a review of quality criteria supporting supplier selection

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Hindawi Publishing CorporationJournal o Quality and Reliability EngineeringVolume , Article ID ,pageshttp://dx.doi.org/.//

Review ArticleA Review of Quality Criteria Supporting Supplier Selection

Mohammad Abdolshah

Engineering Faculty, Islamic Azad University, Semnan Branch, Semnan -, Iran

Correspondence should be addressed to Mohammad Abdolshah; [email protected]

Received December ; Accepted April

Academic Editor: Shey-Huei Sheu

Copyright Mohammad Abdolshah. Tis is an open access article distributed under the Creative Commons AttributionLicense, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properlycited.

Tispaper presents a review o decision criteria reported in theliteratureor supporting thesupplier selection process.Te review isbased on an extensive search in the academic literature. Afer a literature review o decision criteria, we discuss the most importantcriteria: quality. Ten different methods and actors or assessing the quality o supplier are discussed. Results showed that allmethods and actors mentionedin this paper are not appropriate tools or quality evaluation. Moreover, we propose a novelmethod(using loss unctions) in order to assess the quality o suppliers.

1. Introduction

Nowadays companies hope to establish a longer-term work-ing relationship with the suppliers. Tereore, supplier selec-tion is one o the main parts o decisions in supply chainmanagement. Because there are many suppliers with manycriteria, so it is impossible to nd the best way to evaluateand select suppliers. Tereore, in studies, scholars have useddifferent methods, variables, criteria, and actors in order toselect the suppliers.

Evaluation o suppliers is a process that leads companiesto select their desired suppliers. Tis process has two main

aims, which are to reduce all costs o purchasing and toincrease the overall value o the purchasing []. Regardingto the costs o evaluating the suppliers (such as time andtravel budget), companies basically evaluate those suppliersthat have a good chance o qualiying or purchasing romthem. In this process, ormally, companies send expert teamsto the supplier site, and with evaluating different criteria andactors, they will do an in-depth evaluation.

Tere are different steps that must be done in the processo supplier evaluation and selection []. As it is shown in Fig-

ure, in order to evaluate and select the suppliers, companiesmust identiy some important things such as methodologies,criteria, and problems (strategies).

Tis paper ocused on the literature review o criteria orsupplier evaluation and especially the criteria related to thequality evaluation o suppliers.

2. Decision Criteria Formulation

Regarding to multicriteria decision-making concept o sup-plier selection problems, one o the main parts o this processis to dene related actors and criteria. Tere are manycriteria such as price, quality, and process capability and ontime delivery, which can affect selecting the proper supplier.Tere are many studies since the s about actors, whichaffect supplier selection. Roa and Kiser [], Ellram [], andStamm and Golhar [] mentioned , , and criteria orsupplier selection, respectively. Weber at al. [] reviewed articles in which more than one criterion was considered insupplier selection models. One crucial study, which was doneby Dickson [], identied different criteria evaluated insupplier selection.

Tis study was on the base o a questionnaire that wassent to purchasing agents and managers rom the UnitedStates and Canada. Teir survey showed that price, delivery,and quality are three main actors, which are important orthem. Weber et al. [] also did a similar survey and concludedthat price, delivery, quality, production capacity, and localiza-tion are the most important criteria.


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Journal o Quality and Reliability Engineering

Identify key purchasing/sourcing

Determine purchasing strategy approach

Identify potential supply sources

First cut: limit supplier in pool

evaluation and selection

Make supplier selection decision

Determine criteria and method of supplier

F : Supplier evaluation and selection process [].

Although the evolution o the industrial environmentmodied the degrees o the relative importance o supplierselection criteria since the s, the ones presented byDickson [] still cover the majority o those presented inthe literature until today. Ha and Krishnan [] and Aissaouiet al. [] investigated main criteria which were related tosupplier selection in the literature since . In this study, weadded some new studies and summarized them in able : A:Dickson []; B: Wind et al. []; C: Lehmann and haughnessy[]; D: Perreault and Russ []; E: Abratt []; F: Billesbachet al. []; G: Weber et al. []; I: Min and Galle []; J:

Stavropolous []; K: Pi and Low []; L: Pi and Low [], M:eeravaraprug []; N: Sanayei et al. []; O: Parthiban et al.[]; P: Peng []; Q: Bilisik et al. []; R: ektas and Aytekin[]; S: Li []; : Betul et al. []; U: Mehralian et al. [].

