VENDOR SELECTION- AN INSIGHT OF METHODS

 Sariga Raj
Division of Information Technology, School of Engineering, CUSAT

Abstract competitiveness which is why many experts

The objective of a collaborative supply chain believe that supplier selection is the most
is to gain competitive advantage, by important activity of a purchasing department.
improving overall performance through Supplier selection is the process by which
taking a holistic perspective of the supply suppliers are reviewed, evaluated and chosen to
chain. Modeling the constituents of a become part of the company’s supply chain.
collaborative supply chain, the key
parameters they influence, and the The contemporary supply management is to
appropriate performance measures in a maintain long term partnership with suppliers,
decision support environment enables prior and use fewer but reliable suppliers. Therefore,
understanding of the impact on the choosing the right suppliers involves much more
performance of a collaborative supply chain than scanning a series of price list and choices,
as a result of changes in the constituents and will depend on a wide range of factors which
key parameters. In turn, this allows involve both quantitative and qualitative.
pinpointing of those areas where the actual Extensive multi-criteria decision making
supply chain can be improved and hence approaches have been proposed for supplier
manage the chain’s performance. This selection, such as the analytic hierarchy process
research proposal aims at reviewing the (AHP), analytic network process (ANP),
different criteria in supplier selection. The case-based reasoning (CBR), data envelopment
various methodologies are studied here. analysis (DEA), fuzzy set theory, genetic
Further the research methodology of algorithm (GA), mathematical programming,
developing a collaborative framework is simple multi-attribute rating technique
proposed. (SMART), and their hybrids.
Index Terms: Supply Chain Management,
Supplier Selection, Supplier Performance. In a globalized and outsourced environment,
managing the performance of suppliers has taken
I. INTRODUCTION a new sense of urgency. As companies focus on
Supplier selection is a fundamental issue in their core competencies and outsource their
the supply chain which heavily contributes to the non-core operations, this percentage has
overall supply chain performance. Companies increased, leading to an increased dependency
who spend a high percentage of their sales on suppliers. In certain industries such as
revenue on parts and material supplies, and technology and automotive, purchases from
whose material costs represent a larger portion external suppliers can be over half of the total
of total costs, savings from supplies are of cost of new products. Increased dependency on
particular importance. These situations require suppliers not only significantly increases an
more systematic and transparent approach to organization’s supply and pricing risk, but it also
purchase decision making, especially regarding increases exposure to adverse scenarios such as a
the area of supplier selection. Carefully selecting safety issues or lack of regulatory compliance.
the suppliers significantly reduces the To continually improve operation performance,
purchasing cost and improves corporate manage costs and reduce regulatory risks, a

