presentation on supply

Presentation on Supplier Selection Modelling

ME707-Logistics and Supply Chain Management

purchasing processes

Supplier selection and order lot sizing modeling: A review -NajlaAissaoui, Mohamed Haouari, Elkafi Hassini

Evaluation and Selection Process

• 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 production workforce and the suppliers. • Buying firms select suppliers based on their capabilities,

and not purely on the competitive process. The current trend in sourcing is to reduce the supplier base. • Overall objective is to reduce sourcing risk and

maximize value to the buyer• Need to select suppliers for the long-term.

Information Search Requirements

Purchasing & Supply Chain Management, 4e

Supplier Relationship Management (SRM)• The supply chain management process is based on the idea of efficient resource coordination and teamwork.

Buyer and supplier relationships have become increasingly important for a number of reasons: -

There is a trend toward specialization away from manufacturing an entire product and to more contract manufacturing and purchasing.

In some market segments, it is estimated that 80 percent or more of total product revenue often passes directly to suppliers as payment for labor, materials, and equipment.

Buying firms experience a great deal of pressure from customers and competitors to keep their edge and stay in business by reducing costs, improving product, improving service quality and enacting continuous improvement.

With the decreasing number of suppliers used by buying firms, it is more important than ever to maintain strong buyer-supplier relationships.

Four Pure Supply Management RelationshipsOne model that explains supply chain relationship management includes four behavioral dimensions—the four Cs:

1. COUNTERPRODUCTIVE (LOSE-LOSE)- Counterproductive relationships are those in which each organization (buying and supplying) is so focused on getting what is best for it that each puts the other at a disadvantage.

2. COMPETITIVE (WIN-LOSE)-Transactional or competitive relationships are those relationships in which both buying and supplying firms strive to get the very best arrangement possible in their negotiations and fail to see the benefits of both organizations obtaining their goals and objectives.

3. COOPERATIVE (WIN-WIN)- Cooperative relationships recognize the potential value of both organizations getting what they want and maximize the potential of having a long-term relationship.

4. collaborative (win-win) relationships- Collaboration or collaborative relationships, usually found with the buying firm’s strategic/tier-one suppliers, include the team component that is missing in a cooperative relationship.

Analytical Methods For Supplier Selection

EMERGING SUPPLIER SELECTION CRITERIA IN THE CONTEXT OF TRADITIONAL VS GREEN SUPPLY CHAIN MANAGEMENT - Ashish J. Deshmukh.1 and Dr. Hari Vasudevan.2

Supplier Selection Framework

The supplier selection framework (De Boer, 1998)

Multi Attribute Decision Making (MADM) Techniques• A vendor selection problem usually involves more than one criterion and these criteria

often conflict with each other . • MADM techniques such as Analytic hierarchy concept (AHP), Analytic network

process (ANP), TOPSIS long-term and Multi attribute utility technique (MAUT) are implement to solve the problem.

Supplier Selection and Order Allocation Models in Supply Chain Management -Mostafa Setak, Samaneh Sharifi and Alireza Ali mohammadian

Mathematical Programming• It was found out that most of the all journal papers have implemented

mathematical programming approaches.


Methods of Solving Mathematical Programming Models


Artificial Intelligence Method• The artificial intelligence (AI) methods can cope better with complexity and uncertainty than

‘traditional methods’, because they are designed to be more like human judgment functioning. • In AI systems, users only have to provide the information networks on performance of a

supplier on the criteria.

Fuzzy Set Theory• Vendor selection often takes place in a fuzzy environment. The demand

changes occur from one period to another with a probability distribution that is difficult to estimate because of the lack of historic data. Therefore, demand must be characterized as a fuzzy variable.

Configuration change assessment Genetic optimization approach with fuzzy multiple Production Economics-Wang, H.S.

Hybrid Methods• In Turkish based company operating with DEA & AHP developed by Ramanathan

for the appliance industry and the results show that DEAHP method provides a better decision than the AHP.

A hybrid model using DEA, decision tree and neural network-Wu. D

Case-1 “Supplier’s selection model based on an empirical study”-Paulo Ávila, Alzira Mota

• AHP method• The AHP method was proposed and developed by Thomas L. Saaty .This method exploits the

qualitative data of a given problem and transforms the data into quantifiable data, which subsequently can be analyzed and interpreted. • In the AHP model is used a 1-9 scale for comparing two factors, that in the suppliers selection

case are the criteria selection.

AHP’s values scale

AHP weighting matrix

Normalized matrix and estimated weights

Hierarchical structure of the Saaty

Identification and Ranking of Selection Criteria

mean values of the survey results for the 5 major criteria

The means values to the Quality System

The means values to the Financial System

The means values to the Synergies System

The means values to the Production System

The means values to the Cost System

Proposed Model

Comparison matrix of the A, B and C suppliers for the Q1 sub-criterion

Normalized matrix of the A, B and C suppliers to Q1

• Finally, the selected supplier will be the one with the highest classification. • Both models use linear weighting models. While the AHP model makes comparisons between all supplier

pairs, the Value Analysis model evaluates individually the supplier on each sub-criterion.

• It is the conviction of the research team that the proposed reference model for supplier/partner selection presents will help company managers to select the best supplier/partner for their companies.

• The proposed weightings present in the model can be used in the alternative evaluation with the AHP or Value

Analysis method given more reliability to the choices made.

What Does a Good Supplier Have Do ?• Builds quality into the product, aiming for zero defects•Makes delivery performance a priority•Demonstrates responsiveness to a buyer’s needs•Works with the buyer to reduce lead times• Provides the buyer with capability and workload information• Creates the future• Reinvests part of its profits into R&D with a long-term view•Meets stringent financial stability criteria when evaluating new

customers

presentation on supply

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