Supplier selection is the process by which firms identify, evaluate, and contract with suppliers.
The supplier selection process deploys an enormous amount of a firm’s financial resources and plays a crucial role in the success of any organization.
The main objective of the supplier selection process is to reduce purchase risk, maximize overall value to the purchaser, and develop closeness and long-term relationships between buyers and suppliers.
Supplier Selection Process consists of the following steps:
Analyze business requirements
RFP and RFQ
Proposal Evaluation and Vendor Selection
Contract Negotiation Strategies
Mathematical Methods in Supplier Selection Process
Linear Point Method
MULTI-CRITERIA DECISION-MAKING (MCDM)
Multi-Criteria Decision-Making (MCDM) is about methods for making decisions when multiple criteria (or objectives) need to be considered together, in order to rank or choose between the alternatives being evaluated.
The following are the various techniques of MCDM:
Analytic Hierarchical Process (AHP)
Analytic Network Process (ANP)
Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS)