Srinivas Talluri

A methodology for strategic sourcing

Abstract Strategic sourcing is critical for firms practicing the principles of supply chain management. It specifically deals with managing the supply base in an effective manner by identifying and selecting suppliers for strategic long-term partnerships, involving in supplier development initiatives by effectively allocating resources to enhance supplier performance, providing benchmarks and continuous feedback to suppliers, and in some cases involving in supplier pruning activities. Currently, the methodologies in practice for strategic sourcing have mostly been subjective in nature with few objective decision models focused at supplier evaluation, which are also not devoid of limitations. This paper proposes an objective framework for effective supplier sourcing, which considers multiple strategic and operational factors in the evaluation process. Suppliers are categorized into groups based on performance, which assists managers in identifying candidates for strategic long-term partnerships, supplier development programs, and pruning. In addition, this research investigates the differences among supplier groups in proposing possible improvement strategies for ineffectively performing suppliers. Also, we demonstrate the methodological richness of our framework when compared to some of the traditional methods proposed and utilized for supplier evaluation purposes. The supplier data utilized in the study is obtained from a large multinational corporation in the telecommunications industry.

A multi-phase mathematical programming approach for effective supply chain design

Abstract A supply chain is an alliance of independent business processes, such as supplier, manufacturing, and distribution processes that perform the critical functions in the order fulfillment process. Effective design and management of supply chains assists in production and delivery of a variety of products at low cost, high quality, and short lead times. Although the importance of supply chain design is emphasized in the literature, few formal decision models have been proposed for this purpose. This paper presents a multi-phase mathematical programming approach for effective supply chain design. More specifically, the methodology develops and applies a combination of multi-criteria efficiency models, based on game theory concepts, and linear and integer programming methods. Model application and insights are detailed through numerical illustrations.

Vendor evaluation with performance variability: A max-min approach

Abstract The importance of incorporating multi-dimensional information into vendor evaluation is well established in the literature. Over the years, several multi-criteria techniques have been proposed for effective evaluation and selection of vendors. However, these models have not considered performance variability measures in evaluating alternative vendors. It is critical for the buyer to derive and incorporate such type of measures into the evaluation process because it provides for a more accurate portrayal of vendor’s performance. This paper fills this gap by proposing a max–min productivity based approach that derives vendor performance variability measures, which are then utilized in a non-parametric statistical technique in identifying vendor groups for effective selection. The primary advantage of this technique is that it provides the buyer with effective alternative choices within a vendor group. Thus, allowing the buyer to base the final decision on other intangible factors that could not be incorporated into the analysis. The model application is demonstrated through a previously reported dataset from a pharmaceutical company.

Multiproduct, Multicriteria Model for Supplier Selection with Product Life-Cycle Considerations

In industrial purchasing contexts firms often procure a set of products from the same suppliers to benefit from economies of scale and scope. These products are often at different stages of their respective product life cycles (PLCs). Firms consider multiple criteria in purchasing such products, and the relative importance of these criteria varies depending on the PLC stage of a given product. Therefore, a firm should select suppliers and choose sourcing arrangements such that product requirements across multiple criteria are satisfied over time. The extant models in sourcing literature for evaluating and selecting suppliers for a portfolio of products have not considered this important and practical issue faced by firms. This article proposes a mathematical model that effectively addresses this issue and contributes to the sourcing literature by demonstrating an approach for optimally selecting suppliers and supplier bids given the relative importance of multiple criteria across multiple products over their PLC. The application of the model on a hypothetical data set illustrates the strategic and tactical significance of such considerations.

A Supply Risk Reduction Model Using Integrated Multicriteria Decision Making

Risk management in supply chains is receiving increasing attention in both academia and industry. Firms are recognizing the importance of considering supply risk in evaluating and selecting suppliers for strategic partnerships. One of the critical issues faced by purchasing managers is in effectively defining, operationalizing, and incorporating supply risk measures in the supplier evaluation process. Due to the multidimensional nature of supply risk, analytical tools that can effectively integrate various risk measures into the decision process can prove useful for managers. To this end, the contribution of this paper is twofold. First, we consider extant research in supply risk in developing a framework for risk assessment based on various categories and types of risks. Second, we propose a combination of analytic hierarchy process and goal programming as a decision tool for supplier selection in the presence of risk measures and product life cycle considerations. The efficacy of the model is tested at a mid-sized automotive supplier and managerial implications are discussed.

