Supplier Portfolio Selection and Optimum Volume Allocation: A Knowledge Based Method

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Abstract

Selection of suppliers and allocation of optimum volumes to suppliers is a strategic business decision. This paper presents a decision support method for supplier selection and the optimal allocation of volumes in a supplier portfolio. The requirements for the method were gathered during a case study that was conducted within the logistics unit of Shell Chemicals Europe. The proposed method is based on the classical view by Sprague and Carlson of sequence and interaction of the different phases of decision making in a decision support system and supports Kraljic’s portfolio approach for supplier management. This method aims to help the managers in making decisions on the allocation of volumes to suppliers while simultaneously trying to satisfy conflicting objectives of improvement in benefit and reduction in risk. A mathematical model to struc-ture the problem is presented, knowledge elicited from the managers is used to parameterize the mathemati-cal model and a multi-objective, hierarchical optimization procedure produces ‘trade-off’ outputs. The man-agers can also conduct interactive post optimization ‘what-if’ analysis
Original languageEnglish
Title of host publicationPioneering Solutions in Supply Chain Management
Subtitle of host publicationA Comprehensive Insight into Current Management Approaches
EditorsWolfgang Kersten, Thorsten Blecker, Christian Lüthje
Place of PublicationBerlin
PublisherErich Schmidt Verlag
Pages241-261
ISBN (Print)9783503126859
Publication statusPublished - 2010
EventHamburg International Conference on Logistics, HICL 2010: Innovative Processes and Solutions in Logistics and SCM - Hamburg, Germany
Duration: 2 Sep 20103 Sep 2010

Publication series

NameOperations and technology management
PublisherErich Schmidt Verlag
Volume14

Conference

ConferenceHamburg International Conference on Logistics, HICL 2010
Abbreviated titleHICL
CountryGermany
CityHamburg
Period2/09/103/09/10

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