3. Assessing the Quality

Quality is one o the main criteria or supplier evaluation andsupplier selection. As it showed in able, among criteria,quality was the main criterion or supplier evaluation [].Holjevac [] dened quality as ollows:

(i) quality reers to the ability o a product or service to

consistently meet or exceed customers expectations;(ii) quality means getting what you have paid or;

(iii) quality is not something that is adopted as a specialeature; instead, it is an integral part o a product orservice.

Assessing quality as one o the main actors or supplierselection is so important. In order to assess the quality, thereare many actors and methods that can be used. Tere are alot o literatures which have been accumulated on the subjecto vendor evaluation and selection models, and in orderto evaluate quality, most o these models have used rate orejects [,,], while rate o rejects cannot present the

quality appropriately. In a recent study, Lee [] used yieldrate in order to evaluate the quality. In the next chapter, itis mentioned why the rate o rejects or yield rate are notappropriate tools or assessing the quality.

Some scholars integrated some actors in order to evaluatethe quality. eng and Jaramillo [] integrated continuous

improvement programs, quality o customer, support ser-vices, certications, and percentage on time shipment. Inanother study, Hou and Su [] dened a quality indexwith integration o technical and design level, ease o repair,and reliability. Xia and Wu [] used just technical anddesign level, and reliability in order to evaluate the quality.Tese actors also cannot present the core o quality level oproducts.

Process capability indices are appropriate and suitableindices in order to evaluate the quality, but presenting themas cost are so complicated, so some scholars presented aninnovative qualitative method with the integration o processcapability indices and other actors.

In the other hand, some scholars have used processcapability indices in order to evaluate the quality. seng andWu [] considered the problem o selecting the best manu-acturing process rom some available processes based on theprecision capability index and have proposed a modiedlikelihood ratio (MLR) selection rule. Tey prepared sometables o the sample size and o the critical values or selectingthe best manuacturing by controlling the probability basedon the proposed MLR selection rule. Moreover, in case anonnormal symmetric distribution, seng and Wu [] usedsimulation to examine the robustness o the selection rule.Teir results showed that the proposed modied likelihoodratio selection rule is acceptable or nonnormal symmetricprocess distributions.

Chou [] developed an approximate method or select-ing a better supplier based on one-sided capability indicesand when the sample sizes are the same, which dealswith comparing two one-sided processes and selects betteronewith the higherprocess yield. Pearnet al. [] investigatedthe selection power analysis o the method via simulation andprocess capability. Huang and Lee () proposed a modelor selection a subset o processes containing the best supplierrom a given set o processes. Under the circumstances, asearch or the larger which are used to provide a measureo the process perormance is equivalent to a search or thesmaller 2 [].

Te selection method proposed by Chou [] utilized

some approximating results but provide no indication onhow one could urther proceed with selecting the bettersupplier by testing process capability index or .Pearn et al. [] investigated the selection power analysis othe method via simulation. Te accuracy analysis providesuseul inormation regarding the sample size required ordesignated selection power. o render this method practicalor in-plant applications, a two-phase selection procedure isdeveloped by Pearn et al. [] to select the better supplier andexamine urther the magnitude o the difference between thetwo suppliers [].

Tere are some innovative research with the integrationo process capability and other actors in order to select the


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: supplier evaluation criteria [].

Rank Criteria Mean rating Evaluation

Quality . Extreme importance

Delivery .

Perormance history .

Warranties and claim policies . Production acilities and capacity . Considerable importance

Price .

echnical capability .

Financial position .

Procedural compliance .

Communication system .

Reputation and position in industry .

Desire or business .

Management and organization .

Operating controls .

Repair service . Average importance

Attitude . Impression .

Packaging ability .

Labor relations record .

