Vendor Selection Process Research Articles

VENDOR AND LOGISTICS PROVIDER SELECTION IN THE CONSTRUCTION SECTOR: A PROBABILISTIC PREFERENCES COMPOSITION APPROACH

The main purpose of the present work is to present an application of the probabilisticpreferences composition method to the vendor and carrier selection process in the construction sector of the Southern Region of Rio de Janeiro state, in Brazil. The traditional measures associated with vendor and carrier evaluation are considered in the model and are combined through a preferences composition, which considers the options' uncertainties. In the application, we considered three different suppliers of sand for construction and three different logistics providers, two of them outsourced. Our intention was to verify if outsourcing can be considered a better solution, as proposed by many authors. The results show thatoutsourcing is the best option for different probabilistic composition points of view as well as when the overall evaluation is obtained by average composition.

Application of Independent Finance Certification Agency in the Decision Process of Vendor Selection

This paper introduces independent finance certification agency to supervise the vendor selection process under the circumstance of the dynamic and incomplete information market. Using the signaling theory under unsymmetric information of game theory, a multidime nsion signaling model of the strategic choice is established. The game model is set up and the equilibrium calculated out following the description of the key elements of the buyer and vendor in above market. Upon separating equilibrium, the provider dispatches the signal stands for his actual category to maintain the performance of the market. Upon pool equilibrium, the inefficient provider rather than efficient one occupies the core position which results in loss of the latter. Case result shows that the buyer can adopt the signals from the Independent finance certification agency as a significant element when making decision. As a result the introduction of independent finance certification agency can effectively and efficiently supervise the vendor selection process in incomplete information market.

Vendor Selection Using Soft Thinking Approach: A Case Study of National Iranian South Oil Company

Facing the complexity of managerial problems, on which different stakeholders have different viewpoints, has increasingly led to the use of soft systems methodology (SSM). One of these issues that play an important role, particularly in purchasing and supplying resources, is Vendor Selection. Using traditional methods of problem solving as a principal solution for such issues overlooks the significant role of human factors such as the level of knowledge and experience of experts, as well as the culture and norms of the organizations. This crucial drawback of hard methodologies motivated the study of vendor selection issue from another perspective, using a soft thinking approach. Furthermore, Cognitive Map is used to model knowledge and experience of all beneficiaries and combine their mental maps in designing the solution of vendor selection problem. In this study, using the combination of cognitive mapping and SSM, based on a distinctive research approach, namely Action Research, the fundamental factors of an issue were identified to make it possible to combine the views of different experts to reach consensus among several attitudes for choosing the best vendor. The methodology proposed in this study was applied for vendor selection process in National Iranian South Oil Company (NISOC) as a case study.

Release capacity in the vendor selection process

This study draws from the knowledge theory of the firm to introduce the release capacity concept to the vendor selection process. The study proposes that suppliers' release capacity – a form of knowledge diffusion that describes the transmission of a sense of a supplier's tacit knowledge to manufacturers – influences their performance during vendor selection. The authors identify two release capacity dimensions: visualization, during which knowledge is embedded and diffused through a visual encoding process, and socialization, during which a sense of the supplier's knowledge is released through a social construction process. The authors use data from the equipment supply industry to empirically test their predictions. The findings show that the release capacity dimensions affect the market's aggregate responses during the formation of consideration sets and preferences. These findings contribute to integrating developments on the source side of the knowledge diffusion process with the vendor selection research tradition.

Application of complex proportional assessment method for vendor selection

In a supply chain environment, the decision-making is related with the selection of vendors and the quantities to be purchased from those vendors. A number of vendor selection attributes are to be considered and the objectives are to be formulated. An effective vendor selection process requires the consideration of many quantitative as well as qualitative factors. Evaluating vendor alternatives in the presence of multiple conflicting criteria and performance measures is often a difficult task for the decision-maker. In this paper, an attempt is made to explore the applicability and capability of an almost new multi-criteria decision-making approach, i.e. a complex proportional assessment (COPRAS) method for vendor selection. Two examples are illustrated to demonstrate the applicability and ranking performance of COPRAS method while solving the given vendor selection problem. In all these cases, the results obtained using the COPRAS method almost match with those derived by the previous researchers.

