Supplier Selection Improvement Process in an XYZ Company Through DMAIC

Supplier Selection Improvement Process in an XYZ Company Through DMAIC

Umangkumar Pabari (Concordia University, Canada)
DOI: 10.4018/978-1-5225-9570-0.ch015

Abstract

The existing supplier selection process of an XYZ company will be defined and mapped to understand the process characteristics and capabilities and then it will be analyzed to identify non-value-added activities. Corrective actions will be recommended to improve the supplier selection process for the company using DMAIC technique. It will aid in developing a competitive supplier base out of bulk suppliers available in the market that will result in competitive advantage over its peers and achieving the quality, cost, and service enrichment goals.
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Background

It’s essential to know the types of suppliers available in the market before understanding the importance of choosing a right supplier for a firm. There are mainly seven types of suppliers that a buyer needs to play with according to a specific need.

  • 1.

    Manufacturers and Vendors: They research, develop and finally produce the product which is ready for purchase.

  • 2.

    Wholesalers and Distributors: They buy in bulk from many vendors and supply larger quantities to government and other organizations directly.

  • 3.

    Affiliate Merchants: They sell their products with the help of banner ads and a network of affiliates.

  • 4.

    Franchisors: It is a business owner who gives license to an individual to develop own business which includes suppliers often at less price than an individual can get for himself or herself.

  • 5.

    Importers and Exporters: They will buy products from manufacturers in one country and export them to a distributor in another country or vice versa.

  • 6.

    Independent Crafts People: They will sell directly their manufactured products directly to retailers or end customers.

  • 7.

    Drop Shippers: They are suppliers of products from single or multiple firms which will deliver directly to the buyer.

The company should not only receive right materials, in right quantity, at right time, with the right service and at the right price but also from the right source which is supplier. Multiple sourcing has replaced single sourcing in most cases now-a-days as it dwindles external risks. However, it depends on the size of the company and their needs. Choosing the right suppliers is vital in giving consistent rise to any business and it is a skill that needs to be developed and there are many methods available for it and have been used by purchase managers but to build a long-term relationship with the supplier is as important as taking few factors while analyzing the whole process.

The importance of having a proper supplier can be inexplicable in words but in-general it affects the whole manufacturing process and therefore the customer while affects manufacturer’s image in the market.

Supplier selection process is a part of the procurement process and their job is to get required goods while supply chain is the required infrastructure to get those goods. Therefore, both are different to an extent but supply chain management can be considered as one of the responsibilities of a procurement team.

Key Terms in this Chapter

Analytical Hierarchy Process: A tool for designing and analyzing complex decisions.

Failure Mode and Effects Analysis: Used to identify failure modes in a system, its causes and effects.

CTQ: A key measurable characteristics of a product or a process in-order to fulfill customer requirements.

Process Mapping: Drawn to understand about the workflow of a process.

Bayesian Network: A probabilistic graphical model which uses Bayesian inference for the calculation of probability.

Six Sigma: A method used to remove defects in a process using relevant data.

DMAIC: A problem-solving methodology used in Six Sigma and an acronym for define, measure, analyze, improve, and control.

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