Geographical location .

Amount o past business .

raining aids .

Reciprocal arrangements . Slight importance

best supplier. Linn et al. [] presented CPC chart or supplierselection problem (Figure). Te CPC chart integrates theprocess capability and price inormation o multiple suppliers

and presents them in a single chart. It provides a simple anduseul method to consider quality and price simultaneouslyin the supplier selection process. However, thischart uses index, while we know that this process capability index is nota proper index to evaluate quality.

In order to evaluate supplier, Linn et al. [] consid-ered some actors such as quality, on-time delivery, price,and service, but the strategy is not clear i the purchasedepartment wants to buy many kinds o materials rom onesupplier. It means in this case that some other actors mustbe considered, because purchase department always wants tobuy all materials rom one or two suppliers, so the shipmentcost also will be decreased. Similarly Zhu [] established

a suppliers capability and price inormation chart (SCPIC)(Figure ) ocused on the case where the specicationlimits are symmetric about the target or evaluating supplierperormance which applies the process incapability index tomeasure supplier quality perormance.

Assessing quality as one o the main actors or supplierselecting is so important. In order to assess the quality thereare manyactors and methodsthat can be used. Tereare a loto literatures accumulated on the subjecto vendorevaluationandselection models, andin orderto evaluate quality, most othese models have used rate o rejects [,,], while rateo rejects cannot present the quality appropriately. In a recentstudy, Lee [] used yield rate in order to evaluate the quality.

0 0.5 1 1.5 2 2.5

T/P

0.5

1

1.5

2

2.5

U

0

EG

G

C

C

S

Cpk

E zone

H zone

S

F : CPC chart [].

Tere are ew studies about the usage o loss unctions inorder to selection the suppliers. In these studies, scholars justhave used the concepts o loss unction in order to weigh thecriteria. Pi and Low [] used aguchi loss [] and assumed% deective products as the standard rate o rejects, and thequality could be calculated with aguchi loss unction and


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: Various selection criteria that have emerged in the literature.

Selection criteria A B C D E F G H I J K L M N O P Q R S U

Price (cost)

Quality Delivery

Warranties and claims

Afer sales service

echnical support

raining aids

Attitude

Perormance history

Financial position

Geographical location

Management and organization

Labor relations

Communication system Response to customer request

E-commerce capability

JI capability

echnical capability

Production acilities and capacity

Packaging ability

Operational controls

Ease o use

Maintainability

Amount o past business

Reputation and position in industry

Reciprocal arrangements Impression

Environmentally riendly products

Product appearance

Catalog technology

Dependability

Flexibility

Payment terms

Productivity

Applicable o conceptual Manuacturing

Manuacturing challenges

Driving Power

o match the lead times Personnel capability

o be solution oriented

Global actors

Environmental risk 1Dependability reers to the ability to supply items as promised. Dependability sometimes includes delivery due date, delivery accuracy, and deliverycompleteness.Ability to change or revise in the production operations.A: Dickson []; B: Wind et al. []; C: Lehmann and haughnessy []; D: Perreault and Russ []; E: Abratt []; F: Billesbach et al. []; G: Weber et al. []; I:Min and Galle []; J: Stavropolous []; K: Pi and Low []; L: Pi and Low [], M: eeravaraprug []; N: Sanayei et al. []; O: Parthiban et al. []; P: Peng[]; Q: Bilisik et al. []; R: ektas and Aytekin []; S: Li []; : Betul et al. []; U: Mehralian et al. [].


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0 1 2 3 4 5 6

1

2

3

4

5

Cpl

Cpp= 0.25

Cpp= 0.81

Cpu

B

C

D+

A+

E+

G

F

F : Suppliers capability and price inormation chart [].

this target value. In another study, they [] continued theirresearch and proposed an AHP method in order to select thenal supplier.

eeravaraprug [] proposed a new model or outsourc-ing and vendor selection based on aguchi loss unction. Inthis interesting study loss, the unction was used in orderto calculate the quality rate, but in its methodology aguchiloss unction was used or just weighting the different rates,and again in order to calculate the quality, just rate o rejectsassumed. Summary o the main studies in this area is shownin able.

