Supplier selection, which is the first step of the activities in the product realization process starting from the purchasing of material till to the end of delivering the products, is evaluated as a critical factor for the companies desiring to be successful in nowadays competition conditions. With the scope of this paper, supplier selection was considered as a multi criteria decision problem. A model aiming the usage of analytic network process (ANP) in supplier selection is developed owning to the evaluation of the relations between supplier selection criterias in a feedback systematic. The proposed model is implemented in a company of electronic.
Purchasing decisions have a major impact on companies, because of this fact systematic methods must be followed up. There are two main reasons for this [1]:
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First in many companies, the cost of the purchased goods and services accounts for more then 60% of the cost of goods sold.
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Second, over 50% of all quality defects can be traced back to purchase material.
Since 1960s, supplier selection criterias and suppliers performance have been a focal point of many researchers.
While the traditional vendor evaluation methods primarily considered financial measures in the decision making process, more recent emphasis on the incorporation of multiple vendor criteria into evaluation process [2].
The studies about supplier selection are based on the years of 1960s. Dickson identified 23 criteria for supplier selection based on a survey of 273 purchasing manager. He showed that quality was perceived to be most important criteria followed by delivery and performance history [2].
It is never expected from a supplier being perfect, according to all supplier selection criterias. For example, a supplier product may have a high quality, but cost of the products may not be the lowest. On the other hand, another suppliers’ products cost may be the lowest, this is very good for a company, but on the same time delivery performance may be the worst. As it seen from the example, for making good decisions, supplier selection process must be handled systematically.
There are many methods used in supplier selection such as cluster analysis [3], case based reasoning systems [4], statistical models [3], decision support systems [4] and [3], data envelopment analysis [3], [1], [5] and [6], analytic hierarchy process [7], [8], [9] and [3] total cost of ownership models [3] and [10], activity based costing [11], artificial intelligence [4] and [3], mathematical programming [12], [6], [13], [2] and [14].
The methods used in supplier selection are intending the effectively of the purchasing decisions and implementing decision-making mechanism systematically.
Gaballa [14] is the first author who applied mathematical programming to supplier selection in a real case in 1974. He used a mixed integer-programming model to formulate this decision-making problem for the Australian Post Office.
There are many papers in literature about supplier selection. Some of them are: Ghodsypour and O’Brien [12] and [14], Zhu [13], Talluri [6], Talluri and Narasimhan [2], Boer et al. [3], Weber et al. [5], Barbarosoğlu and Yazgaç [7], Tam and Tummala [8], Dağdeviren and Eren [9], Degraeve et al. [10].
Supplier selection, which is one of the company’s most important processes, must be systematically considered from the decision makers.
For this reason, supplier selection is evaluated by researchers for many years in a large framework consisting various techniques from the experimental to the analytical ones and its successful applications were performed in numerous sectors.
In this paper, supplier selection was considered as an multi criteria decision problem and a model is proposed by using ANP. The evaluation criterias were developed according to the structure of the business scenario and the model was applied to an actual case study. The selected supplier by using ANP is also approved from the purchasing manager.
This paper shows that, ANP is a decision tool by making strategical decisions, such as selecting a supplier to have a long term relationships or a procuring a critical material for the company. Generally, managers might be inclined not to use a sophisticated method, but by using a user friendly software like super decision, developed by Saaty, the decision making process by using ANP will be handled more easy.
Evaluating the supplier from both objective and subjective criterias will gain flexibility to the decision process. When we think a suppliers all functional departments, all these departments have relationships with the other ones, so we can easily say that all the criterias related with the supplier selection must have influences between the criteria clusters.
Another important finding is that the proposed model is more reflecting the relation of how the selection criterias affect the selected suppliers and at the same time what is more important for the suppliers among the selection criterias.
This paper moves us one step closer to the usage of ANP in real world situations. We think that, this paper can be extended by adding the risk, cost and opportunity control hierarchies and at the same time it can be developed by using the limiting priorities as an input in the mathematical program techniques.
