Question

Complete the following chart to determine which supplier will you choose according to given scoring system and what are your selections's point of strengths and weaknesses?

		Pesi	Supplier 1	Supplier 2	Supplier 3	Supplier 4
Technical area (65%)	Technical proposal	40%	30%
	Matching with project planning	10%	70%
	Reorder lead time	5%	20%
	Supplier past performance (if applicable)	10%	10%
Economic area (35%)	Quotation for the project	10%	50%
	Quotation for future projects	15%	100%
	Quotation for repairing and maintenance	5%	100%
	Supplier dependence rate	5%	100%
	Total score	100%	51%
	Top supplier to be selected		NO

Given the following background information:

Matching with project planning (10%)
	Weight	Supplier 1	Supplier 2	Supplier 3	Supplier 4
Variance between project due date and proposed due date (days)	100%	34.00	46.00	46.00	42.00
Worst variance		46.00
Best variance		34.00

Technical proposal (40%)
	Weight	Supplier1	Supplier2	Supplier3	Supplier4
Adherence to system design included in the proposal	50%	95%	87%	75%	90%
Historical supplier capability to adhere to design included in the proposal	35%	90%	77%	70%	70%
Effectiveness of communication of technical details	15%	40%	30%	20%	35%

Reorder lead time (5%)
	Weight	Supplier1	Supplier2	Supplier3	Supplier4
Supplier lead time	100%	30	40	40	40
Average lead time		37.5
Variance with average lead time		-7.5	2.5	2.5	2.5
Worst variance		2.5
Best variance		-7.5

Supplier past performance (10%)
	Weight	Supplier1	Supplier2	Supplier3	Supplier4
order freezing time	20%	0%	90%	50%	60%
payment terms	20%	100%	100%	100%	100%
delivery lead time	20%	100%	100%	100%	100%
open work in progress activities	20%	100%	100%	100%	100%
defects part per million	20%	100%	93%	12%	100%

Quotation for the project (10%)
	Weight	Supplier1	Supplier2	Supplier3	Supplier4
Supplier quotation	100%	4900	9000	7250	6100
Average quotation		6812.5
Variance with average quotation		-1912.5	2187.5	437.5	-712.5
Worst variance		2187.5
Best variance		-1912.5

Quotation for future projects (15%)
	Weight	Supplier1	Supplier2	Supplier3	Supplier4
Supplier quotation	100%	15150	27000	21550	21200
Average quotation		21225
Variance with average quotation		-6075	5775	325	-25
Worst variance		5775
Best variance		-6075

Quotation for repairing and maintenance (5%)
	Weight	Supplier1	Supplier2	Supplier3	Supplier4
Supplier quotation	100%	38	40	40	35
Average quotation		38.25
Variance with average quotation		-0.25	1.75	1.75	-3.25
Worst variance		1.75
Best variance		-3.25

Supplier dependence rate (5%)
	Weight	Supplier1	Supplier2	Supplier3	Supplier4
Supplier dependence rate	100%	0.16	0.66	0.42	0.01

Each sub-item has the following meaning:

• Technical proposal: evaluation of three items 1. Adherence to system design included in the proposal (50%) 2. Historical supplier capability to adhere to design included in the proposal (35%) 3. Effectiveness of communication of technical details (15%)

• Matching with project planning: for each supplier, the difference between the project due date and the proposed due date is calculated. Then, each supplier receives a score between 0 and 100% calculated as 1 – [(supplier variance – best variance)/(worst variance – best variance)]

• Reorder lead time: each supplier offers a lead time value, from which the average lead time is calculated; so, for each supplier, the difference between the average lead time and the proposed lead time is calculated. Then, each supplier receives a score between 0 and 100% calculated as 1 – [(supplier variance – best variance)/(worst variance – best variance)]

• Supplier past performance: ongoing suppliers are evaluated against four performance dimensions (order freezing time, payment terms, delivery lead time, open work in progress activities, defects part per million); for each, a threshold value is set (e.g. for defects part per million, it is 1%): each supplier receives a score between 0% and 100% according to how much the target value has been achieved (it is default 0% if the supplier has no performance data available). Each performance has the same weight (20%)

• Quotation for the project: each supplier offers a price for this project, from which the average price is calculated; so, for each supplier, the difference between the average price and the proposed price is calculated. Then, each supplier receives a score between 0 and 100% calculated as 1 – [(supplier variance – best variance)/(worst variance – best variance)];

• Quotation for future projects: each supplier offers a price for at three future project, from which the average price is calculated; so, for each supplier, the difference between the average price and the proposed price is calculated. Then, each supplier receives a score between 0 and 100% calculated as 1 – [(supplier variance – best variance)/(worst variance – best variance)];

• Quotation for repairing and maintenance: each supplier offers a price for maintenance and repair, from which the average price is calculated; so, for each supplier, the difference between the average price and the proposed price is calculated. Then, each supplier receives a score between 0 and 100% calculated as 1 – [(supplier variance – best variance)/(worst variance – best variance)];

• Supplier dependence: each supplier receives a score which equal the value of supplier dependence.

