This article outlines a hybrid method, incorporating multiple techniques into an evaluation process, in order to select competitive suppliers in a supply chain. It enables a purchaser to do single sourcing and multiple sourcing by calculating a combined supplier score (CSS), which accounts for both qualitative and quantitative factors that impact on supply chain performance. By performing a cluster analysis, it draws a supplier map (SM) so as to position suppliers within the qualitative and quantitative dimensions of performance efficiency, and to select a portfolio of suppliers from supplier segments, which are different in performance with regard to key factors.
The value of win–win strategies, which enable businesses to achieve success, increases as the world is becoming highly complex and specialized. Such strategies make it possible to interconnect organizations and for people to get involved in business transactions businesses and companies can share maximum benefits, at acceptable levels under circumstances, pursuing either cooperative goals or conflicting goals. The win–win strategies are more important to strategically-related firms, which conduct direct commercial transactions in an industrial network.
Manufacturing firms, which face a competitive environment, should seriously consider win–win strategies, as customer needs vary over time and technology changes rapidly. Firms begin to focus on strategic business partners in the production process and recognize the significance of a supply chain and supply chain management, in order to actively cope with such environmental changes.
In order to gain competitive advantages in markets, manufacturers must collaborate, not only with component or raw material suppliers, but also with wholesalers/distributors, retailers, and customers, who all participate in a supply chain, directly or indirectly, in order to fulfill customer requests. Supply chain management (SCM) involves the management of transaction flows among players in a supply chain so as to maximize total supply chain profitability.
SCM aims to minimize overall costs across the supply chain and to maximize the revenue generated from the customer in cooperation with business partners. Firms within a supply chain can achieve sustainable competitive advantages through developing much closer relationships with all companies, and they can significantly reduce time and costs depending on the appropriate management of the supply chain, while serving customer needs at the same time. In a competitive environment, successful SCM is much helpful in strengthening the competitive edge of firms (Kumar, Vrat, & Shankar, 2004).
In general, SCM arises from several corporations that build their own supply chain. They must find more efficient partners to make the chain competitive. Among a variety of available suppliers, manufacturers must choose more collaborative ones who are able to develop long-term relationships. Especially, as purchasing activities within a supply chain play a more strategic role and trends include the movement from spot purchasing to long-term contractual relationships, sound supplier selection has become a strategic decision, meaning that it has become a vital source for adding strength to value proposition and for improving the competitiveness of manufacturers (Wise & Morrison, 2000).
This paper, therefore, focuses on the selection of competitive suppliers in order to develop an efficient supply chain. The organization of this paper is as follows. The second section provides the various performance categories that are considered while evaluating and selecting the supplier, and it provides an overview of existing methods. The next section presents a hybrid method, incorporating analytic hierarchy process (AHP), data envelopment analysis (DEA), and neural network (NN) into the evaluation process. The fourth section exhibits the results from the new method by using actual data. Finally, concluding remarks and discussions follow.
This article outlined a hybrid method, which incorporates multiple techniques (i.e., AHP, DEA, and NN) into an evaluation process, in order to select competitive suppliers in a supply chain. A combined supplier score and a supplier map were devised.
This hybrid method emphasizes the following characteristics:
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It accounts for both qualitative and quantitative factors that have an impact on supply chain performance.
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It adopts multiple techniques, including AHP, DEA, and NN, to find the performance frontiers from a set of potential vendors.
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It enables a purchaser to do single sourcing and multiple sourcing by calculating a combined supplier score (CSS) and performing a cluster analysis.
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It draws a supplier map (SM) to select multiple suppliers within different segments, according to the performance along qualitative and quantitative factors.
A variety of combination of different techniques, however, can produce different portfolios of the suppliers selected. Under different decision situations, supplier selection methods are found to vary. A combination of AHP, DEA, and NN is one possible approach in evaluating and selecting suppliers. This combination, however, performed well with regard to the target domain.
