An evaluation of vendor selection models from a Total Cost of Ownership perspective.

Many different vendor selection models have been published in the purchasing literature. However there has been no systematic approach to compare the relative efficiency of the systems. In this paper we propose to use the concept of Total Cost of Ownership as a basis for comparing vendor selection models. We illustrate the comparison with real life data set of the purchasing problem of ball bearings at Cockerill Sambre, a Belgian multinational company in the steel industry. Mathematical programming models outperform rating models and multiple item models generate better results than single item models from a Total Cost of Ownership perspective for this specific case study.Evaluation; Models; Selection;

A supplier selection strategy within the Malaysian telecommunications industry

The telecommunication industry in Malaysia has grown rapidly over the last 15 years, with effective supply chain management becoming increasing important within the sector. A multitude of providers and part owned Malaysian government companies, vendors and suppliers are involved in generating and creating value-adding products and services within this sector (across wireless, wireline, broadband business and consumer lines of business). This paper describes key challenges facing a major telecoms service provider in Malaysia with regards to drivers involved in the overall procurement and supplier selection with regards to components of performance management, decision-making, selection techniques, quality and cost management, procurement policy and procurement ethics. This paper further focuses on defining and detailing research currently being undertaken to develop a framework for identifying supplier selection drivers that are inherent within the sector and suggests a research approach to investigate and develop strategies for supplier selection for the telecommunications industry in Malaysia

Improving the efficiency of the purchasing process using total cost of ownership information : The case of heating electrodes at Cockerill Sambre S.A.

Improving the efficiency of the purchasing process provides important opportunities to increase a firm's profitability. In this paper we introduce a mathematical programming model that uses total cost of ownership information to simultaneously select suppliers and determine order quantities over a multi-period time horizon. The total cost of ownership quantifies all costs associated with the purchasing process and is based on the activities and cost drivers determined by an activity based costing system. Our approach is motivated by the purchasing problem of heating electrodes at Cockerill Sambre S.A. a Belgian multinational steel producer. In this case quality issues account for more than 70 % of the total cost of ownership making the quality of a supplier a critical success factor in the vendor selection process.Efficiency; Heating; Processes; Purchasing;

A mathematical programming approach for supplier selection using Activity Based Costing.

Vendor selection is an important problem in today's competitive environment . Decisions involve the selection of vendors and the determination of order quantities to be placed with the selected vendors. In this research we develop a mathematical programming model for this purpose using an Activity Based Costing approach. The system computes the total cost of ownership, thereby increasing the objectivity in the selection process and giving the opportunity for different kinds of sensitivity analysis. Moreover, it allow the analyst to objectively evaluate alternative purchasing policies due to the underlying analytic and rigorous decision model.Activity based costing; Mathematical programming; Selection;

Determining sourcing strategies : A decision model based on activity and cost driver information.

Determing sourcing strategies for different material groups provides a major challenge to most companies. There has been little research on the choice of the optimal number of different suppliers for a given product group and the determination of their market shares. In this paper we propose a mathematical programming model using activity based costing information to determine optimal order splitting among suppliers on the basis of the different costs associated with the purchasing decision. We argue that sourcing strategies should be based on the minimisation of the total cost of ownership resulting from external purchases. The model is applied to the case of ball bearings at Cockerill Sambre S.A., a Belgian multinational company in the steel industry.Model; Sourcing; Strategy;

Applying total cost of ownership for strategic procurement : three industrial case studies.

In this paper we elaborate on a Total Cost of Ownership supplier selection methodology that we have constructed using three real life case studies which are presented in this article. Analysing the value chain of the firm, data on the costs generated by the purchasing policy and on supplier performance are collected using Activity Based Costing (ABC). Since a spreadsheet cannot encompass all these costs, let alone optimise the supplier selection and inventory management policy, a mathematical programming model is used. Possible savings of between 6 and 14% are obtained for the three cases.Case studies; Studies;

Construction of capital procurement decision making model to optimize supplier selection using Fuzzy Delphi and AHP-DEMATEL

Purpose – Supplier selection for capital procurement is a major strategic decision for any automobile company. The decision determines the success of the company and must be taken systematically with the utmost transparency. Therefore, the aim of this study is the construction of capital procurement decision making models to optimize supplier selection in the Indian automobile industry. Design/methodology/approach – To achieve the stated objective, a combined approach of fuzzy theory and AHP-DEMATEL is applied. Evaluation parameters are identified through an extensive literature review and criteria validation has been introduced through a Fuzzy Delphi method by using fuzzy linguistic scales to handle the vagueness of information. AHP is employed to find the priority weight of criteria although an inter-relationship map among criteria is not possible through AHP alone since it considers all criteria as independent. To overcome this, DEMATEL is used to establish cause-effect relationships among criteria. Findings – The results show that the total cost of ownership is the first weighted criterion in supplier selection for capital procurement, followed by manufacturing flexibility and maintainability, then conformity with requirement. The cause-effect model shows that supplier profile, total cost of ownership, service support and conformity with requirement are in the cause group and are considered to be the most critical factors in selecting the supplier. Originality/value – The study’s outcome can help the automobile industry to optimize their selection process in selecting their suppliers for capital procurement; the proposed model can provide guidelines and direction in this regard.N

A decision-making approach for investigating the potential effects of near sourcing on supply chain

Purpose - Near sourcing is starting to be regarded as a valid alternative to global sourcing in order to leverage supply chain (SC) responsiveness and economic efficiency. The present work proposes a decision-making approach developed in collaboration with a leading Italian retailer that was willing to turn the global store furniture procurement process into near sourcing. Design/methodology/approach - Action research is employed. The limitations of the traditional SC organisation and purchasing process of the company are first identified. On such basis, an inventory management model is applied to run spreadsheet estimates where different purchasing and SC management strategies are adopted to determine the solution providing the lowest cost performance. Finally, a risk analysis of the selected best SC arrangement is conducted and results are discussed. Findings - Switching from East Asian suppliers to continental vendors enables a SC reengineering that increases flexibility and responsiveness to demand uncertainty which, together with decreased transportation costs, assures economic viability, thus proving the benefits of near sourcing. Research limitations/implications - The decision-making framework provides a methodological roadmap to address the comparison between near and global sourcing policies and to calculate the savings of the former against the latter. The approach could include additional organisational aspects and cost categories impacting on near sourcing and could be adapted to investigate different products, services, and business sectors. Originality/value - The work provides SC researchers and practitioners with a structured approach for understanding what drives companies to adopt near sourcing and for quantitatively assessing its advantage

A guide to implementing cloud services

The Australian Government’s policy on cloud computing is that agencies may choose to use cloud computing services where they provide value for money and adequate security, as stated in the April 2011 Australian Government Cloud Computing Strategic Direction Paper1 (the Strategic Direction Paper).   Readers new to cloud computing should read the Strategic Direction Paper which provides an introduction to cloud computing, a definition and an overview of its associated risks and benefits as they apply to Australian Government agencies. The guide supports the Strategic Direction Paper and provides an overarching risk-based approach for agencies to develop an organisational cloud strategy and implement cloud-based services. It is designed as an aid for experienced business strategists, architects, project managers, business analysts and IT staff to realise the benefits of cloud computing technology while managing risks