Luitzen de Boer

A review of methods supporting supplier selection

this paper we present a review of decision methods reported in the literature for supporting the supplier selection process. The review is based on an extensive search in the academic literature. We position the contributions in a framework that takes the diversity of procurement situations in terms of complexity and importance into account and covers all phases in the supplier selection process from initial problem definition, over the formulation of criteria, the qualification of potential suppliers, to the final choice among the qualified suppliers. Moreover, we propose decision methods and techniques that previously have not been suggested in a purchasing context. The proposed methods specifically accommodate for buying situations for which few or no decision models were published so far. This paper extends previous reviews by Weber et al. (Eur. J. Oper. Res. 50 (1991) 2), Holt (Int. J. Project Mange. 16 (1998) 153) and Degraeve et al. (Eur. J. Oper. Res. 125 (1) (2000a) 34) in that it classifies the models in a framework developed by De Boer (Ph. D. Thesis, University of Twente, Enschede, The Netherlands, 1998) which recognises more steps in the buying process than only the final among qualified suppliers and accommodates for the diversity of procurement situations.

Outranking methods in support of supplier selection

Initial purchasing decisions such as make-or-buy decisions and supplier selection are decisions of strategic importance to companies. The nature of these decisions usually is complex and unstructured. Management Science techniques might be helpful tools for this kind of decision making problems. So far, however, the application of outranking methods in purchasing decisions has not been suggested in purchasing or operations research literature. In this paper we show by means of a supplier selection example, that an outranking approach may be very well suited as a decision-making tool for initial purchasing decisions.

A conceptual model for assessing the impact of electronic procurement

This paper aims to contribute to the development of a conceptual model for studying the direct and indirect impact of various forms of electronic procurement (EP) on a firms integral purchasing (-related) costs. The model builds on existing classifications of purchasing-related costs and benefits and is illustrated by means of empirical data. Building the model leads us to conclude that assessment of the direct impact but especially the indirect impact of EP is far from straightforward. A form of EP may not only affect different categories of purchasing-related costs but also induce opposing direct effects within one such category. In addition, indirect effects can occur in many ways, as drastic reduction costs in one category may offer possibilities for structural changes in existing purchasing routines, which may in turn affect costs and benefits in other categories as well.

Green procurement in Norway; a survey of practices at the municipal and county level

Consumer pressure is usually considered as one of the major drivers for more environmental friendly products. During the last decade an increasing focus on public procurement has emerged as an important contributor to that pressure. In this paper we focus on the role of municipalities and counties in green public procurement. Based on surveys we investigate to what degree green public procurement is implemented in Norwegian municipalities and counties and which capabilities are critical for successful green procurement. We both investigate to what degree environmental information is requested in call for tenders and also to what degree the information is actually used in the final selection of supplier. The information gathered from the municipalities and counties is compared with information obtained from potential suppliers to see if suppliers and purchasers agree on the importance of environmental demands in the selection of suppliers.

A survey of third party logistics in Mexico and a comparison with reports on Europe and USA

Purpose – To investigate the status of third party logistics (3PL) in Mexico and the feasibility of 3PL as a global, uniform strategy.Design/methodology/approach – A survey among firms located in the central part of Mexico, followed by a comparison of the results with data from existing 3PL studies of Europe and the USA.Findings – 3PL seems a common but “low profile” practice among large Mexican firms. Only a third outsources more than three functions, which are mostly supportive and operational. Compared to Mexico, 3PL use is higher in Europe and USA. Firms in Europe and USA focus more on tactical, integrated functions and cost reduction when using 3PL while Mexican firms aim for improved customer service and concentration on core activities. The lack of competitive local providers makes 3PL expensive and may favour larger, international providers.Research limitations/implications – The results warrant additional surveys of Mexico and other developing regions, preferably using a unique survey design and ...

