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Definition of Supplier Selection: Supplier selection is considered as one of the most important responsibilities of supply professionals.

Supplier selection is a decision-making process that involves trade-offs among multiple criteria, which may also be conflicting, in order to select the most appropriate supplier for the continuation of organizations performance Supplier selection is a complicated process where supply professionals have to solve two major problems. First is how to select the right set of criteria which are appropriate with business priorities and strategies for effectively evaluating potential suppliers. In order to survive in current competitive environment, it is essential to organization to provide high quality products and services at lower cost and shorter lead time. However, it is not practicable to achieve these goals without the right input products from the right suppliers. As a result, selecting appropriate suppliers becomes one of the most important aspects of purchasing and supply chain management for many industries selecting the right supplier has a direct and positive impact on firms performance, as well as helping buying firms to achieve long-term competitive advantages and gain added value from the supply chain. On the other hand, wrong supplier selection decision can result in adverse impacts, hurting firms performance and image, and even causing unexpected operation disruption. This essay will first quickly define supplier selection, then discuss its importance and finally present several insights of supplier selection approach. Approach to supplier selection Since the practitioners recognize the importance of supplier selection to the overall performance of buying firms, many researches have been conducted to develop numerous selection criteria and selection methodologies for supplier selection The empirical studies (Table 1) identified quality, delivery and historical performance as the three most important criteria in supplier selection, followed by guarantee and compensation, equipment and capability, and price. This classification is highly different with the traditional practice focusing mainly on low cost factor when selecting supplier. As the supplier selection is a typical unstructured decision-making process involving multiple criteria, it is very important that evaluation criteria must cover both tangible and intangible, quantitative and qualitative, operational and strategic factors. However, since each company has its own business priorities and strategies, it is difficult to have one set of evaluation criteria that suits every buying firms requirements. However, the research of Ndubisi et al. (2005) presented some interesting insights of different drivers in supplier selection of manufacturing companies. The study found that manufacturers who concentrated on product and launch flexibility placed an extremely attention to technology factor. Nevertheless, when the manufacturers focus on volume flexibility, quality becomes strategically important. Moreover, Chen (2011) suggested that at the first stage of supplier selection process, enterprise should analyze its competitive strategy using SWOT method to identify a foundation for establishing evaluation criteria and indicators. Through the process of analyzing internal organizational strengths and weaknesses, as well as external environmental threats and opportunities, enterprise will be able to clarify its priorities and strategic requirements. By this way, firms can go beyond traditional

operational selection criteria to select supplier with similar strategic orientation and commitment to meeting shared goals and objectives. Important criteria of vendor evaluation

After evaluation criteria have been identified, firms must employ an analytical methodology to evaluate suppliers performance and make final decision. Summarized various methods might be used by decision makers as illustrated in Figure 1. He suggested that decision methods used for prequalifying suitable supplier included categorical methods, EDA, cluster analysis, and case-based reasoning systems. Decision models for the final choice phase comprehended the linear weighting, total cost of ownership, mathematical programming, and statistical and artificial intelligence-based models.

Analytical method for supplier selection Supplier selection is a complicated decision-making process which identifies and evaluates the trade-offs between multiple evaluation criteria in order to select the most appropriate supplier. Since such decision can result in very positive or very adverse impact on firms performance, it needs to be taken

very carefully. Once the right supplier is selected, it can help firm to stimulate its performance and achieve business strategic plans. The importance of supplier selection becomes even more significant when firm pursuits innovative supply chain management strategies such as strategic alliance, early supplier involvement, just-in-time, and global sourcing. However, the process of selection requires firm to devote a significant amount of resources to identify appropriate evaluation criteria and analytical methodology. They must go beyond the traditional operational practices to employ an integrated approach of multiple analytical methods by a cross-functional team to evaluate a multiple selection factors. Combining all these efforts, firm will be able to direct all its purchasing activities toward opportunities to gain competitive advantages and added value from its supply chain.