Strategic purchasing,supply management practices and buyer performance improvement: an empirical study of UK manufacturing organisations

Purchasing is increasingly seen as an important strategic activity of the firm. However, there is little evidence examining the effects of strategic purchasing on a firm's inter-organisational supply management practices and performance. The purpose of this paper is to examine the effect of strategic purchasing on the supply management practices of socialisation, supplier integration and supplier responsiveness, together with relationship performance. Using empirical data collected from 111 United Kingdom purchasing executives, a structural equation model is used to test the theoretical framework. The results provide support for four of the six hypotheses developed. Strategic purchasing was found to have an indirect, significant effect on improving buyer performance, acting through supplier integration. Strategic purchasing also had a significant effect on the use of socialisation mechanisms, but not on supplier responsiveness. Our research indicates that close, long-term supplier relationships can lead to the creation of relational rents. Implications for future research and suggestions for improving the rigour of strategic purchasing research are made.     

Green procurement and green supplier development: antecedents and effects on supplier performance

This study adopts the opposing theoretical views of legitimacy – institutional and strategic – in evaluating firm performance and top management commitment as antecedents to green procurement and green supplier development. Additionally, the impact of green procurement and green supplier development on supplier performance is analysed. Using a sample of western European companies, we develop a structural equation model to test our hypotheses. We find that the buying firm’s market performance positively relates to the adoption of green procurement. While financial performance has no effect on green procurement, top management commitment is found to be an important driver of both green procurement and green supplier development. Moreover, the relationship between green procurement and supplier performance is fully mediated by green supplier development. The paper addresses a research gap concerning firm-level antecedents for green procurement and green supplier development showing that both practices may impact supplier performance. Furthermore, it is shown that legitimacy concerns drive basic green procurement, whereas top management is decisive for advanced practices, such as green supplier development.     

Supplier development or supplier switching?

We study a firm's cost-based sourcing decision of whether to invest in an incumbent supplier or switch to an alternative supplier in order to realise lower purchasing costs. In isolation, it can be shown that the development of an incumbent supplier (i.e., a cooperative investment) becomes more attractive, the higher the uncertainty about the price the buying firm can realise on the market and the incumbent supplier's cost. Likewise, switching to an alternative supplier becomes more attractive, the higher the expected value of and the uncertainty about the buying firm's market price. For comparing these two sourcing strategies simultaneously we provide a profit-maximising framework for the buying firm that shows that switching is less recommendable the higher the variance of the incumbent's cost and if the uncertain maximum demand is negatively correlated with the uncertain incumbent supplier's cost. Overall, our study substantially expands the frequently followed approach of basing supplier development versus supplier switching decisions merely on strategic and qualitative considerations.     

A distinct decision model for the evaluation and selection of a supplier for a chemical processing industry

The supplier selection process has gained importance recently due to the considerable amount of revenue spent on purchasing. The intention of this work is to develop an appropriate hybrid model by integrating the analytical hierarchy process (AHP) and grey relational analysis (GRA) for supplier evaluation and selection, which comprises three stages. In Stage I, the most influential criteria are selected by mutual-information-based feature selection. Stage II focuses on the determination of the weights of the attributes using AHP, while Stage III is used for the determination of the best supplier using GRA. The proposed model is illustrated using the case study of an electroplating industry to highlight the effectiveness and flexibility of the model. The model effectively combines specialised knowledge, experience and quantitative data to select the best suppliers. This paper presents the model development, solution and application processes of the proposed hybrid model for supplier selection. The decision support software was implemented in Excel to automate supplier selection. The proposed hybrid model is applied to enhance the decision-making process in supplier selection and also helps decision makers to effectively select suppliers.     

一体化供应链下的项目采购管理与供应商管理战略

本文针对汽车行业讨论了产品项目开发中采购管理的重要作用,根据目前项目采购中暴露出的问题,总结出项目采购管理其实质即为对供应商战略管理的理念,从而提出在一体化供应链下项目采购管理中对供应商管理的战略模型。该模型包括四个路径:"构造供应商库,选择和评价供应商,供应商参与项目开发,定义目标供应商平台",并体现如何应用该模型以提高一体化供应链的竞争性。     

A multi-agent architecture for multi-product supplier selection in consideration of the synergy between products