How do supplier development programs affect suppliers?: Insights for suppliers, buyers and governments from an empirical study in Mexico

Purpose – The purpose of this paper is to evaluate the effects of supplier development programs on the short‐term performance of suppliers and the more long‐term development of their capabilities given the relational learning context of the dyad.Design/methodology/approach – Data were collected through a survey of strategic suppliers from original equipment manufacturers of the automotive industry located in Mexico.Findings – Results suggest that basic and widely used forms of supplier development hardly lead to improved operational and financial performance of suppliers. More demanding and less frequently used forms of supplier development may lead to improved supplier performance given the suppliers have sufficient absorptive capacity and the presence of an adequate collaborative and relational learning context.Research limitations/implications – Only suppliers of firms in the automotive industry were surveyed; participant suppliers were referred by buying firms operating in Mexico.Practical implication...

Unfair allocation of gains under the Equal Price allocation method in purchasing groups

Certain purchasing groups do not flourish. A supposed reason for this is a creeping dissatisfaction among various members of a group with the allocation of the cooperative gains. In this paper, we analyze unfairness resulting from using the commonly used Equal Price (EP) method for allocating gains under the assumption of continuous quantity discounts. We demonstrate that this unfairness is caused by neglecting a particular component of the added value of individual group members. Next, we develop two fairness ratios and tie these to fairness properties from cooperative game theory. The ratios show among other things that being too-big a player in a purchasing group can lead to decreasing gains. They can be used to assess if EP is an unfair method in specific situations. Finally, we discuss measures a purchasing group could consider in order to attenuate perceived unfairness. Thereby, the group may improve its stability and prosperity.

What follows after the decision to offshore production

Purpose – The purpose of this paper is to consider research that has been conducted on the offshoring of manufacturing activities, and more specifically to synthesize results regarding the question of how firms integrate and govern geographically dispersed production activities. Design/methodology/approach – A set of 100 carefully selected articles on offshoring and offshore outsourcing of production published in international peer-reviewed journals during the past 15 years are systematically analyzed. The focus is on 34 articles that touch on issues of integration and governance of dispersed production facilities. Findings – Offshoring and offshore outsourcing of production is a cross-cutting subject of research. Most research is recent and largely conceptual. Furthermore, the findings suggest that the decision to offshore is often followed by the need to build more integrated operations. Research limitations/implications – One of the major constraining factors of this research, like many literature revi...

Purchasing as an organizational design problem: the case of non-product-related items and services

This paper discusses the problems and challenges that arise if a firm tries to concentrate purchasing activities in a separate organisational unit. For a variety of reasons, only a – small – part of all purchasing activities in an organisation is actually carried out by a purchasing department or a specialist. In particular, the purchasing of so-called non-product-related (NPR) items and services often takes place without the involvement of a purchasing department. In addition, despite the sometimes huge savings that reportedly are possible by involving a purchasing department, many managers and boards pay only modest attention to such opportunities. In this paper, a conceptual model is proposed that serves, in particular, to explain the Purchasing department’s limited and problematic involvement in a firm’s tactical NPR-purchasing activities. Based on these explanations and results from a small empirical study, we draw conclusions and formulate implications for managers and purchasing specialists. Research implications are formulated as well.

Conceptualising the production offshoring organisation using the viable systems model (VSM)

Purpose – The purpose of the paper is concerned with one of the main contributions from the field of management cybernetics, the Viable System Model (VSM) developed by Beer (1972). This paper analyses what happens in terms of the VSM when a firm engages in production offshoring. Design/methodology/approach – The paper is conceptual and develops four propositions about the nature of variety balance that production firms face, and what adjustments they make in the original viable system, both in terms of the properties of one or more of the basic subsystems and in the network of couplings between them. Findings – The paper shows the production offshoring organisation as a dynamic adaptive system in search of ways to cope effectively with external forces that undermine its viability. The paper discusses how VSM can advance production offshoring research by both supplementing and linking established approaches such as transaction cost economics, the resource-based view and the eclectic theory of international...