ISSN (PRINT): 2393-8374, (ONLINE): 2394-0697, VOLUME-5, ISSUE-1, 2018

1
 INTERNATIONAL JOURNAL OF CURRENT ENGINEERING AND SCIENTIFIC RESEARCH (IJCESR)

company must be able to not only select the values are used to assess the ratings and weights
appropriate suppliers, but also to monitor and for various factors. These linguistic ratings can
manage performance of these partners over time. be expressed in trapezoidal or triangular fuzzy
numbers. Then, a hierarchy multiple criteria
Recent analyst reports have shown that often less decision-making (MCDM) model based on
than half of enterprises have formal procedures fuzzy-sets theory is proposed to deal with the
or systems in place for consistently measuring supplier selection problems in the supply chain
supplier performance. The monitoring is based system. According to the concept of the TOPSIS,
on tracking the performance with previously a closeness coefficient is defined to determine
agreed norms of the agreement or predefined the ranking order of all suppliers by calculating
Key Performance Indicators (KPI’s). Often the distances to the both fuzzy positive-ideal
suppliers cannot conform to the predefined solution (FPIS) and fuzzy negative-ideal
norms due to many reasons. Non-conformance solution (FNIS) simultaneously.
by the supplier adversely affects the supply
chain. But if the risk at every stage is analysed Lewis [4] suggested that of all the
previously and behavior of the supplier predicted, responsibilities that related to purchasing, none
the failure could be averted. This research was more important than the selection of a
proposes to develop a framework to monitor proper source. As long as supplier relationship
supplier performance by constantly tracking management (SRM) concept is concerned,
supplier activities, analyzing the outcomes and Companies are trying to build long-term and
risks at each stage, predicting the supplier profitable relationships with suppliers. Zeng, A.
performance. The research includes the study of Z. [5] developed an integrated optimization
different KPI’s and the possible risks involved. framework for joint decisions of sourcing and lot
The effects of these risks on the KPI’s will also sizing for sustaining time-based competitiveness.
be studied. The proposed framework will help to Author developed an optimization procedure
select an appropriate supplier for any buyer and that can be conveniently implemented on a
track the performance. It will recommend a risk spreadsheet to determine the optimal number of
free solution for the supplier. sources and the lot size and the sensitivity
analysis shows that the impact of transportation
II. LITERATURE SURVEY on the sourcing and lot sizing decisions is
Weber, C. A. et al. [1] reviewed, annotated, significant.
and classified 74 related articles which have
appeared since 1966. Specific attention was Aissaoui, et al. [6] extended previous survey
given to the criteria and analytical methods used papers by presenting a literature review that
in the vendor selection process. In response to covers the entire purchasing process, considers
the increased interest in Just-In-Time (JIT) both parts and services outsourcing activities,
manufacturing strategies, and analysis of JIT's and covers internet-based procurement
impact on vendor selection was also discussed environments such as electronic marketplaces
by the authors. auctions. In view of its complexity, authors
focused especially on the final selection stage
Degraeve, Z. et al. [2] focused on a that consists of determining the best mixture of
combinatorial auction where a bidder can vendors and allocating orders among them so as
express his preferences by means of a so-called to satisfy different purchasing requirements.
ordered matrix bid. Authors gave an overview of Tahriri, F. et al. [7] state that in today’s highly
how this auction works and elaborated on the competitive environment, an effective supplier
relevance of the matrix bid auction. The methods selection process is very important to the success
to verify whether a given matrix bid satisfies a of any manufacturing organization. Supplier
number of properties related to micro-economic selection is a multi-criterion problem which
theory were developed. Tung and Torng [3] includes both qualitative and quantitative factors
presented a fuzzy decision-making approach to (criteria). A trade-off between these tangible and
deal with the supplier selection problem in intangible factors is essential in selecting the
supply chain system. In this work linguistic best supplier.

ISSN (PRINT): 2393-8374, (ONLINE): 2394-0697, VOLUME-5, ISSUE-1, 2018

2
 INTERNATIONAL JOURNAL OF CURRENT ENGINEERING AND SCIENTIFIC RESEARCH (IJCESR)

Burton, T.T. [8] states that for many firms, companies consider factors like quality,
purchases from outside vendors account for a flexibility, etc. when evaluating supplier
large percentage of their total operating costs. performance. Authors developed a decision
The raw material purchased for most U.S. firms support tool which should help companies to
constitutes 40-60% of the unit cost of a product. integrate environmental criteria into their
For large automotive manufacturers, the cost of supplier selection process. Yan and Wei [14]
components and parts purchased from outside described a mini-max principle based procedure
vendors may total more than 50% of sales. of preference adjustments with a finite number
Purchased material and services represent up to of steps to find compromise weights. Finally it is
80% of total product costs for high technology proved that compromise weights can be
firms. Abratt [9] analyzed the buying behavior of achieved within a finite number of adjustments
purchasers of high technology laboratory on preference orders.
instrumentation process and identifies and
determines the relative importance of the factors Svensson [15] investigated the models of
influencing supplier selection. Research was supplier segmentation and supplier selection
undertaken with 54 organizations. criteria. Empirical illustrations of supplier
Sharland et al. [10] empirically examined the segmentation based on the perspectives of a VM
impact of cycle time on supplier selection and on and its suppliers are presented. It consists of four
the effectiveness of long-term relationships with relationship strategies towards suppliers in the
suppliers, as reflected in the commitment and automotive industry, such as family, business
trust developed. Authors observed that initial partner, friendly, and transactional. Lee et al. [16]
cycle time is not a significant predictor of trust proposes a methodology which identifies the
and commitment in the context of supplier-buyer managerial criteria using information derived
long-term relationships. However, cycle time from the supplier selection processes and makes
reduction along with consistently high quality use of them in the supplier management process.
were found to be significant predictors of trust For this methodology, authors propose the
and commitment in long-term relationships supplier selection and management system
(SSMS) that includes purchasing strategy
Lin et al. [11] identified the factors affecting system, supplier selection system, and supplier
the supply chain quality management. Authors management system, and explained how the
observed that Quality Management (QM) SSMS is applied to a real supply chain. Pearson
practices are significantly correlated with the and Ellram [17] states that one important domain
supplier participation strategy and this of management is the selection and evaluation of
influences tangible business results, and suppliers. Authors examined and explore the
customer satisfaction levels. techniques currently used to select and evaluate
Gonzalez et al. [12] developed a methodology suppliers by studying a sample of small and large
to analyze the variables involved in the supplier firms in the electronics industry.
management process and it is illustrated with a
case study of the chair manufacturing industry. Verma and Pullman [18] examines the
The results indicate that the supplier selection difference between managers' rating of the
process appears to be the most significant perceived importance of different supplier
variable as it helps in achieving high quality attributes and their actual choice of suppliers in
products and customer satisfaction. Total Nine an experimental setting. Authors use two
variables related to the supplier selection process methods: a Likert scale set of questions, to
were analyzed. Each of these variables was then determine the importance of supplier attributes;
evaluated through an experimental design using and a discrete choice analysis (DCA) experiment,
statistical information based on three factors, to examine the choice of suppliers. The results
namely, quality, cost and productivity. indicate that although managers say that quality
is the most important attribute for a supplier,
Humphreys et al. [13] presented a framework they actually choose suppliers based largely on
for integrating environmental factors into the cost and delivery performance.
supplier selection process. Traditionally,