Regarding to erce worldwide competition, qualityturned to be one o the main actorsdwhich directly affectsthe supplier selection decision. As stated in the literaturereview, quality can be assessed by methods categorized intwo different groups. Te rst group consists o qualitativemethods such as continuous improvement programs, qualityo customer and support services, certications, technical anddesign level,capability o handling abnormal quality, andeaseo repair. Te second group consist o quantitative methodsincluding reliability, rate o rejects, yield rate, process capa-bility indices, and loss unctions.

Since qualitative methods can evaluate just one aspect oan organization but cannot evaluate the whole productionprocess, they are not suitable methods or assessing the qual-

ity o a process. For example, one product o an organizationmay have a bad quality, but the recent top manager o theorganization has taken the basic decision to implement somecontinuous improvement programs. Continuous improve-ment programs help to enhance the quality, but they cannotguarantee the quality o the current products. Tere aresome quality certications, such as ISO , ocused on thequality management in organizations. Tese quality systemscanbe chosen in order to assessthe quality o an organization,but they cannotbe an appropriate representative o the qualityo the products. For example, Reimann and Hertz [] statedthat ISO registration does not necessarily mean the ollowingwords: () good or improving product quality, () satisaction

o customers needs, () comparable levels o product qualityamong registered companies, () better quality than nonreg-istered companies, and () good or improving productivity,responsiveness, competitiveness, or workorce development.Moreover, Juran [] acknowledged that a comprehensivequality system dened by ISO standards hasa degreeo merit,

but the certication alone will not enable companies to attainworld-class quality.Quality o customer and support services is another

criterion in order to evaluate the quality o suppliers. Tiscriterionis a sign o implementing customer-based systems inorganizations, but customers just with considering this actorcannot assure the quality o the products. Some organizationsmay show off their responsibility and hide their weak pointswith a ashy customer and support service.

echnical and design level is another criteria, which isused or assessing the quality in some studies. echnical anddesign level helps organizations to produce products withbetter quality, but or multiproduction organization, it is hardto assess whether high technical and design level has aneffect on the quality o a specic product or not. Also, inassembly organizations, the technical and design level cannotguarantee the product quality. Since nowadays customersofen tend to replace the deective products or deective parts,the product, or one part o it, repairing hasmissedits positionin the term o quality. So the item ease o repair is not anappropriate criterion or quality assessment.

Capability o handling abnormal quality products isanother qualitative method, which is important but cannotguarantee the quality o products. Nowadays, some newapproaches such as zero deects which rely on the zero rateso rejects are emerging, so organizations, instead o ocusingon problems o abnormal quality products such as handlingo them, ocus on low rate o rejects. On the other hand, asupplier can have a bad quality o products, but a good serviceor handling abnormal quality products.

Te second group o quality assessment methods consistso quantitative methods. Te quantitative methods also havesome weak points. For example, some studies evaluatedthe reliability o products instead o assessing the quality.Reliability is dened as the probability that a product willsuccessully perorm without any ailure, under speciedenvironmental conditions, or a specied period o time[]. In this denition, there is not a distinction betweena product, which its quality specications are really closeto the target, and an accepted product, which its quality

perormance is ar rom the target. Ramakrishnan et al. []presented an example o solder bump ailures in assemblyprocess (Figure ). Tey showed a high process capabilityindex, but actually the rate o rejects is high and consequentlythe reliability is low.

Te example o Ramakrishnan et al. [] showed thatprocess capability indices also have some weak pointsin orderto evaluate the quality o products. Moreover, Perakis andXekalaki [] illustrated that process capability indices suchas , , and do not have a direct relationship with theconormance proportion o the process.

Rate o rejects is one o the main methods or assessingthe quality. Tis method selects the supplier with least rate


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:Teliteraturereviewabo

utthemethodsofassessingqualityforsup

plierselection.

