A Model for Strategic Supplier Selection

TLDR

Purchasing has become a critical supply‑chain function, driven by material cost impact, advanced manufacturing, and JIT production, requiring effective supplier selection to meet cost, quality, quantity, and timing goals. This article investigates a supplier‑selection process. The proposed model evaluates suppliers using strategic, operational, tangible, and intangible criteria, incorporates input from multiple managerial levels, and accounts for dynamic competitive conditions. An empirical case demonstrates the model’s effectiveness and yields actionable managerial insights.

Abstract

SUMMARY The purchasing function for some time now has been receiving increasing importance as a critical supply chain management component. This is mainly due to the significant impact of material costs on profits, increased investments in advanced manufacturing and information technologies, and a growing emphasis on Just‐In‐Time GIT) production. The critical objectives of purchasing departments include obtaining the product at the right cost in the right quantity with the right quality at the right time from the right source. This requires executing effective decisions concerning supplier selection and evaluation. This article addresses the supplier selection process. This model for evaluation and selection of suppliers considers multiple factors that include strategic, operational, tangible, and intangible measures. The model also allows for input from a variety of managerial decisionmaking levels and considers the dynamic aspects of the competitive environment in evaluating suppliers. An empirical case illustration demonstrates the efficacy of the model. The results provide interesting managerial implications.