Strategic supplier selection: the importance of process formality in non-automated supplier selection decisions

Abstract

Industry 4.0 mainly focuses on the application of modern technologies (digitalization) and the changing role of human beings (digital transformation) in modern production and logistics systems. Besides the basic principles of digitalization, interconnectivity, and autonomization, the importance of human-centered decision-making processes, such as the selection of strategic suppliers, is also increasing, as complex, novel, and unstructured decisions cannot be fully computerized. In this context, there is still a lack of understanding of which formal patterns in the strategic supplier selection process will lead to better supplier performance. Until now, most of the literature emphasizes a minor number of process-related factors in the strategic supplier selection process leading to limited support for the individual decision-maker. This study introduces a cause-effect model that extends prior research by investigating the impact of process formality, as a comprehensive measurement construct of target-, information-, organization-, and heuristics-related process factors in the strategic supplier selection process on supplier performance and purchaser satisfaction. Based on the usage of variancebased structural equation modeling in a large-scale field study, a significant relationship between process formality and supplier performance as well as between process formality and purchaser satisfaction is substantiated.

Mapping Part Characteristics to Machining Capabilities using a Matching Algorithm.

“…Supplier selection is an approach where consumers select an appropriate service provider to fulfill their service request and involves steps to identify, assess, classify, and determine a number of potential suppliers [36]. Supplier selection [36,[40][41]44] has been widely studied in literature and has subcategories that include strategic supplier selection [37] and sustainable supplier selection [38][39]43]. There are also specific applications to the supplier selection process such as for construction [40] and humanitarian logistics [41].…”

“…These parameters are very similar to the quality of service indicators discussed above. Common selection parameters include cost [36,38,40,[42][43][44], quality [38][39][43][44], lead time [40,42,44], pollution control [36,[38][39]43], green image [38][39]43], capacity [36,42], process formality [37], and agility [42]. The breadth of parameters that exist for supplier selection is much wider than that of quality of service indicators.…”

“…The method employed by [37] and [41] do not use weighting methods and instead rely on empirical data. Instead, [37] developed a questionnaire that was sent to manufacturers in Central Europe to determine the relationship between process formality and supplier performance using hypothesis testing, while [41] created a reference task model with data drawn specifically from natural disasters in southern Brazil.…”