A value-based approach to the ex-ante evaluation of IT enabled business process improvement projects

In this study, we propose a value-based management approach for assessing the potential for process improvements enabled by an information technology (IT) solution. Based on activity based management concepts, we perform a granular, process level analysis on workflow structure and associated resource consumption to provide quantifiable measures of potential improvement prior to system implementation. The proof of concept of this approach is illustrated in a southern United States county in need of integrating different government branches through an ERP implementation. Based on prior research, we first provide a catalog of non-value added (NVA) activities that can be used in management control and governance procedures for the systematic identification of process inefficiencies. Next, by breaking down processes to the level of atomic activities, we show that minimizing NVA activities provides a systematic means to mitigate process inefficiencies. A significant observation is that different NVA activities may impact process performance to varying degrees. Consequently, line items in the request for proposals (RFP) should be weighted accordingly during the vendor selection process, contrary to the common practice of treating all line items equally.

Electronic Medical Records: A Practitioner's Perspective on Evaluation and Implementation

This article describes the initial and ongoing efforts of our pulmonary medicine practice to deploy an electronic medical records (EMR) system. Key factors in the vendor selection and implementation process included (1) identification and commitment to long-term goals for EMR; (2) dedicated resources, including both physician and nonphysician champions to lead the design and implementation teams; and (3) ample patience and time allotted to achieve the desired results: a fully functional system that enhances quality, improves operational efficiency, and reduces costs. An EMR scorecard including multiple system attributes was designed to facilitate vendor comparisons. Perseverance, patience, and compromise were necessary to overcome the challenge of changing the behavior of providers and support staff. We have accomplished improvements in workflow automation and reductions in staff hours, office supplies, file space, and transcription costs. Our system lacks pulmonary-specific templates and prompts for work flow and clinical decision making. We have directed internal resources and outsourced professional support to design these features as our practice strives to enhance our quality of care with pulmonary disease management that conforms to national guidelines.

A Fuzzy Multi Criteria Decision Making Approach for Vendor Evaluation in a Supply Chain

Manufacturing enterprises face enormous competitive pressures in today’s business environment and to make full use of inside and outside resources in a competitive globalization market, many manufacturers and service providers are seeking a strategic cooperation with suitable vendors to improve their supply chain management (SCM) so that they can concentrate their efforts on their own core business. Hence, there is a necessary to select the best suppliers among various suppliers available. The decision parameters in vendor selection contains vague and uncertainty. The fuzzy theory able to handle this uncertainty, vague, imprecision and subjectivity present in vendor selection process and makes decision process more effective. In the research, we have analyzed an existing system of vendor rating and proposed a better system of vendor rating for the organization. Most organizations use simple additive weighting for vendor rating. However, we have attempted to use the fuzzy decision making method for the purpose. In the proposed approach, linguistic values are used to assess the ratings and weights for these factors. These linguistic ratings can be expressed in trapezoidal or triangular fuzzy numbers. Then, a hierarchy multiple criteria decision-making (MCDM) model based on fuzzy theory is proposed to deal with the supplier selection problems in the supply chain system.

A theorical model design for ERP software selection process under the constraints of cost and quality: A fuzzy approach

Enterprise Resource Planning (ERP) software selection is one of the most important decision making issues covering both qualitative and quantitative factors for organizations. Multiple criteria decision making (MCDM) has been found to be a useful approach to analyze these conflicting factors. Qualitative criteria are often accompanied by ambiguities and vagueness. This makes fuzzy logic a more natural approach to this kind of problems. This study presents a beneficial structure to the managers for use in ERP software vendor selection process. In order to evaluate ERP vendors methodologically, a hierarchical framework is also proposed. As a MCDM tool, we used analytic hierarchy process (AHP) and its fuzzy extension to obtain more decisive judgments by prioritizing criteria and assigning weights to the alternatives. The objective of this paper is to select the most appropriate alternative that meets the customer’s requirements with respect to cost and quality constraints. In the end of this study, a real-world case study from Turkey is also presented to illustrate efficiency of the methodology and its applicability inpractice.

Risk Effect on Offshore Systems Development Project Cost

Organizations frequently consider offshore systems development in the belief that projects can be completed for lower cost. While prices quoted by offshore vendors are often very appealing when compared with domestic vendors, additional risks must be considered when looking into offshore systems development. These risks typically take the form of intangible and indirect project costs which add to the total cost of the delivered system. This paper describes and classifies these risks, which fall into three primary categories of security risks, legal risks, and general risks. Suggestions for incorporating these intangible and indirect costs into the decision making process, and their effects on total project costs, are offered for the offshore v. domestic vendor selection process.

