Framework to manage suppliers for strategic alliances with a multicriteria method

Guarnieri, Patricia; Almeida, Adiel Teixeira de

doi:10.1590/0103-6513.132213

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Special Section • Prod. 25 (3) • July-Sep 2015 • https://doi.org/10.1590/0103-6513.132213 copy

Framework to manage suppliers for strategic alliances with a multicriteria method

Authorship SCIMAGO INSTITUTIONS RANKINGS

Processes that identify top suppliers of new products or services and evaluate the performance of the existing suppliers are essential to strategic alliances. The objective of this article is to propose a framework to select partners for strategic alliances in supply chain management using a multi-criteria method. To reach this objective, the multi-criteria modeling procedure was used to detach the steps of a decision process, which comprises the methodology used in this article. To illustrate the use of the model, a numerical application, with characteristics from a small supermarket using the ELECTRE III method, was presented. The main contribution of the model proposed is to improve the process used to select suppliers for strategic alliances by considering multiple criteria called 'soft factors'. The proposed model suggests a systematic procedure that can reduce uncertainty in the decision process.

ELECTRE III; Multi-criteria decision analysis; Strategic alliances; Supplier selection

Method	Criteria	Objective	Application/Segment	Author
Taguchi Loss Function and the Analytic Hierarchy Process - AHP	Quality, Price, On-time delivery and Service.	Build a system for selecting and evaluating suppliers	Numerical application Segment not specified	Pi & Low (2006)
Elimination and Choice Translating Algorithm - ELECTRE and Multiatribute UtilityTheory - MAUT	Cost, Response time and Quality of service	Select the most appropriate alternative for outsourcing transportation	Numerical application Transportation services	Almeida (2007)
Preference Ranking Method for Enrichment Evaluation - PROMETHÉE and Fuzzy Goal Programming – FGP	Financial strength, Capacity utilization, Ratio of university graduates to the total number of employees, Reliability, Flexibility, Information flow, Comparison of in-line and final inspection, Ratio of non-damaged items, Quality certificates, Delivery	Evaluate outsourcer and develop a supplier management system	Real life application Textile Industry	Araz et al. (2007)
Multicriteria Modeling (without specific methods)	Not specified	Propose a systematic for selecting suppliers for private sector projects	Theoretical Construction industry	Alencar et al. (2007).
SMART and Fuzzy Set Theory	Unit price, quality, delivery, organizational culture and strategy, strategic fit, technical capacity, technical problem solving	Select a supplier from the perspective of Supply Chain Management - SCM strategy	Real life application IT industry	Chou & Chang (2008)
ELECTRE IV and VIP Analysis methods	Cost, Culture Design, Quality, Deadline Experience	Select project designers for a given project.	Numerical application Segment not specified	Alencar & Almeida (2008)
AHP and Fuzzy Theory	Quality; Price & terms; Supply chain support; Technology.	Select vendors of products and services	Numerical application IT industry	Yang et al. (2008)
AHP and Multi-objective linear programming - MOLP	Purchasing costs, Product quality, Delivery reliability, Customer services, Cooperation and Partnership, Financial status	Propose an integrated approach to supplier selection and purchasing decisions	Numerical application Segment not specified	Ting & Cho (2008)
AHP, Data envelopment analysis - DEA and Neural Network - NN	Quality, Delivery, Management and Organization	Select competitive suppliers in a supply chain management perspective	Real life application – Auto-parts Industry	Ha & Krishnan (2008)
Analytic Network Process – ANP and Mixed-integer non-linear programming - MINLP	Information systems management; Risk management; Quality management system (ISO 9001:2000),	Evaluate suppliers regarding their qualitative attributes which cannot be modeled with mathematical tools	Numerical application Segment not specified	Razmi & Rafiei (2010)
Fuzzy analytic hierarchy process - FAHP and Fuzzy goal programming - FGP	Cost; Quality; Service, Risk.	Select global supplier	Real life application IT industry	Ku et al. (2010)
2-Tuple fuzzy linguistic information	Supplier’s product quality, Supplier’s delivery/order fulfillment capability, Price/cost reduction performance, Supplier’s postsales service	Evaluate supplier’s performance	Real life application- High-tech industry	Wang (2010)
Fuzzy multiple attribute decision-making (FMADM) and Fuzzy Set Theory	Technology capability, Financial health, Knowledge and managerial experience, Capability to access new market, Resource complementarity, Overlapping knowledge bases, Motivation correspondence, Goal correspondence, Compatible cultures	Propose a method for partner selection of co-development alliances using individual and collaborative utilities	Real life application IT industry	Feng et al. (2010).
Taguchi Loss Function, AHP e Multi-choice goal programming - MCGP	Product quality, Offering price, Delivery lead time, service, Warranty degree, Experience time, Financial stability	Select supplier of parts	Numerical application Segment not specified	Liao & Kao (2010)
Constructivist multicriteria decision aid - MCDA-C	Adaptability, Adequacy, Body of engineering, Drawings, Innovation, Technical Instruction, Outsourced, Environmentalism, Reliability in proposals, Warranties	Evaluate suppliers of mechanical equipments	Real life application Engineering company	Ensslin et al. (2013)

