A simulation based supply partner selection decision support tool for service provision in Dell

Abstract

Partner selection is an important aspect of all outsourcing processes. Traditional partner selection typically involves steps to determine the criteria for outsourcing, followed by a qualification of potential suppliers and concluding with a final selection of partner(s). Reverse auctions (RAs) have widely been used for partner selection in recent times. However, RAs, although proven successful in initial price reduction strategies for product and service provision, can suffer from reduced effectiveness as the number of executions increases.This paper illustrates Dell’s experience of such diminishing returns for its outsourced after sales product repair service and presents the development of a new partner selection methodology, which incorporates a new process improvement stage to be executed in combination with the final selection phase. This new methodology is underpinned by the development of a computer based simulation supply partner selection decision support tool for service provision. The paper highlights the significant additional cost saving benefits and improvement in service achievable through the use of advanced simulation based decision supports.