Supply chain risk management: a literature review

Risk management plays a vital role in effectively operating supply chains in the presence of a variety of uncertainties. Over the years, many researchers have focused on supply chain risk management (SCRM) by contributing in the areas of defining, operationalising and mitigating risks. In this paper, we review and synthesise the extant literature in SCRM in the past decade in a comprehensive manner. The purpose of this paper is threefold. First, we present and categorise SCRM research appearing between 2003 and 2013. Second, we undertake a detailed review associated with research developments in supply chain risk definitions, risk types, risk factors and risk management/mitigation strategies. Third, we analyse the SCRM literature in exploring potential gaps.

A model for performance monitoring of suppliers

The purchasing function is central to the strategic operations of effective supply chain management. This centrality is mainly due to the significant impact of material costs on profits, increased investments in inter-organizational advanced manufacturing and information technologies, and a growing emphasis on the just-in-time operations philosophy. The critical business processes of the purchasing function include supplier selection, negotiation of supply contracts, monitoring supplier performance, and acting as an interface between an organization and its suppliers. Within these core processes of purchasing, this paper narrows its scope to focus upon the supplier performance evaluation and monitoring process, which assists in maintaining effective customer-supplier linkages. While price has been traditionally considered as the single most important factor in evaluating suppliers, it has been agreed upon that value performance emphasis needs to include other important factors such as quality, delivery and flexibility. Given this evolving business competitiveness environment, the contribution of this research is threefold. First, it applies a new multi-criteria evaluation model for supplier performance evaluation by considering various performance criteria. Second, a proposed application extension of this model serves as a monitoring and control mechanism for the performance of suppliers, thus supporting continuous process improvement to achieve efficient customer-supplier relationships. Third, the paper presents this technique as a new methodological extension to data envelopment analysis research by improving the discriminatory power of an existing variable returns to scale model. The model and its application are demonstrated through a previously published illustrative case example.

A buyer–seller game model for selection and negotiation of purchasing bids

Abstract Selection and negotiation of purchasing bids is a complex decision making process that requires consideration of a variety of vendor attributes such as price, delivery performance, and quality. Although several decision models have been utilized for vendor evaluation and selection, this paper proposes a buyer–seller game model that has distinct advantages over existing methods for bid selection and negotiation. The model effectively evaluates alternative bids based on the ideal targets set by the buyer. The alternative bid ratings are then utilized in an integer programming model in selecting an optimal set of bids that satisfy the buyers demand requirements. The model also assists in proposing effective negotiation strategies for unselected bids in order to make them competitive. Finally, the paper proposes four variations of the model for evaluating different bid scenarios thereby providing flexibility for the buyer in selecting the appropriate method. The model application is demonstrated through a previously published dataset from a pharmaceutical company.

A framework for designing efficient value chain networks

Strategic interorganizational networks aid organizations in gaining competitive advantages and improving production efficiencies. Network organizations, virtual corporations, and value-adding partnerships are envisioned by many experts as the epitome of interorganizational networks for the 21st century. These multi-organizational structures are viewed as a solution for rapid introduction of products while maintaining high quality and minimal costs. One common key issue in designing these new forms of organizations is the partner selection process. The business processes, owned by organizational partners, must be efficient both individually and as a collective group. This paper proposes a two-phase quantitative framework to aid the decision making process in effectively selecting an efficient and a compatible set of partners. Phase 1 identifies efficient candidates for each type of business process (e.g. design, manufacturing, distribution, etc.) utilizing data envelopment analysis. Phase 2 involves the execution of an integer goal programming model to determine the best portfolio of efficient partners based on a number of compatibility objectives. Model application and insights are evident through an illustrative example.

E‐logistics and the natural environment

Organizations realize that a strong supporting logistics or electronic logistics (e‐logistics) function is an important organizational offering from both the commercial and the consumer perspective. The implications of e‐logistics models and practices cover the forward and reverse logistics functions of organizations. They also have a direct and profound impact from an environmental perspective. Focuses on a discussion of forward and reverse e‐logistics and their relationship to the natural environment. The issues analyzed include those of traditional green logistics and supply chain management functions such as: inventory management, transportation, warehousing, delivery management, supplier management, packaging and order management. Issues relevant to each of these major areas from the electronic commerce and natural environment overlap are discussed. Examples of practices and results are integrated. Environmental issues facing reverse e‐logistics are also described. Brings to the forefront the reverse e‐logistics function, which has been selcom studied even from a non‐environmental perspective. After discussion of the many pertinent issues in these areas, direction of practice and implications for study and research are then presented.