ID

Article

Year

Rateof

rejects

Continuous

improve

ment

programs

Qualityof

customer

and

support

services

Certications

Percentage

ontime

shipment

echnical

anddesign

level

Easeofrepair

Reliability

Capability

of

handling

abnormal

quality

Yieldrate

Process

capability

indices

Loss

functions

Customer

satisfaction

Culture

compatibility

Enterprise

credit

sengandWu

[]

Chou[]

HuangandLee

Pearnetal.[]

engand

Jaramillo[]

LiuandHai[]

PiandLow[]

PearnandKotz

[]

Linnetal.[]

WangandGuo

[]

HouandSu[]

XiaandWu[]

Zhu[]

Sanayeietal.

[]

eeravaraprug

[]

Kokanguland

Susuz[]

Lee[]

Li[]

ektasand

Aytekin[]

Parthibanetal.

[]

Peng[]

Bilisiketal.[]

Mehralianetal.

[]


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16

14

12

10

8

6

42

0

1.6

1.4

1.2

1

0.8

0.6

0.40.2

0Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Time (month of year)

Cap

abilityindex

(Cp

)

Bumpfailure

(ppm

)Process change made

F : An example about relationo process capability index andbump ailures (ppm) [].

USLLSL

Quality characteristics

Target

F : Samples rom process A.

o rejects. Tis is a good quantitative method or assessingthe quality, but it cannot be useul in case o similar rateo rejects. For instance, suppose that two samples wereselected rom suppliers A and B. Each Sample consistedo parts. Suppose that or both samples, eight qualitycharacteristics all within specication limits (LSL, USL), asstated in Figure. Regarding to rate o rejects method, thereis no any differences between them because rate o rejects osupplier A = rateo reject osupplier B = ., but Figures and show that there is a signicant difference between them andprocess A has a better quality.

Yield rate is an opposite concept to rate o rejects and

behaves the same. Similarly based on Figures and , it isconcluded that yield rate o both processes is the same (%),but there is a signicant difference between them.

On time shipment percentage similarly presents a qualityactor, which is indirectly related to the quality o products.On time shipment deals with delivery, and it does not takeinto account the quality. Finally, in some studies, scholars inorder to assess the quality have used the loss unctions. Sinceloss unctions take into account all samples and also havea signicant relation with loss, they seem to be appropriateand reliable unctions or evaluating the quality o suppliers.However, as stated in the literature review, the studies whichare based on loss unctions also have some weak points. For

USLLSL

Quality characteristics

Target

F : Samples rom process B.

example, Pi and Low [] who used aguchi loss unctionactually used the rate o rejects and assumed % deective

products as the standard rate o rejects. Moreover, in themethodology o eeravaraprug [], aguchi loss unctionswere used or just weighting the different rates, and again inorder to calculate the quality, just rate o rejects, assumed.

4. Conclusion and Suggestions forFuture Research

Tere are many supplier selection methods based on differentcriteria that were employed or solving the supplier selectionproblems. Tis paper presented a review o decision criteriareported in the literature orsupporting the supplier selectionprocess. Te review was based on an extensive search in theacademic literature. Tereore, all different criteria related tosupplier selection were reviewed.

Quality is the most important criteria or supplier selec-tion []. Te methods or assessing the quality can bedivided to two main categories: qualitative methods andquantitative methods. In this paper it was shown that allqualitative methods and quantitative methods can evaluate

just one aspect o an organization, but cannot evaluate thewhole production process; they are not suitable methods orassessing the quality o a process. Tereore, these methodshave some weak points and are not appropriate tools to assessthe quality. In act, the objective unctions o these methodsare not realistic objects.

Te suggestion o this paper or quality evaluation isthe use o loss unctions. Among the numerous methodsthat have been proposed or assessing the supplier, lossunctions such as aguchi loss unction without any rangeare considered one o the most effective techniques oridentiying quality parts. Quality loss unctions are morereliable and precise unctions in order to assess the quality.Tere are ew studies such as eeravaraprug [] and Pi andLow [] that used loss unctions in order to evaluate thequality, but actually they have used some denitions suchas weighting or ranges. Tis study proposes the use o lossunctions without any range and weight in order to evaluatethe quality o the suppliers.


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