Ranking Suppliers

In this chapter, we discussed several multiple criteria methods for ranking suppliers—linear weighted point (LWP) method, metric, rating, Borda count, pair-wise comparison, and AHP. It was pointed out that for all the ranking methods (except AHP) to work effectively, the criteria values have to 

The supplier rankings are used in two ways in practice. One is to select the best supplier to negotiate with, under single sourcing. Another is to use the rankings to prequalify or shortlist suppliers under multiple sourcing. 

---

Actively manage a few suppliers. Dell used 25 suppliers for 85 percent of its needs. Dell is actively involved in its suppliers operations and seeks to understand their environments and the issues faced. Dell ranks suppliers relentlessly and posts scores on a limited access Internet connection. 

The LWP method has several drawbacks. It is generally difficult to come up with exact criteria weights. The method also requires all the criteria values to be scaled properly if the measurement units are very different. For example, quality may be measured in "percent defectives," service may be measured by lead-time in days, capacity in hundreds of units, and price in dollars. The use of linear additive value fimction violates the normal economic principle of "Diminishing Marginal Utility." In Section 6.3, we will discuss several methods for ranking suppliers that overcome these drawbacks. 

The problem of ranking suppliers (pre-qualification) represents a class of multiple criteria optimization problems that deal with the ranking of a finite number of alternatives, where each alternative is measured by several conflicting criteria. Several ranking methods have been developed in the multiple criteria optimization literature to solve the problem (Masud and Ravindran, 2008, 2009). In this section, we present several multiple criteria ranking approaches for fhe supplier ranking problem, namely, the pre-qualification of suppliers. 

Supplier Lj Value Rank Supplier L2 Value Rank... 

Supplier Score Rank Supplier Score Rank... 

Discuss the similarities and differences between Lp metric and AHP for ranking suppliers. 

Method gives good practices to current partner rather than operates as a supplier selection criteria. It is not possible to rank suppliers based on HSEQ AP. 

In the beginning of the project, the number of different assessment methods was high, and there was a clear need to make a decision and selection. This procedure was created, the internal instructions were specified and the methods were chosen. The main assessment method was chosen to be HSEQ AP. One goal for HSEQ AP is to help principal companies to confirm supplier s adequate HSEQ level. However, before the project it was not yet used extensively for that purpose. Representatives from principal company did not see HSEQ AP as a method which could rank suppliers. After-work HSEQ evaluation was decided to be used after the work is completed, among other detailed internal criteria, which was based on the contract type, duration and value. 

Some approaches to quality management suggest that companies reduce the total number of suppliers for a service or material to just a few high quality entities. This allows the companies to symbi-otically develop relationships. Both parties can benefit greatly by using a system designed to rank preferred tollers. However, do not let the motivation to reduce the number of suppliers inhibit the critical review of potential tollers capable of performing the toll successfully. 

Go to the Web and develop a list of suppliers along with unit costs for some of the various types of flocculants described in this chapter. Also obtain the MSDS (Material Safety Data Sheets) for these chemicals. Once you have collected the information, develop a relative ranking of unit cost and health risk associated with each. For question 2 you will need information of recommended doses. 

Price Cost-to-serve Supplier rank Share of customer wallet (SCW) Overall satisf. Satisf. with competition Operating margin Total sales ( k) Share costs Competitor share costs... 

In order to identify the success factors for custom manufacturing, an antagonistic approach is recommended the selection criteria for outsourcing partners, as established by a major pharmaceutical company, are listed in Appendix A.6. Those fine-chemical companies, which best comply with the 28 criteria, obviously have the best chance to become suppliers. The ranking is typically based on an extensive audit of the prospective supplier. 

The data collected is then used to prioritize waste streams and operations for assessment. Each waste stream is assigned a priority based on corporate pollution-prevention goals and objectives. Once waste origins are identified and ranked, potential methods to reduce the waste stream are evaluated. The identification of alternatives is generally based on discussions with the facility staff review of technical literature and contacts with suppliers, trade organizations, and regulatory agencies. 

Propene oxide (PO) is one of the largest propene derivatives in production, ranking second behind polypropene it is used primarily as a chemical intermediate [1]. Worldwide, approximately 8 million tons are produced annually, the major suppliers are Dow (1.9M-tonyr ), Lyondell (2.1-tonyr ) and Shell/BASF (0.9M-tonyr ) other key producers are Sumitomo, Repsol and Huntsman. 

This activity includes information on contractual arrangements with suppliers and points of contact, relationship history (orders, fulfillments, disputes, resolutions), business evaluations, and technical evaluations of products and capabilities, including certifications for specific materials. For specific materials (or product families), there are approved supplier lists that identity supphers from whom the organization may order that material, often with preference ranking or ranking criteria. 

The team has developed an evaluation sheet from the rankings of the attributes (see Figure 5.1). Each team member (and visitor, if the team chooses) can rate the supplier s answers to each attribute from zero to five after the interview is completed. 

The preferred supplier would be the one with the highest ranking. The strengths can be identified by looking at the business area breakdowa The overall rating will give the first evaluation point. Then look to the business areas for further breakdown. If specific questions are important these results can be looked at as well. 

---