MANAGEMENT

Business Decision Management

Business Decision Management

Introduction

In today's global market companies go through a lot of pressure to find new ways of doing business and cutting costs. A qualified supplier is the main element by which a company can reduce its costs, therefore, evaluation and selection of the right supplier is important for a business. It is important for a business to select a most vital supplier selection model which can be effective for the company's supplier chain management in the long run. This paper aims to understand various models which are applicable in supplier selection and the decision making models that are applied.

Discussion

The supplier selection is the process of finding the right suppliers which provide the buyers with the right raw materials for their products and services at the right price. Further, they are available in the right quantities and at the right time. Thus, the evaluation procedure for a supplier has multiple decision making criteria which can be utilized both qualitatively and quantitatively in a business. Therefore, it can be concluded that supplier selection requires a systematic and rational selection model as there are many suppliers available and choosing the right ones becomes a difficult task.

The supplier selection is a five phase process where firstly, the need for a new supplier is felt, next formulation of a decision criteria and finally supplier selection. There are two main tasks involved in the decision making problem which is the evaluation and assessment and secondly making a choice from the assessment. The criteria for the potential suppliers are assessed in the beginning than evaluation scale is formulated in accordance with the supplier. This helps in determining the best and worst outcomes for each attribute. Next, weight is attributed to each criterion for supplier evaluation which helps in telling relative importance of each in the assessment. The final procedure is the evaluation and assessment of supplier against the attributes.

There are two main procedures used in compiling the scores. The first one is linear where weak performance one on criteria is replaced by good performance in the other. The other more useful is the non-linear category. The selection of suppliers also depends on the sourcing strategy that a particular firm follows. A firm which wants to have a single supplier will be in favour of single sourcing and a firm which follows multiple sourcing strategies will follow a different criteria.

In a study conducted by Lehmann in 1982 suggested that different products have different effects on purchasing decision is made in terms of choice. According to Lehman, there are routine order products that have less issues related with functional capability of the product and secondly the procedural problem products where there is no question about the capability of the product. Such products have service and delivery as the most important factors. Lastly, there are performance problem products which are those products that have to perform above a certain level.

The supplier selection procedure is also affected by the type of manufacturing strategy followed by ...