An integrated approach for supplier selection and purchasing decisions

Abstract

Purpose -The paper seeks to provide academic researchers and practitioners with a better understanding about purchasing strategies through an integrated approach to supplier selection and purchasing decisions. Design/methodology/approach -This paper views supplier selection as a multi-criteria problem. Through the analytical hierarchy process (AHP), in consideration of both quantitative and qualitative criteria, a set of candidate suppliers is identified. A multi-objective linear programming (MOLP) model, with multiple objectives and a set of system constraints, is then formulated and solved to allocate the optimum order quantities to the candidate suppliers. Findings -The paper provides tradeoffs among different objectives, which are more consistent with the complexity and nature of the real-world decision-making environment. It also offers better information and solutions supporting effective purchasing decisions.Research limitations/implications -The main concept of the proposed approach can be applicable to any organization with a purchasing function. However, its implementation will be very specific to a particular organization of interest, as each individual organization must define its own subjective criteria and constraints. The area of decision support system development, which automates (or computerizes) the input process of the proposed models and integrates with other databases in a company, will provide great opportunities for future research. Practical implications -The paper provides practitioners with flexibility and effectiveness in their supplier selection and purchasing decision process and with a better understanding about their future purchasing strategies. The results from the application of the proposed models to the supplier selection problem at a high-technology firm in Taiwan show that the models are effective and applicable. Originality/value -This paper takes an integrated approach to problem analysis (i.e. multi-objectives with both quantitative and qualitative information), uses a sound scientific methodology in model development (i.e. integrating AHP with MOLP), and provides practical use of the models. It offers additional knowledge and value to both academics and practitioners.

The Fundamentals of Global Outsourcing for Manufacturers

“…They then interviewed 60 administrators to determine the priority level of the criteria and used the AHP to select suppliers. Ting & Cho (2008) presented a two-step decision-making procedure. They used the AHP to select a set of candidate suppliers for a firm and then used a Multi-Objective Linear Programming (MOLP) model to determine the optimal allocation of order quantities to those suppliers.…”

Metodologias para seleção de fornecedores: uma revisão da literatura

“…Além do grande número de fatores de avaliação, o processo lida ao mesmo tempo com critérios quantitativos e qualitativos e, muitas vezes, conflitantes. Daí a importância de métodos que permitam a articulação de diferentes aspectos na avaliação das várias alternativas.A complexidade e relevância da decisão incentivaram o estudo de diferentes técnicas para a atividade de seleção de fornecedores (WEBER, 1996;ALMEIDA, 2001;MEADE;DOHEL, 2003;CHENA;LINB;HUANG, 2006;RAMANATHAN, 2007;TING;CHO, 2008;CARMO;BARROS NETO;DUTRA, 2011). Desse modo, foi desenvolvida uma variedade de ferramentas e técnicas no intuito de simplificar o processo decisório e aumentar a eficiência e eficácia dos resultados.…”

Applying supplier selection methodologies in a multi-stakeholder environment: A case study and a critical assessment

“…Indeed, while the number of applications is growing, there is little empirical evidence of the practical usefulness of such tools (Weber et al, 1991;de Boer and van der Wegen, 2003;Bruno et al, 2012). Indeed, very often, the proposed models are tested on generic applications, numerical examples and computational experiments (Bhutta and Huk, 2002;Dahel 2003;Saen, 2007;Ting and Cho, 2008;Ordoobadi, 2009), with less emphasis on the problems emerging in the practical implementation of the methodology, on its strengths and weaknesses, and on the appreciation given them by the practitioners and managers involved in decision-making processes. Furthermore, most of the approaches available in the literature fail to capture and discuss the inherent complexities deriving from the multi-stakeholder nature of the problem.…”