Characteristics	Description
Company approached in numerical application	Supermarket
Configuration of company	Small supermarkets which exist as independent firms or in small chains
Location of market	Sao Paulo region
Main Products	Perishables at most, some groceries, beverages, cleaning supplies and personal hygiene (shared in 15 categories of goods)
Scale of purchasing	Tend to be small, but may vary broadly.
Purchasing Managers	15 managers in charge of each category of goods 1 manager in charge of supplier relationship management
Criteria usually used for select suppliers	Price/cost; quality and delivery on-time
Problems	1)Divergence of price on invoice delivery when compared with the budgets negotiated with the suppliers, which occurs in about 20% of total purchasing; 2) Loss rate of 10% in horticultural products, since, at the time of delivery, an inspection is made only on a small sample of lots.
Consequence related to problems	1)Rupture or shortage of the goods in the store; 2) Losses and customers complain on the quality of the products.
Policies	1)In the first two purchases the company accepts the goods and issues an invoice to be discounted in the next purchase; 2) In the third purchase the company refuses to receive the goods.
Purchasing orders and Replenishment system	Manual Automatic through EDI - Electronic Data Interchange
% suppliers covered by each system	90% Manual 10% Automatic
Decision maker	Single decision maker – Supplier Relationship Manager
Problem	Selection of supplier including criteria related to strategic alliances including information sharing
Objectives	Optimize the supply process and; Offer a better service to customers.

Alternatives	Criteria
Alternatives	C1	C2	C3	C4	C5
Weights	0.20	0.20	0.15	0.20	0.25
Supplier A - SA	5	4	4	5	3
Supplier B - SB	3	2	1	2	2
Supplier C - SC	3	1	3	2	1
Supplier D - SD	5	5	4	4	5
Supplier E - SE	4	2	2	4	3
Supplier F - SF	5	4	3	3	4

Rank	Median pre-order	Final pre-order
1º	SA - SD	SA - SD
2º	SF	SF
3º	SE	SE
4º	SC	SC
5º	SB	SB

	Concordance matrix							Credibility matrix
	SA	SB	SC	SD	SE	SF		SA	SB	SC	SD	SE	SF
SA	1.00	1.00	1.00	0.67	1.00	0.86	SA	1.00	1.00	1.00	0.67	1.00	0.86
SB	0.00	1.00	0.81	0.00	0.19	0.00	SB	0.00	1.00	0.81	0.00	0.19	0.00
SC	0.00	0.67	1.00	0.00	0.19	0.19	SC	0.00	0.67	1.00	0.00	0.19	0.19
SD	0.76	1.00	1.00	1.00	1.00	1.00	SD	0.76	1.00	1.00	1.00	1.00	1.00
SE	0.14	1.00	0.81	0.24	1.00	0.24	SE	0.14	1.00	0.81	0.24	1.00	0.24
SF	0.57	1.00	1.00	0.24	0.76	1.00	SF	0.57	1.00	1.00	0.24	0.76	1.00