ISSN (PRINT): 2393-8374, (ONLINE): 2394-0697, VOLUME-5, ISSUE-1, 2018

3
 INTERNATIONAL JOURNAL OF CURRENT ENGINEERING AND SCIENTIFIC RESEARCH (IJCESR)

Dulmin and Mininno [19] made the effort to Weber, C.A. et al. [24] describe three
highlight those aspects that are crucial to process approaches for the selection and negotiation with
qualitative and quantitative performance vendors who were not selected. Furthermore, it
measures. The contribution of a multi-criteria describes how in certain situations two
decision aid method to such problems is multi-criteria analysis tools, multi-objective
investigated, together with how to allow for a programming and data envelopment analysis,
simultaneous change of the weights, generating can be used together for this selection and
results that can be easily analyzed statistically, negotiation process. The paper describes
performing an innovative sensitivity analysis. non-cooperative vendor negotiation strategies
where the selection of one vendor results in
Monczka et al. [20] suggested seven step another being left out of the solution. Weber and
methodology for supplier selection and Desai [25] demonstrated the use of data
evaluation process. These steps are: Recognition envelopment analysis for measuring vendor
of Need for Supplier Selection, Identify Key performance and efficiency. An algorithm is
Sourcing Requirements and Criteria, Determine employed for determining points of vendor
Sourcing Strategy, Identify Potential Supply efficiency on multiple criteria. This study then
Sources, Pre-qualification of Potential Suppliers, demonstrates how parallel coordinates graphical
Determine Method for Final Selection and Select representation can be used to display the
Suppliers and Reach Agreement. De Boer, L. [21] efficiency of vendors on multiple criteria, and, in
stated that so far the application of outranking so doing, visually identify benchmark values on
methods in purchasing decisions has not been these criteria for negotiating with inefficient
suggested in purchasing or operations research vendors.
literature. Authors have shown by means of a
supplier selection example, that an outranking Weber and Ellram [26] explore the use of a
approach may be very well suited as a decision multi-objective programming approach as a
making tool for initial purchasing decisions. method for supplier selection in a just-in-time
(JIT) setting. Maggie and Tummala [28]
Weber, C.A. [22] reviews, annotates, and formulated an AHP-based model and applied it
classifies 74 related articles which have to a real case study to examine its feasibility in
appeared since 1966. Specific attention is given selecting a vendor for a telecommunications
to the criteria and analytical methods used in the system. The use of the proposed model indicates
vendor selection process. In response to the that it can be applied to improve the group
increased interest in Just-In-Time (JIT) decision making in selecting a vendor that
manufacturing strategies, and analysis of JIT's satisfies customer specifications. Also, it is
impact on vendor selection is also presented. Li found that the decision process is systematic and
and Fun [23] proposed a supplier performance that using the proposed AHP model can reduce
measure using the concept of dimensional the time taken to select a vendor.
analysis to obtain an index called the VPI
(Vendor Performance Index). Usually the Hill and Nydick [29] have shown how AHP
performance criteria used in supplier can be used to structure the supplier selection
performance evaluation include quantitative and process. This method of selection is described,
qualitative criteria. Here a new supplier and a detailed, hypothetical example of how
performance measure is proposed as an AHP can be used also is provided. Liu and Hai
alternative to the VPI. For qualitative criteria, a [30] compared the weighted sum of the selection
two-directional consideration is used instead of a number of rank vote, after determining the
one-directional approach, which results in only a weights in a selected rank in order to decide the
single score. The fuzzy bag method is used to total ranking of the suppliers. This investigation
compensate for blindness in human judgment. presents a novel weighting procedure in place of
Then all scores for quantitative and qualitative AHP's paired comparison for selecting suppliers.
criteria are combined in an intuitive sum of It provides a simpler method than AHP that is
weighted averages called the SUR. called voting analytic hierarchy process, but
which does not lose the systematic approach of