A simulation-optimization approach for integrated sourcing and inventory decisions

In this paper, we study a generalized vendor selection problem that integrates vendor selection and inventory replenishment decisions of a firm. In addition to vendor-specific procurement and management costs, we consider inventory replenishment, holding, and backorder costs explicitly to meet stationary stochastic demand faced by the firm. Our goal is to select the best set of vendors along with the optimum inventory decisions at each plant of the firm so that we minimize the system-wide total costs and achieve desired service and reliability levels. Due to uncertainties inherent in the problem related to demand observed by the firm, quality provided by vendors, and disruptions observed by vendors, we utilize a simulation-optimization approach to solve the problem. More specifically, we build a discrete-event simulation model to evaluate the objective function of the problem that works in concert with a scatter search-based metaheuristic optimization approach to search the solution space. Computational results not only provide managerial insights and measure the significance of intangible factors in the vendor selection process but also highlight the importance of computational tools such as simulation-optimization for the vendor selection problem.

A novel hybrid MCDM approach for outsourcing vendor selection: A case study for a semiconductor company in Taiwan

Outsourcing manufacturing is a trend in today’s global business operations. Vendor selection is an essential factor affecting outsourcing operations performance and has been determined as a multiple criteria decision making (MCDM) problem. The purpose of this paper is to propose a novel hybrid MCDM technique to cope with the complex and interactive vendor evaluation and selection problem which can determine the structural relationships and the interrelationships amongst all the evaluation’s dimensions and support the Analytic Network Process (ANP) method to arrange appropriate weightings to each dimension and criterion in the evaluation model by summarizing the opinions of the experts. Finally, the overall performance ranking of all alternatives can be obtained to assist the decision making. Taiwan semiconductor industry is the largest provider in worldwide market. It is vertically disintegrated and outsourcing is a main stream practice. Wafer-testing is a critical manufacturing step in the semiconductor supply chain that distinguishes whether the IC can meet the specifications. Consequently, it’s crucial to establish a thorough model for selecting the wafer-testing vendors in order to achieve the success of the outsourcing operation. A case study of a Taiwan semiconductor company in selecting its wafer-testing outsourcing vendor by using the proposed MCDM technique is demonstrated to enhance the decision making quality. The results and proposed solution can be referred to by not only the semiconductor companies, but also other industries so that they can improve the vendor selection process in order to achieve a higher performance and satisfaction level.

A case on vendor selection methodology: An integrated approach

Vendor selection methodology is a highly researched area in supply chain management l terature and a very significant decision taken by supply chain managers due to technological advances in the manufacturing process. Such research has two basic dimensions: one is related to the identification of variables affecting the performance of the vendors and the other deals with the methodology to be applied. Most of the research conducted in this area deal with the upfront selection of vendors. However, it is very common to have a list of dedicated vendors due to the development of sophisticated production technologies like just in time (JIT), a lean or agile manufacturing process where continuous flow of materials is a requirement. This paper addresses the issue of selecting the optimal vendor from the internal database of a company. Factor analysis, analytical hierarchy process and regression analysis is used in an integrated way to supplement the vendor selection process. The methodology presented here is simply a proposal where every possible room for adjustment is available.

A decision analysis framework for vendor selection in construction projects in greece

The aim of the present paper is to model the vendor selection process in construction projects in Greece. The applied approach involves a multicriteria rating technique used for calculating a normalized economic bid for the alternatives (i.e. vendors) by determining a proposed multiplier coefficient. This technique uses two stage compromise programming procurement criteria and weights according to the relevant legislative framework for government procurement to provide a multicriteria value score for each vendor. The application of the approach is demonstrated by an illustrative example concerning the procurement of earthmoving equipment (i.e. bulldozer). The primary advantage of this approach is that it incorporates a degree of subjectivity into the evaluation process in compliance with the existing legislative framework.

Design a new mixed expert decision aiding system using fuzzy ELECTRE III method for vendor selection

Any decision process deals with two different concerns as its cornerstones, evaluating the alternatives and ranking them based on their performances. In any decision process, the former phase is usually the premise of the latter one. Alternatives’ evaluation is the concept that largely depends on the experts and their expertise, which increase uncertainty in the decision-making process. In addition to all proposed methods for having the experts’ knowledge as evaluations of the alternatives, utilizing expert decision support systems (EDSS) can be a sensible response to such a need. Having evaluated the alternatives in the first phase of a decision-making process, the second phase of the process deals with the ranking the alternatives based on their performances obtained from the first phase. In this paper, we discuss the architecture of a fuzzy system including both modules, utilizing fuzzy concept for dealing with the uncertainty of the problem. Concerning the problem we had been dealt with, our system comprises a fuzzy evaluation module, which is a fuzzy expert system and an appropriate tool for evaluating the existing alternatives promptly and smoothly, without the imposed time delays by the experts to propose their comments and the uncertainty of such expertise-based comments, and a fuzzy ranking module, which is a fuzzy version of ELECTRE III method ranking the alternatives based on their outranking relations and by considering the existing uncertainty in their performances. This way the final ranking is resulted from an independent fuzzy system, which has considered the existing uncertainty in the evaluations not once but twice. Our proposed system has been applied to a real case of vendor selection process in one of the greatest and the most famous companies in the Iranian oil industry, OIEC, and the results are discussed.