Alternative	Relation	Alternative	Credibility Index (%)
SA	At least almost as good as	SB	100
		SC	100
		SD	67
		SE	100
		SF	86
SB	Worse than	SA	100
	Worse than	SD	100
	At least almost as good as	SC	81
		SE	100
		SF	86
SC	Worse than	SA	100
	Worse than	SD	100
	At least almost as good as	SB	67
		SE	19
		SF	19
SD	At least almost as good as	SA	76
		SB	100
		SC	100
		SE	100
		SF	24
SE	At least almost as good as	SA	14
		SB	100
		SC	81
		SD	24
		SF	24
SF	At least almost as good as	SA	57
		SB	100
		SC	100
		SD	24
		SE	76

	Preference relations matrix
	SA	SB	SC	SD	SE	SF
SA	I	P	P	I	P	P
SB	P-	I	P-	P-	P-	P-
SC	P-	P	I	P-	P-	P-
SD	I	P	P	I	P	P
SE	P-	P	P	P-	I	P-
SF	P-	P	P	P-	P	I

Rank	α=0.25 and β=0.40		α=0.35 and β=0.50
Rank	Median Pre-order	Final Pre-order	Median Pre-order	Final Pre-order
1º	Supplier D	Supplier D	Supplier D	Supplier D
2º	Supplier A	Supplier A	Supplier A	Supplier A
3º	Supplier F	Supplier F	Supplier F	Supplier F
4º	Supplier E	Supplier E	Supplier E	Supplier E
5º	Supplier B	Supplier B	Supplier B	Supplier B
6	Supplier C	Supplier C	Supplier C	Supplier C

	α=0.25 and β=0.40							α=0.35 and β=0.50
	Concordance matrix							Credibility matrix
	SA	SB	SC	SD	SE	SF		SA	SB	SC	SD	SE	SF
SA	I	P	P	P-	P	P	SA	I	P	P	P-	P	P
SB	P-	I	P	P-	P-	P-	SB	P-	I	P	P-	P-	P-
SC	P-	P-	I	P-	P-	P-	SC	P-	P-	I	P-	P-	P-
SD	P	P	P	I	P	P	SD	P	P	P	I	P	P
SE	P-	P	P	P-	I	P-	SE	P-	P	P	P-	I	P-
SF	P-	P	P	P-	P	I	SF	P-	P	P	P-	P	I

Associação Brasileira de Engenharia de Produção Av. Prof. Almeida Prado, Travessa 2, 128 - 2º andar - Room 231, 05508-900 São Paulo - SP - São Paulo - SP - Brazil
E-mail: production@editoracubo.com.br

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[TFN02] Source: Adapted from Mainville et al. (2008)Mainville, D., Reardon, T., & Farina, E. M. M. Q. (2008). Scale, scope, and specialization effects on retailers procurement strategies: evidence from the fresh produce markets of São Paulo. Revista de Economia e Sociologia Rural, 46(1): 207-227 http://dx.doi.org/10.1590/S0103-20032008000100009 .
https://doi.org/10.1590/S0103-2003200800... .

	Preference relations matrix
	SA	SB	SC	SD	SE	SF
SA	I	P	P	I	P	P
SB	P-	I	P-	P-	P-	P-
SC	P-	P	I	P-	P-	P-
SD	I	P	P	I	P	P
SE	P-	P	P	P-	I	P-
SF	P-	P	P	P-	P	I

	Preference relations matrix
	SA	SB	SC	SD	SE	SF
SA	I	P	P	I	P	P
SB	P-	I	P-	P-	P-	P-
SC	P-	P	I	P-	P-	P-
SD	I	P	P	I	P	P
SE	P-	P	P	P-	I	P-
SF	P-	P	P	P-	P	I

	Preference relations matrix
	SA	SB	SC	SD	SE	SF
SA	I	P	P	I	P	P
SB	P-	I	P-	P-	P-	P-
SC	P-	P	I	P-	P-	P-
SD	I	P	P	I	P	P
SE	P-	P	P	P-	I	P-
SF	P-	P	P	P-	P	I