ISSN (PRINT): 2393-8374, (ONLINE): 2394-0697, VOLUME-5, ISSUE-1, 2018

4
 INTERNATIONAL JOURNAL OF CURRENT ENGINEERING AND SCIENTIFIC RESEARCH (IJCESR)

deriving the weights to be used and for scoring criteria, which are obtained from the nominal
the performance of suppliers. group technique (NGT) with interdependence.
A. Criteria for Supplier Selection
Ellram, L. M. [33] examines case studies of 11
firms which use total cost of ownership concepts On the basis of the literature reviewed above it
in purchasing. Based on the case study data and has been observed that the basic criteria typically
the literature, barriers and benefits associated utilized for selecting the suppliers are pricing
with the total cost of ownership approach are structure, delivery, product quality, and service
discussed. The total cost of ownership models etc. While most buyers still consider cost to be
used by the case study firms are classified by their primary concern, few more interactive and
type as dollar-based or value-based. interdependent selection criteria are increasingly
Elanchezhian, C. [34] used a versatile technique being used by the manufacturers. The various
namely multi criteria decision making (MCDM) important criteria for the supplier selection as
technique which involves the analytical network observed from the literature reviewed above are:
process (ANP) and technique for order • Price
performance by similarity to ideal solution • Quality
(TOPSIS) method to select the best vendor. • Delivery
Authors developed standard software in a • Performance History
suitable platform such as VB, .NET and MS • Warranties & Claims Policies
access. • Production Facilities and Capacity
• Technical Capability
Min, H. [35] proposes multiple attribute utility • Financial Position
theory which can help purchasing professionals • Procedural Compliance
to formulate viable sourcing strategies in the • Reputation and Position in Industry
changing world marketplace particularly for • Desire for Business
international supplier selection. Authors • Repair Service
considered the factors including political • Attitude
situations, tariff barriers, cultural and • Packaging Ability
communication barriers, trade regulations and • Labor Relations Record
agreements, currency exchange rates, cultural • Geographical Location
differences, ethical standards, quality standards • Amount of Past Business
and so forth. • Reciprocal Arrangement

Sanayei, A. et al. [39] proposed an integrated It has been observed from the literature that
approach of multi-attribute utility theory the price, delivery, and quality continued to be
(MAUT) and linear programming (LP) for rating considered most important criteria by most of
and choosing the best suppliers and defining the the researchers. With economic globalization,
optimum order quantities among selected ones in companies choose suppliers globally from
order to maximize total additive utility. anywhere in the world. For instance , developing
countries are becoming more competitive
Shyur and Shih [40] proposed a hybrid model for because of their low labor and operating costs.
supporting the vendor selection process. First,
the vendor evaluation problem is formulated by
the combined use of the multi-criteria
decision-making (MCDM) approach and a
proposed five-step hybrid process, which
incorporates the technique of an analytic
network process (ANP). Then the modified
TOPSIS is adopted to rank competing products
in terms of their overall performances. The
newly developed ANP will eventually yield the
relative weights of the multiple evaluation

ISSN (PRINT): 2393-8374, (ONLINE): 2394-0697, VOLUME-5, ISSUE-1, 2018

5
 INTERNATIONAL JOURNAL OF CURRENT ENGINEERING AND SCIENTIFIC RESEARCH (IJCESR)

Supplier
Selection
Methods

Fig. 1 Vendor Selection Methods

in supplier selection in several publications.

A. Supplier Selection Methods
Various supplier selection methods as 3) Cluster Analysis (CA)
observed in the literature have been classified in CA is a basic method from statistics which
to a number of broader categories. Fig. 1 uses a classification algorithm to group a number
presents various supplier selection methods as of items which are described by a set of
discussed in the literature. Some of the most numerical attribute scores into a number of
commonly used methods for supplier selection clusters such that the differences between items
are discussed briefly here. within a cluster are minimal and the differences
between items from different clusters are
B. Methods for Prequalification of Suppliers maximal. This classification is used to reduce a
Prequalification is the process of reducing the larger set of suppliers into smaller more
set of all suppliers to a smaller set of acceptable manageable subsets. Hinkle et al. [27] were the
suppliers. The various methods available under first to report this.
this category are: C. Multi Attribute Decision Making (MADM)
1) Categorical Methods Techniques
Basically, categorical methods are qualitative A vendor selection problem usually involves
models. Based on historical data and the buyer's more than one criterion and these criteria often
experience, current or familiar suppliers are conflict with each other. So MADM techniques
evaluated on a set of criteria. After a supplier has are implemented to solve the problem. Some of
been rated on all criteria, the buyer gives an the MADM techniques are:
overall rating. The primary advantage of the
categorical approach is that it helps structure the 1) Analytical Hierarchical Process (AHP)
evaluation process in a clear and systematic way. Analytical Hierarchical Process (AHP) is a
decision-making method developed for
2) Data Envelopment Analysis (DEA) prioritizing alternatives when multiple criteria
DEA is a classification system that splits must be considered and allows the decision
suppliers between two categories, ‘efficient’ or maker to structure complex problems in the form
‘inefficient’. Suppliers are judged on two sets of of a hierarchy, or a set of integrated levels. This
criteria, i.e. outputs and inputs. DEA considers a method incorporates qualitative and quantitative
supplier to have a relative efficiency of 100% if criteria. The hierarchy usually consists of three
he produces a set of output factors that is not different levels, which include goals, criteria,
produced by other suppliers with a given set of and alternatives. Because AHP utilizes a ratio
input factors. Weber et al. [27], [28], and [29] scale for human judgments, the alternatives
have primarily discussed the application of DEA weights reflect the relative importance of the