Supplier selection is an important task in purchasing. The performance of a supply chain depends on the selection of the right suppliers to provide the right materials or services at the right price and right time. Most of the research on supplier evaluation and selection assumes that products are procured independently. However, in reality, it is common for a purchasing company to procure a bundle of products together. In this regard, synergy could exist between products and hence affect the final choice of suppliers. It is therefore necessary for the purchasing company to incorporate the synergy between products in supplier selection. This paper presents a multi-agent system (MAS) architecture for multi-product supplier selection in consideration of the synergy between products. A three-phase supplier selection model is proposed to support multi-product procurement in consideration of the synergy between products. The three phases are, namely, product synergy determination phase, supplier pre-selection phase and negotiation-based final selection phase. The MAS is equipped with various types of autonomous function agents and different agent interaction protocols to effect the functioning of this three-phase multi-product supplier selection model.     

An integrated fuzzy multi-criteria group decision-making approach for green supplier evaluation

Purchasing is one of the most vital functions within a company and supplier performance evaluation is one of the most important business processes of the purchasing function. Traditionally, companies have considered factors such as price, quality, flexibility, etc. while evaluating suppliers. However, environmental pressures urge them to consider green issues. This study proposes a decision model for supplier performance evaluation by considering various environmental performance criteria. An integrated, fuzzy group decision-making approach is adopted to evaluate green supplier alternatives. More precisely, a fuzzy analytic hierarchy process (AHP) is applied to determine the relative weights of the evaluation criteria and an axiomatic design (AD)-based fuzzy group decision-making approach is applied to rank the green suppliers. Finally, a case study is given to demonstrate the potential of the methodology.     

Using integrated fuzzy DEMATEL and fuzzy C: means algorithm for supplier evaluation and selection

Decision-making techniques are used to help evaluate the current suppliers’ aim at classifying performance of individual suppliers against desired levels of performance, so as to design suitable plans to increase the performance and capabilities of suppliers. In this study, an integrated model is introduced and proposed for increasing the supplier selection and evaluation quality. The methodology is composed of two steps. The first stage is fuzzy decision-making trial and evaluation laboratory method in which the interactions between the evaluation criteria and the criteria weight have been computed. At the second stage, performances of suppliers are assessed using both the criteria weights obtained at the first stage and fuzzy c-means clustering algorithm by classifying the vendors according to their performances. Obtained results show that the proposed model is very well suited as a decision-making tool for supplier selection decisions.     

Order allocation in purchasing management: a review of state-of-the-art studies from a supply chain perspective

Supplier selection (SS) and order allocation (OA) are strategic decisions that have a substantial effect on a company’s performance. However, order allocation is often neglected, since it results from supplier selection and is considered supplementary: little attention has been paid to its specific nature and complexity. Consequently, the authors conducted a systematic literature review specifically regarding order allocation methods. The research aimed to evaluate how often and when the issue has been dignified with an individual focus, independently of the supplier selection problem. This study conducted a comprehensive examination of the order allocation models and solutions, criteria for order quantity allocation, features of suppliers, items, planning periods, and demand most commonly considered in the literature. Finally, it aimed to discover whether supply chain configurations and trends have been considered in efforts to find a solution to the problem. The scientific contribution of this study is threefold: (i) to expand the review of scientific literature regarding order allocation models, (ii) to identify research gaps and highlight research opportunities, and (iii) to suggest a research agenda for the development of order allocation models according to the requirements of current trends in supply chain management.     

A hierarchical model for optimal supplier selection in multiple sourcing contexts

This paper addresses a crucial objective of the strategic purchasing function in supply chains, i.e. optimal supplier selection. We present a hierarchical extension of the data envelopment analysis (DEA), the most widespread method for supplier rating in the literature, for application in a multiple sourcing strategy context. The proposed hierarchical technique is based on three levels. First, a modified DEA approach is used to evaluate the efficiency of each supplier according to some criteria proposed by the buyer. Second, the well known technique for order preference by similarities to ideal solution (TOPSIS) is applied to rank the maximally efficient suppliers given by the previous step. Third and finally, a linear programming problem is stated and solved to find the quantities to order from each maximally efficient supplier in the multiple sourcing context. The presented approach is able to straightforwardly discern between efficient and inefficient partners, avoid the confusion between efficient and effective suppliers and split the supply in a multiple sourcing context. The hierarchical model is applied to the supply of a C class component to show its robustness and effectiveness, while comparing it with the DEA and TOPSIS approaches.     