Multicriteria-based customer-focused vendor selection through the analytic hierarchy process

Vendor selection and evaluation are arguably some of the most critical functions for the success of an organisation. The competitive international business environment has forced many organisations to focus on supply chain management to cope with the rapidly increasing competition. The vendor selection problem involves multiple criteria that are both tangible and intangible. It would be difficult for the decision maker to select the best vendor from the available vendors by the traditional Analytic Hierarchy Process (AHP) for vendor selection, which considers the quality, price and delivery criteria, especially when the overall scores of two or more vendors are almost equal. This paper aims to establish a new vendor selection system using AHP from the customer satisfaction orientation. This new model is very useful in the vendor selection process, as it combines the multiplicity of judgements in a systematic way to obtain the best vendor. This paper shows how the customer-focused AHP is able to select the most efficient vendor. It involves a multicriteria decision-making process with various objectives. A real-time example has also been cited to demonstrate the usefulness of this approach.

Applications of real option analysis to vendor selection process in IT outsourcing

Information technology (IT) outsourcing is one change management issue facing organisations in today's rapidly changing business environment. Due to its very nature of uncertainty, it is critical for companies to manage and mitigate the high risks associated with change management including the task of vendor selection in IT outsourcing practices. In this study, we explore a two-stage vendor selection approach to IT outsourcing using real options analysis (ROA). In the first stage, the client engages a vendor for a pilot project and observes the outcome. Using this observation, the client decides either to continue the project to the second stage based upon pre-specified terms or to terminate the project. A case example of outsourcing the development of supply chain management information systems (SCMSs) for a logistics firm is also presented in the paper. Our findings suggest that ROA is a viable valuation technique for IT outsourcing.

Online Reverse Auctions for Outsourcing Small Software Projects: Determinants of Vendor Selection

Online service marketplaces have enabled small firms to efficiently outsource small-scale IT projects by providing reduced transaction costs and increased competition among bidders. This paper presents an explanatory study that examines the vendor selection process using data from a large online service marketplace. Theories from production economics, resource dependency, and software risk management are applied in a small-firm context. The empirical results suggest that a client’s utility function increases with a lower bid price, shorter lead-time, higher vendor average feedback rating, higher degree of vendor experience, and domestic (U.S.) location. There was not sufficient evidence to support strategically differentiated vendor selection behavior with respect to project value (or price). This study’s findings help understand patterns of bid evaluation in online auctions, where a large percentage of transactions consist of small IT projects.

Optimising vendor selection for information systems outsourcing under uncertainty

Information systems outsourcing has become a popular strategy to acquire much needed organisational capability. Business value from outsourcing increasingly depends on how well the vendor selection process is managed. Effectively solving the vendor selection problem is therefore a significant outsourcing decision. This paper presents a multicriteria analysis method for optimising the vendor selection process in solving a specific information systems outsourcing problem. The multiplicity of the vendor selection process is effectively handled in the context of multicriteria analysis, and the uncertainty and imprecision of the human decision making process is adequately modelled with the use of linguist variables approximated by fuzzy numbers. An example that shows the practical use of the proposed method in real world settings is given. The example showcases how vendor selection problems in information systems outsourcing under uncertainty can be approached effectively.

Outsourcing of Checkbook Printing: The Case of a Family-Owned Bank in Hong Kong

ABSTRACT This study analyzes the business background of a family-owned bank in Hong Kong and how it outsourced its checkbook printing. Through in-depth interviews with experienced security printing and marketing supervisors, customers, and different levels of bank staff, empirical data were collected to reveal the background, challenges, and success of the outsourcing initiative. Empirical findings revealed that the main need of the outsourcing was to make use of the benefits of outsourcing to achieve cost savings and to improve the operational efficiency without placing huge investments in resources. During the vendor selection process, factors of cost, quality of services, financial soundness, reputation, experience, managerial skills, client list, and operational capability were considered. The organizational culture in family-owned organizations makes the management achieve a no worse-off scenario.