||An Application of the Balanced Scorecard to Assess the Fit between Corporate Strategy and Supplier Selection
||Institute of International Management (IIMBA--Master)(on the job class)
Strategic supplier selection
From the perspective of a procurement department, the most important task is to ensure that the firm’s product supply chain runs smoothly. Supplier performance is thus important due to its relationship with buying performance and even corporate performance. Buyers thus need to consider whether the selected suppliers really meet the needs of the firm and its customer, and whether the currently used rules for evaluating supplier performance have any fundamental strategic meaning for corporate planning.
In order to find the strategic connection between supplier assessment and corporate strategy, this research applies the balanced scorecard approach along with an MCDM-based AHP method, and then gives appropriate strategic weights to various indicators used in evaluations of supplier performance.
The multiple criteria hierarchy strategic supplier assessment model presented in this work can give procurement department management a more effective way to consider their strategic buying plans to improve both firm results and buying performance. Furthermore, the model can also help strategic business units to speed up the supplier assessment process. The results of this study can give managers a more flexible way to set a firm’s buying strategy, and give a strategic direction with regard to supplier evaluation rules. Moreover, this study’s strategic supplier’s assessment model can help improve supply chain relationship management.
TABLE OF CONTENTS IV
LIST OF TABLES VII
LIST OF FIGURES VIII
CHAPTER ONE INTRODUCTION 9
1.1 Industry Background. 9
1.2 Research Background. 9
1.3 Motivation. 10
1.3.1 What the Procurement Department Fights for and the Importance of Supplier Performance for Enterprises. 11
1.3.2 Not only Pursuing Buying Performance, but also Strengthening the Supply Chain. 11
1.4 Research Objective. 12
1.5 Research Structure. 12
CHAPTER TWO LITERATURE REVIEW 13
2.1 Case Study Background Review. 14
2.2 Balanced Scorecard and Supplier Assessment using an MCDM Approach. 15
2.2.1 Review of the BSC Literature Related to Corporate Strategy and Procurement Department. 18
2.3 Cost (Price). 22
2.3.1 Price Analysis Offering (C11). 22
2.3.2 Payment Terms (C12). 23
2.3.3 Trade Terms (C13). 23
2.3.4 Cost Down Performance (C14). 23
2.4 Inventory and Delivery Management. 24
2.4.1 Response for Delivery Confirmation (C21). 24
2.4.2 Responsiveness to Unusual Material Requirements (C22). 25
2.4.3 On Time Goods and Document Delivery and Accuracy (C23). 25
2.4.4 Safety Stock Reservation (C24). 26
2.5 Relationship Management (D3). 26
2.5.1 Responsiveness to Unusual Material Requirements (C31). 27
2.5.2 Market Information Sharing (C32). 27
2.5.3 Price Proposal Response (C33). 27
2.5.4 Cooperation Level with regard to General Affairs (C34). 28
2.6 Green Policy in the Company (D4). 28
2.6.1 Green Purchasing (C41). 28
2.6.2 Green CSR Activities (C42). 28
2.6.3 Green Regulation Compliance (C43). 29
2.7 Supplier Selection. 29
CHAPTER THREE RESEARCH DESIGN AND METHODOLOGY 30
3.1 A MCDM Based AHP Model. 30
3.2 Multi-criteria Decision Making (MCDM). 30
3.3 Dimension/Criterion Weights and Evaluation of Strategic Alternatives. 32
3.4 Assessment of Alternative Suppliers. 35
3.5 Sampling Procedure. 37
CHAPTER FOUR RESEARCH RESULTS 39
4.1 Empirical Study Results and Weighting. 39
4.2 Factor Evaluation and Consistency Analysis. 39
4.3 AHP Computation. 41
4.3.1 Level Two of the Supplier Assessment Model. 41
4.3.2 Level Three of Supplier’s Assessment Model. 42
4.2.3 Overall Computation of All Level Three Items. 43
CHAPTER FIVE CONCLUSION AND SUGGESTIONS 47
5.1 Research Discussion. 47
5.2 Academic Implications. 48
5.3 Practical Implications. 48
5.4 Research Limitations and Future Research Directions. 49
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