A supplier pre-selection model for multiple products with synergy effect

In practice, it is common for companies to purchase multiple products simultaneously. For the multiple required products, a large number of interested suppliers are involved. It is necessary for the purchasing company to shortlist a small number of qualified and competitive potential suppliers prior to finalising the suppliers for order fulfilment. In addition, synergy effect which is an effect arising between two or more products that produce an effect greater than the sum of their individual effects, could exist in the multi-product supplier selection environment. Since synergy effect between products can affect the choice of suppliers, it is also necessary to incorporate the synergy effect between products in the supplier selection for multiple products. However, few research efforts have been focused on the supplier pre-selection problem, let alone explicitly for multiple products with synergy effect. This paper presents a supplier pre-selection model for multiple products with synergy effect. The model is able to evaluate interested suppliers on the multiple pre-selection criteria, by the fuzzy Technique for Order Preference by Similarity to Ideal Solution (TOPSIS)-based supplier pre-selection algorithm, and shortlist a small number of potential suppliers. Illustrative examples are conducted to demonstrate the function and application of the supplier pre-selection model for multiple products with synergy effect.     

An integration of a hybrid modified TOPSIS with a PGP model for the supplier selection with interdependent criteria

This paper deals with the supplier selection process when the criteria of selection are not independent. The primary aim is to illustrate that ignoring the interdependencies among these criteria leads to an unrealistic decision. Since supplier selection is a multiple-criteria decision-making (MCDM) process, the general structures of the relative methods are outlined in this paper. The proposed methodology then presents a comprehensive approach to find the best ranking among the alternative suppliers of a typical product. A hybrid modified TOPSIS is integrated with a preemptive goal programming model in this study and then compared to an analytical hierarchy process (AHP) to show the effect of considering interdependencies in the supplier selection process. The results indicate that the proposed methodology provides a higher total value of purchasing (TVP) than AHP while the total cost of purchasing (TCP) of both methods are equal. Empirical proof is offered based on a case study.     

The performance impact of implementing Web-based e-procurement systems

As Web-based e-procurement has become an important business avenue for the improvement of inter-organisational process efficiency, its implementation for purchasing direct materials nevertheless implies establishing collaboration mechanism among supply chain participants based on the adopted Internet based infrastructure. However, the value of Web-based procurement to the supply chain participants remains an arduous task for researchers. This study proposes a Web-based e-procurement impact model based on supply chain orientation, which includes both operational and strategic impacts. Specifically, the strategic dimension is about partner relationship, and the operational efficiency dimension includes supplier performance, buyer performance, process integration, and process automation. To prove the proposed model's contribution, a questionnaire survey was conducted on 137 firms in Taiwan who have all participated in e-procurement related projects. The results verify that the electronic execution of purchasing activities improves both the operational efficiency dimension and the strategic dimension. Furthermore, partnership has a positive impact on supplier performance and buyer performance.     

A model for performance monitoring of suppliers

The purchasing function is central to the strategic operations of effective supply chain management. This centrality is mainly due to the significant impact of material costs on profits, increased investments in inter-organizational advanced manufacturing and information technologies, and a growing emphasis on the just-in-time operations philosophy. The critical business processes of the purchasing function include supplier selection, negotiation of supply contracts, monitoring supplier performance, and acting as an interface between an organization and its suppliers. Within these core processes of purchasing, this paper narrows its scope to focus upon the supplier performance evaluation and monitoring process, which assists in maintaining effective customer-supplier linkages. While price has been traditionally considered as the single most important factor in evaluating suppliers, it has been agreed upon that value performance emphasis needs to include other important factors such as quality, delivery and flexibility. Given this evolving business competitiveness environment, the contribution of this research is threefold. First, it applies a new multi-criteria evaluation model for supplier performance evaluation by considering various performance criteria. Second, a proposed application extension of this model serves as a monitoring and control mechanism for the performance of suppliers, thus supporting continuous process improvement to achieve efficient customer-supplier relationships. Third, the paper presents this technique as a new methodological extension to data envelopment analysis research by improving the discriminatory power of an existing variable returns to scale model. The model and its application are demonstrated through a previously published illustrative case example.     

Efficient methods for comparing two process yields – strategies on supplier selection

Selecting an appropriate supplier can substantially reduce purchasing costs, decrease production lead time, increase customer satisfaction, and strengthen corporate competitiveness. Thus, an effective approach to alleviate the problem of supplier selection is essential. Numerous studies have indicated that quality is the most critical and fundamental factor for supplier selection and evaluation, among various criteria. This study provides several methods for selecting the superior supplier based on the commonly used quality criterion, process yield. Four tests for comparing two yield-measure indices, based on the normal approximation and generalised confidence intervals method, are presented and compared. This paper provides recommendations for selecting efficient methods, based on the simulation results of test size and selection power. An example is also presented to illustrate the applicability of these methods.     