ISSN (PRINT): 2393-8374, (ONLINE): 2394-0697, VOLUME-5, ISSUE-1, 2018

6
 INTERNATIONAL JOURNAL OF CURRENT ENGINEERING AND SCIENTIFIC RESEARCH (IJCESR)

criteria in achieving the goal of the hierarchy method is only used for international supplier
[32], [34]. selection, where the environment is more
complicated and risky [36].
2) Analytic Network Process (ANP)
Analytic Network Process (ANP) [31] is a 6) Outranking Methods
comprehensive decision-making technique that Outranking methods are useful decision tool to
captures the outcome of the dependence and solve multi-criteria problems. These methods are
feedback within and between the clusters of only partially compensatory and are capable of
elements. Analytical Hierarchy Process (AHP) dealing with situations in which imprecision is
serves as a starting point for ANP. Analytical present. Lot of attention has been paid to
Network Process (ANP) is a more general form outranking models, primarily in Europe.
of AHP, incorporating feedback and However, there is no evidence of applications of
interdependent relationships among decision outranking models in purchasing decisions [21].
attributes and alternatives. ANP is a coupling of
D. Mathematical Programming (MP) Models
two parts, where the first consists of a control
hierarchy or network of criteria and sub-criteria Mathematical programming models often
that controls the interactions, while the second consider only the quantitative criteria.
part is a network of influences among the Mathematical programming models allow
elements and clusters [32]. decision makers to consider different constraints
in selecting the best set of suppliers. Most
3) Total Cost of Ownership (TCO) Models importantly, mathematical programming models
TCO-based models for supplier choice are ideal for solving the supplier selection
basically consists of summarization and problem because they can optimize results using
quantification of all or several costs associated either single objective models or multiple
with the choice of vendors and subsequently objective models [6], [20], and [27]. Some of
adjusting or penalizing the unit price quoted by these models are:
the supplier. Total Cost of Ownership (TCO) as
stated by Ellram [33] is a methodology and 1) Multi-Objective Models
philosophy, which looks beyond the price of a These models deal with optimization problems
purchase to include many other purchase-related involving two or more coinciding criteria.
costs.
2) Goal Programming Models
4) Technique for the Order Performance by Another important tool is Goal Programming
Similarity to Ideal Solution (TOPSIS) (GP). Unlike most mathematical programming
Another favorable technique for solving models, goal programming provides the decision
MADM problems is the TOPSIS. According to maker (DM) with enough flexibility to set target
the concept of the TOPSIS, a closeness levels on the different criteria and obtain the best
coefficient is defined to determine the ranking compromise solution that comes as close as
order of all suppliers and linguistic values are possible to each one of the defined targets.
used to assess the ratings and weights of the
factors. TOPSIS is based on the concept that the E. Artificial Intelligence Methods
optimal alternative should have the shortest Artificial Intelligence (AI) models are
distance from the positive ideal solution (PIS) computer-based systems trained by the decision
and the farthest distance from the negative ideal maker using historical data and experience.
solution (NIS) [34]. These systems usually cope very well with the
complexity and uncertainty involved in the
5) Multiple Attribute Utility Theory (MAUT) supplier selection process. Some of the AI
The MAUT proposed by Min, H. [35] is also models are:
considered a linear weighting technique. The
MAUT method has the advantage that it enables 1) Case-Based-Reasoning (CBR) Systems
purchasing professionals to formulate viable CBR systems fall in the category of the
sourcing strategies and is capable of handling so-called artificial intelligence (AI) approach.
multiple conflicting attributes. However, this Basically, a CBR system is a software-driven

