very interesting and well-executed articles, the majority are descriptive and focus on status updates. We provide a set of propositions to guide future research in logistics, supply chain management, and quality management in China, as well as guidelines for dealing with some of the unique challenges of conducting empirical research in China. Subject Areas: China research, Logistics, Quality Management, Supply Chain Management.......

Words: 18592 - Pages: 75

Premium Essay

Supply Chain Management

...Finance Instructor Supply Chain Management June 18, 2012 Supply Chain Management Business has become increasingly competitive due too many factors. Business has become increasingly global and many companies are diversifying to enter new markets. A factor which companies have become increasingly aware of is supply chain management. A supply chain connects supplies with customers (Chin, Lie, Tsai, 2012). Supply chain management has become an important for companies to evaluate and research because improper management can lead to can hinder performance. Therefore, increased evaluation and research in proper supply chain management is essential for businesses to maintain a competitive advantage. This paper is going to analyze supply chain management a retail perspective to new learning perspectives of modern businesses. Issues For many years supply chain managers had difficulty determining the optimal amount for their inventory levels (Chin et al, 2012). For example, in Wal-Mart the company has to determine how much inventory to include in stores in comparison to a just in time approach. Research has indicated that improper supply chain management can lead to inefficient company performance (Asamoah, Annan, Nyarko, 2012). Therefore, improper evaluation of inventory can increase costs for the company and decrease sales to lack of inventory. For example, typically businesses would replenish inventories when the inventory is low. The supply chain manager would......

Words: 1972 - Pages: 8

Premium Essay

Literature Review Socio Political

...Literature Review In an effort to combat and overcome the pitfalls experienced in public procurement and supply chain management, government has made available guidelines and best practice procedures through the provisions of various legislation. This legislation brought about the establishment of the Construction Industry Development Board. The construction board is a means or a method of ensuring that government only deals with suppliers that are reputable and have met public procurement selection criteria. This ensures that the management of public finances are not misused and abused by officials in the form of underhanded business and procurement practices, such as bribery and corruption. However the short fall in legislation is that there is no institutionalised structures established to enforce mandatory procedures and actions within the procurement process of infrastructure. Thus the focus is moved on to the tendering processes and the tender boards of government departments and their role in the supplier selection process and the costs involved in the entire tender process. In South Africa there have been many incidents where tenders have been unlawfully awarded to companies that lack the competence, staffing capacity and financial stability, to meet the standards of the tendering specifications. Although malpractices may have been dealt with through the exclusion of the supplier from the government department's supplier database or the payment of an insignificant...

Words: 265 - Pages: 2

Premium Essay

Measuring Supply Chain Performance

... prod. res., 2004, vol. 42, no. 1, 131–163 Understanding supply chain management: critical research and a theoretical framework I. J. CHENy* and A. PAULRAJy Increasing global cooperation, vertical disintegration and a focus on core activities have led to the notion that firms are links in a networked supply chain. This strategic viewpoint has created the challenge of coordinating effectively the entire supply chain, from upstream to downstream activities. While supply chains have existed ever since businesses have been organized to bring products and services to customers, the notion of their competitive advantage, and consequently supply chain management (SCM), is a relatively recent thinking in management literature. Although research interests in and the importance of SCM are growing, scholarly materials remain scattered and disjointed, and no research has been directed towards a systematic identification of the core initiatives and constructs involved in SCM. Thus, the purpose of this study is to develop a research framework that improves understanding of SCM and stimulates and facilitates researchers to undertake both theoretical and empirical investigation on the critical constructs of SCM, and the exploration of their impacts on supply chain performance. To this end, we analyse over 400 articles and synthesize the large, fragmented body of work dispersed across many disciplines such as purchasing and supply, logistics and transportation, marketing, organizational......

Words: 17828 - Pages: 72

Premium Essay

Southwest Airlines

...Purchasing and Supply Chain Management 2th Exam GEOP4335. Chapter 8: Supplier Selection and Evaluation |1. |In today’s competitive environment, progressive firms must be able to produce quality products at reasonable prices. Product | | |quality is a direct result of the _______________ and the ___________. | | |A. management / workforce | | |B. engineers / designers | | |C. production workforce / suppliers | | |D. production department / operations division | | |E. employees / machinery | | |Page 157 | |2. |Traditional purchasing professionals who act as little more than order placers are giving way to __________ involved ___________ | | |managers who control vital inputs to the production process. ...

Words: 1833 - Pages: 8

Premium Essay

3pl Selection

...OPERATIONS MANAGEMENT ROUNDTABLE Decision Support Memorandum June 2001 3PL Selection and Implementation GAINS FROM OUTSOURCING CONTENTS Overview of Current Practice STRATEGIC ALLIANCES (Page 2) Shortcoming of Current Practice FAILED PARTNERSHIPS (Page 4) Member Imperative PUTTING THE PIECES TOGETHER Companies gain more from outsourcing all supply chain functions 25 Average Annual Savings(%) 20 15 10 5 0 Inventory Management Freight Payments and Auditing All Supply Chain Functions Year 1 Years 2, 3 &4 (Page 5) Outsourcing logistics functions to 3PLs has been a source of competitive advantage for most companies. Most companies cite greater flexibility, operational efficiency, improved customer service levels, and a better focus on their core businesses as part of the advantages of engaging the services of 3PLs. SELECTING A 3PL PROVIDER (Page 7) Source: Journal of Business Logistics (January 1999) HANDLING THE INTEGRATION PROCESS (Page 9) Executive Summary MANAGING THE RELATIONSHIP (Page 11) Appendices DO YOU NEED TO CONSIDER PARTNERING WITH A 3PL? SOME PERFORMANCE METRICS FOR ASSESSING A 3PL(Pages 13) TEN STEPS TO OUTSOURCING SUCCESS PROFITABLE LIAISONS The Dilemma in Brief The advantages of streamlined and efficiently run supply chains compel many companies to outsource some or all of their logistics functions to third party logistics providers (3PLs). Making the switch to a 3PL presents some unique challenges to a company. The......

Words: 6638 - Pages: 27