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Vendor selection model

A vendor selection model is a structured framework that helps
businesses evaluate potential vendors.

Business challenges

- Find a vendor evaluation method to facilitate an objective, unbiased selection process

- Identify the key metrics of vendor performance that can help during negotiation with vendors on specific points

- Find a robust framework that can measure vendors’ performance

Analytics solution and results

- Analytic hierarchy process (AHP) is a prominent approach in solving multi-criterion decision-making problems.

- The method allows the incorporation of judgements on intangible qualitative criteria alongside tangible quantitative criteria.

The results: Improved ROI on trade promotions

- Helped avoid conflicts through collaborative decision making

- Generated a repeatable process that saves time

- Measured vendor performance among peers and across time

Solution Approach

1.Defining and ordering criteria

2. Evaluating vendors and selecting the best one

Criteria Local weights Sub-criteria Local weights Combined weights Ranks
Capability 26.2% Quantity 33.2% 8.7% 4
Standards 38.2% 10.0 % 1
Delivery network 28.5% 7.5% 8
Process 21.9% Management and organisatoin 30.6% 6.7% 10
Automation 39.3% 8.6% 5
Delivery lead time 30.2% 6.6% 11
Packaging 18.5% SKU packaging 49.3% 9.1% 3
Delivery packaging 50.7% 9.4% 2
Pricing 17.6% Margin cost 36.7% 6.5% 12
Minimum order quantity 38.9% 6.9% 9
Credit period 24.4% 4.3% 13
Quality 15.7% Product quality 50.0% 7.9% 6
Hygiene 50.0% 7.9% 6

Impact

  • Helped avoid conflicts through collaborative decision making
  • Generated a repeatable process that saves time
  • Measured vendor performance among peers and across time
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