ISSN (PRINT): 2393-8374, (ONLINE): 2394-0697, VOLUME-5, ISSUE-1, 2018

7
 INTERNATIONAL JOURNAL OF CURRENT ENGINEERING AND SCIENTIFIC RESEARCH (IJCESR)

database which provides a decision-maker with research proposes to identify metrics or KPI’s
useful information and experiences from similar, for any kind of enterprise. Data from different
previous decision situations. CBR is still very industries will be analysed to identify the
new and only few systems have been developed shortfalls in method already develop. The
for purchasing decision-making [43]. research includes the study of different KPI’s
and the possible risks involved. The effects of
2) Artificial Neural Network (ANN) these risks on the KPI’s will also be studied. The
The ANN model saves money and time. The proposed framework will help to select an
weakness of this model is that it demands appropriate supplier for any buyer and track the
specialized software and requires qualified performance. It will recommend a risk free
personnel who are expert [42]. solution for the supplier.
The use of collaborative supplier portals that
F. Fuzzy Logic Approach provides this information to suppliers, along
with the ability to set priorities helps ensure that
In this method, linguistic values are used to nothing falls between the cracks and both parties
assess the ratings and weights for various are on the same page with respect to what is
factors. These linguistic ratings can be expressed working well and what needs improvement.
in trapezoidal or triangular fuzzy numbers. Since
human judgments including preferences are
often vague and cannot estimate his preference A. Methodology
with an exact numerical value. The ratings and Step 1: Identify metrics, thresholds and
weights of the criteria in the problem are targets:
assessed by means of linguistic variables. One The first step is to capture key performance
can convert the decision matrix into a fuzzy metrics in the supplier’s contracts. This validates
decision matrix and construct a key terms and measures to help ensure contract
weighted-normalized fuzzy decision matrix once compliance are visible. Secondly, gather input
the decision-makers’ fuzzy ratings have been from key relationship managers to understand
pooled. Finally a closeness coefficient of each their supplier performance objectives and use the
alternative is defined to determine the ranking information to establish metrics and validate that
order of all alternatives [4], [26]. they are aligned with overall strategy.
G. Combined Approaches/ Hybrid Methods Step 2: Collect data through various
mechanisms:
Some authors have combined decision models Collect information to calculate current values
from different steps in the supplier selection on agreed upon set of metrics, thresholds and
process. Degraeve and Roodhoft [37] developed targets. Various methods that can be used to
a model combining mathematical programming gather this data include supplier assessment
model and TCO. Ghodsupour and O’Brien [38] surveys, information from Enterprise Resource
had integrated AHP and Linear Programming to Planning (ERP) systems, homegrown
consider both tangible and intangible factors in operational systems, instant supplier feedback,
choosing the best suppliers. Sanayei et al. [39] etc.
presented an effective model using both MAUT Step 3: View and analyze aggregated
and LP for solving the supplier selection information:
problem. Shyur [40] present an effective model Once data is collected, it should be aggregated
using both ANP and modified TOPSIS, to to report on performance versus plan. While
accommodate the criteria with spreadsheets and other tools can be used for
interdependencies. Boran [41] has proposed a analysis, supplier performance management
multi criteria group decision making approach systems significantly improve the ability to
using fuzzy TOPSIS, to deal with uncertainty. analyze the information.
Step 4: Identify gaps, prioritize and
III. RESEARCH OBJECTIVES AND APPROACH
communicate:
This research proposes to develop a Scorecards, trend reports and alerts help
framework for a collaborative supplier base. In identify gaps between target and actual
order to monitor supplier performance, constant performance for virtually every supplier.
tracking of supplier activities is necessary. The

ISSN (PRINT): 2393-8374, (ONLINE): 2394-0697, VOLUME-5, ISSUE-1, 2018

8
 INTERNATIONAL JOURNAL OF CURRENT ENGINEERING AND SCIENTIFIC RESEARCH (IJCESR)

Step 5: Develop alternatives: The shortfalls sustaining time-based competitiveness”,

in the existing system will be identified new Journal of Marketing Theory and Practice,
alternatives will be developed. 6(1998) 10-21.
Step 6: Implement and Test alternatives: [8] Aissaoui, N., M. Haouari and E. Hassini,
The proposed methods will be implemented and “Supplier selection and order lot sizing
tested. The results will be analysed. modeling: A review”, Computers &
Operations Research, 34 (2007) 3516-3540.
IV. CONCLUSION [9] Tahriri, F., Osman, M.R., Ali,A. and Yusuff,
A supplier performance management initiative R.M., “A review of supplier selection
provides a critical foundation for improving methods in manufacturing industries”,
operational performance, reducing supplier risk, Suranaree J. Sci. Technol., 15(3)( 2008)
reducing component costs and improving supply 201-208.
chain efficiency. It is not about completing a [10]Burton, T.T. "JIT/repetitive sourcing
one-time review with suppliers. To be strategies: Tying the knot with your
successful, it must be sustained on an ongoing suppliers", Production and Inventory
basis using enabling technology – and ideally Management Journal (1988) 38-41.
implemented globally. With these elements in [11]Abratt, R., “Industrial buying in high-tech
place, a company’s supplier performance markets”, Industrial Marketing
management initiative can significantly improve Management, 15(4) (1986) 293-298.
operational performance and competitive [12]Sharland, A., Eltantawy, R. A. and
advantage Giunipero, L. C., “The impact of cycle time
on supplier selection and subsequent
REFERENCES performance outcomes”, Journal of Supply
[1] S. Chen, B. Mulgrew, and P. M. Grant, “A Chain Management: A Global Review of
clustering technique for digital Purchasing and Supply, 39(3) (2003).
communications channel equalization using [13]Lin, C., Chow, W. S., Madu, C. N., Kuei,
radial basis function networks,” IEEE Trans. C.-H. and Yu, P. P. , “A structural equation
on Neural Networks, vol. 4, pp. 570-578, model of supply chain quality management
July 1993. and organizational performance”,
[2] J. U. Duncombe, “Infrared navigation—Part International Journal of Production
I: An assessment of feasibility,” IEEE Trans. Economics, 96(3) (2005) 355-365.
Electron Devices, vol. ED-11, pp. 34-39, [14]Gonzalez, M. E., Quesada, G. and Monge,
Jan. 1959. C. A. M., “Determining the importance of
[3] C. Y. Lin, M. Wu, J. A. Bloom, I. J. Cox, and the supplier selection process in
M. Miller, “Rotation, scale, and tr Weber, C. manufacturing: a case study”, International
A., Current, J. R. and Benton, W. C., Journal of Physical Distribution & Logistics
“Vendor Selection Criteria and Methods”, Management, 34(6) (2004) 492-504.
European Journal of Operational Research, [15]Humphreys, P. K., Wong, Y. K. and Chan,
50 (1991) 2-18. F. T. S., “Integrating environmental criteria
[4] Degraeve, Z., Labro, E., Roodhooft, F., “An into the supplier selection process”, Journal
evaluation of supplier selection methods of Materials Processing Technology,
from a Total Cost of Ownership perspective” 138(1-3) (2003) 349-356.
European Journal of Operational Research [16]Yan, H. and Wei, Q., “Determining
125, 1(2000) 34-59. compromise weights for group decision
[5] Chen-Tung, C. and Ching-Torng, L., “A making”, Journal of the Operational
fuzzy approach for supplier evaluation and Research Society, 53(6) (2002) 680-687.
selection in supply chain management”, [17]Svensson, G., “Supplier segmentation in the
Production Economics, 102 (2006) 289–301. automotive industry: A dyadic approach of a
[6] Lewis, H.T., Industrial purchasing principles managerial model”, International Journal of
and practices. Chicago: Richard D. Irwin Physical Distribution & Logistics
(1943). Management, 34(1/2) (2004) 12-38.
[7] Zeng, A.Z., “Single or multiple sourcing: an [18]Lee, E.K., Ha, S. and Kim, S.K., “Supplier
integrated optimization framework for Selection and Management System

ISSN (PRINT): 2393-8374, (ONLINE): 2394-0697, VOLUME-5, ISSUE-1, 2018

9
 INTERNATIONAL JOURNAL OF CURRENT ENGINEERING AND SCIENTIFIC RESEARCH (IJCESR)

Considering Relationships in Supply Chain a telecommunications system”, Omega, 29