An application of the fuzzy ELECTRE method for supplier selection

Supplier selection is vital to the success of a manufacturing firm. Supplier selection is a multi-criteria decision-making problem and is of strategic importance for most companies. As the conventional methods for supplier selection are inadequate for dealing with the imprecise or vague nature of linguistic assessment, a new method called the fuzzy technique for ELECTRE (ELimination Et Choix Traduisant la REalité) is proposed. The aim of this study is to compare and contrast crisp and fuzzy ELECTRE methods for supplier selection. The proposed methods are applied to a manufacturing company in Turkey. After determining the criteria that affect the supplier selection decisions, the results for both crisp and fuzzy ELECTRE methods are presented.     

Supplier relationship impacts on postponement strategies

The main purpose of this paper is to examine the impact of the supplier relationship on postponement implementation in the buying firm. The links between three supplier relationship constructs and three postponement constructs are hypothesised and tested through structural modelling. These hypotheses are then tested using empirical data of a sample of 219 manufacturing firms. The findings suggest that the ability of the buying firm to delay product design decisions (postponement in product design) is positively related to the level of supplier commitment, supplier expectation of a continuing relationship with the buyer, and level of joint buyer and supplier actions. However, the buying firm’s ability to delay purchasing decisions about which items to order or how many to order (postponement in purchasing operations) was only positively related to the level of joint buyer and supplier actions. By contrast, the buying firm’s ability to delay the final product configuration (postponement in production operations) was not directly affected by those aspects of the supplier relationship investigated. These findings give greater insight into how different aspects of supplier relationship impact different types of postponement than previous research and have significant implications for practice.     

Employing dynamic fuzzy membership functions to assess environmental performance in the supplier selection process

The proposed system illustrates that logic fuzzy can be used to aid management in assessing a supplier's environmental performance in the supplier selection process. A user-centred hierarchical system employing scalable fuzzy membership functions implement human priorities in the supplier selection process, with particular focus on a supplier's environmental performance. Traditionally, when evaluating supplier performance, companies have considered criteria such as price, quality, flexibility, etc. These criteria are of varying importance to individual companies pertaining to their own specific objectives. However, with environmental pressures increasing, many companies have begun to give more attention to environmental issues and, in particular, to their suppliers’ environmental performance. The framework presented here was developed to introduce efficiently environmental criteria into the existing supplier selection process and to reflect on its relevant importance to individual companies. The system presented attempts to simulate the human preference given to particular supplier selection criteria with particular focus on environmental issues when considering supplier selection. The system considers environmental data from multiple aspects of a suppliers business, and based on the relevant impact this will have on a Buying Organization, a decision is reached on the suitability of the supplier. This enables a particular supplier's strengths and weaknesses to be considered as well as considering their significance and relevance to the Buying Organization.     

Outsourcing in non-developed supplier markets: a lean thinking approach

The benefits organisations can gain from outsourcing include cost savings and higher levels of innovation. On the other hand, outsourcing drawbacks include potential operations and performance issues such as capability and capacity problems. Some large organisations are pursuing the practice of outsourcing, more specifically, targeting global outsourcing from developing and low-wage countries. However, the perception of expected cost saving benefits when outsourcing to low-wage countries does not always reflect reality. A number of companies have failed to achieve the expected cost savings in sourcing from low-wage countries due to operational-level capability. The objective of this study is to develop an extended evaluation method that takes into account operational-level influence factors, in addition to the procurement factors, in the context of non-developed supplier markets. Our extended evaluation method of potential suppliers addressed the paradigm of ‘standard industry recipes’, by encompassing operational-level influence factors and integrating supplier value stream analysis into the evaluation and selection process of outsourcing. A survey was distributed to 369 international manufacturers. Operational levels were categorised into seven latent constructs: Customer Service/Sales, Purchasing, Production Planning and Control, Manufacturing Engineering, Shop Floor and Quality Control, Receiving and Shipping. Structural Equation Modelling (SEM) confirmed the seven constructs, but measuring items were reduced from 39 to 23 significant observed measuring items, compromising the supplier selection framework. Our proposed framework will help practitioners make better informed decisions in outsourcing from non-developed supplier markets.