Management”, IEEE Transactions on (2001) 171-182.
Engineering Management, 47(4) (2001) [31]Hill, R.P. and Nydick, R.L., “Using the
307-318. Analytic Hierarchy Process to structure the
[19]Pearson, J. M. and Ellram, L. M., “Supplier supplier selection procedure”, International
selection and evaluation in small versus large Journal of Purchasing and Materials
electronics firms”, Journal of Small Business Management 28 (2) (1992) 31-36.
Management, 33(4) (1995) 53-65. [32]Liu, F.H.F. and Hai, H.L., “The voting
[20]Verma, R. and Pullman, M. E., “An Analysis analytic hierarchy process method for
of the Supplier Selection Process”, selecting supplier”, Int. J. Prod. &
OMEGA- International Journal of Economics 97 (3) (2005) 308-317.
Management Science, 26(6) (1998) 739-750. [33]Saaty, T. L., "Decision Making with
[21]Dulmin, R. and Mininno, V., “Supplier Dependence and Feedback: The Analytic
selection using a multi-criteria decision aid Network Process", RWS Publications,
method”, Journal of Purchasing and Supply Pittsburgh, P.A. (1996).
Management, 9(4) (2003) 177-187. [34]Saaty, T. L., “Fundamentals of Analytical
[22]Monczka, R. M. and Trent, R. J., Process”, ISAHP 1999, Kobe, Japan, Aug 12
“Cross-Functional Sourcing Team – 14, 1999.
Effectiveness”, Tempe, AZ: Center for [35]Ellram, Lisa M. “Total Cost of Ownership:
Advanced Purchasing Studies, (1993). An analysis approach for purchasing”
[23]De Boer, L., Van der Wegen, L., Telgen, J., International Journal of Physical
“Outranking methods in support of supplier Distribution & Logistics Management. 25(8)
selection”, European Journal of Purchasing (1995) 4-23.
and Supply Management 4 (2/3) (1998) [36]Elanchezhian, C., Vijaya Ramnath, B., and
109-118. Dr. R. Kesavan, “Vendor Evaluation Using
[24]Weber, C.A., Current, J.R., Benton, W.C. Multi Criteria Decision Making”,
“Vendor selection criteria and methods,” International Journal of Computer
European Journal of Operational Research, Applications 5 (9) (2010) 0975 – 8887.
50(1991) 2-18. [37]Min, H. “International Supplier Selection: a
[25]Li, C.C. and Fun, Y.P., “A new measure for Multi-attribute Utility Approach,"
supplier performance evaluation”, IIE International Journal of Physical
Transactions, 29(1) (1997) 753-758. Distribution & Logistics Management, 24(5)
[26]Weber, C.A., Current, J.R., Desai, A., (1994) 24-33.
“Non-cooperative negotiation strategies for [38]Bross, M.E. and Zhao, G. “Supplier
vendor selection”, European Journal of selection process in emerging markets - The
Operational Research 108 (1998) 208-223. Case Study of Volvo Bus Corporation in
[27]Weber, C.A., Desai, A., “Determination of China”, School of Economics and
paths to vendor market efficiency using Commercial Law Göteborg University
parallel co-ordinates representation: a (2004).
negotiation tool for buyers”, European [39]Degraeve, Z. and F. Roodhoft “Effectively
Journal of Operational Research 90(1996) Selecting Suppliers Using Total Cost of
142-155. Ownership," Journal of Supply Chain
[28]Weber, C.A., Ellram, L.M., “Supplier Management, 35(1) (1999) 5-10.
selection using multi-objective [40]Ghodsypour S. H., O’Brian C. “A decision
programming: a decision support system support system for supplier selection using
approach”, International Journal of Physical an integrated analytic hierarchy approach
Distribution& Logistics Management 23 (2) and linear programming”, Int. J. Prod. Econ.,
(1992) 3-14. 56/57(1998) 199-212.
[29]Hinkle, C.L., Robinson, P. J., Green, P. E., [41]Sanayei, A., Mousavi, S.F. Abdi, M.R. and
“Vendor evaluation using cluster analysis”, Mohaghar, A., “An integrated group
Journal of Purchasing 5 (3) (1969) 49-58. decision-making process for supplier
[30]Maggie C.Y.T. and Tummala, V.M.R. “An selection and order allocation using
application of the AHP in vendor selection of multi-attribute utility theory and linear

ISSN (PRINT): 2393-8374, (ONLINE): 2394-0697, VOLUME-5, ISSUE-1, 2018

10
 INTERNATIONAL JOURNAL OF CURRENT ENGINEERING AND SCIENTIFIC RESEARCH (IJCESR)

programming”, Journal of the Franklin

Institute, 345(2008) 731-747.
[42]Shyur, H.J. and Shih, H.S., “A hybrid
MCDM model for strategic vendor
selection”, Mathematical and Computer
Modeling, 44(2006) 749-761.
[43]Boran, F.E., Genc, S., Kurt, M. and Akay,
D., “A multi-criteria intuitionistic fuzzy
group decision making for supplier selection
with TOPSIS method”, Expert Systems with
Applications, 36 (2009) 11363-11368.
[44]Kuo, R. J., Wang, Y. C. and Tien, F. C.,
“Integration of artificial neural network and
MADA methods for green supplier
selection”, Journal of Cleaner Production,
18(12)(2010), 1161–1170.
[45]Faez, F., Ghodsypour, S. H. and O’Brien, C.,
“Vendor selection and order allocation using
an integrated fuzzy case-based reasoning and
mathematical programming model”,
International Journal of Production
Economics, 121(2)(2009), 395-408.

ISSN (PRINT): 2393-8374, (ONLINE): 2394-0697, VOLUME-5, ISSUE-1, 2018

11