Answer 1

		Pesi	Supplier 1	Supplier 2	Supplier 3	Supplier 4
Technical area (65%)	Technical proposal	40%	85%	75%	65%	75%		• Technical proposal: evaluation of three items 1. Adherence to system design included in the proposal (50%) 2. Historical supplier capability to adhere to design included in the proposal (35%) 3. Effectiveness of communication of technical details (15%)
	Matching with project planning	10%	100%	0%	0%	33%		• Matching with project planning: for each supplier, the difference between the project due date and the proposed due date is calculated. Then, each supplier receives a score between 0 and 100% calculated as 1 – [(supplier variance – best variance)/(worst variance – best variance)]
	Reorder lead time	5%	100%	0%	0%	0%		• Reorder lead time: each supplier offers a lead time value, from which the average lead time is calculated; so, for each supplier, the difference between the average lead time and the proposed lead time is calculated. Then, each supplier receives a score between 0 and 100% calculated as 1 – [(supplier variance – best variance)/(worst variance – best variance)]
	Supplier past performance (if applicable)	10%	80%	97%	72%	92%		• Supplier past performance: ongoing suppliers are evaluated against four performance dimensions (order freezing time, payment terms, delivery lead time, open work in progress activities, defects part per million); for each, a threshold value is set (e.g. for defects part per million, it is 1%): each supplier receives a score between 0% and 100% according to how much the target value has been achieved (it is default 0% if the supplier has no performance data available). Each performance has the same weight (20%)
Economic area (35%)	Quotation for the project	10%	100%	0%	43%	71%		• Quotation for the project: each supplier offers a price for this project, from which the average price is calculated; so, for each supplier, the difference between the average price and the proposed price is calculated. Then, each supplier receives a score between 0 and 100% calculated as 1 – [(supplier variance – best variance)/(worst variance – best variance)];
	Quotation for future projects	15%	100%	0%	46%	49%		• Quotation for future projects: each supplier offers a price for at three future project, from which the average price is calculated; so, for each supplier, the difference between the average price and the proposed price is calculated. Then, each supplier receives a score between 0 and 100% calculated as 1 – [(supplier variance – best variance)/(worst variance – best variance)];
	Quotation for repairing and maintenance	5%	40%	0%	0%	100%		• Quotation for repairing and maintenance: each supplier offers a price for maintenance and repair, from which the average price is calculated; so, for each supplier, the difference between the average price and the proposed price is calculated. Then, each supplier receives a score between 0 and 100% calculated as 1 – [(supplier variance – best variance)/(worst variance – best variance)];
	Supplier dependence rate	5%	16%	66%	42%	1%		• Supplier dependence: each supplier receives a score which equal the value of supplier dependence.
	Total score	100%	85%	43%	47%	62%
	Top supplier to be selected		Yes	No	No	No
Given the following background information:
Matching with project planning (10%)
	Weight	Supplier 1	Supplier 2	Supplier 3	Supplier 4
Variance between project due date and proposed due date (days)	100%	34	46	46	42
Worst variance		46
Best variance		34
Technical proposal (40%)
	Weight	Supplier1	Supplier2	Supplier3	Supplier4
Adherence to system design included in the proposal	50%	95%	87%	75%	90%
Historical supplier capability to adhere to design included in the proposal	35%	90%	77%	70%	70%
Effectiveness of communication of technical details	15%	40%	30%	20%	35%
Reorder lead time (5%)
	Weight	Supplier1	Supplier2	Supplier3	Supplier4
Supplier lead time	100%	30	40	40	40
Average lead time		37.5
Variance with average lead time		-7.5	2.5	2.5	2.5
Worst variance		2.5
Best variance		-7.5
Supplier past performance (10%)
	Weight	Supplier1	Supplier2	Supplier3	Supplier4
order freezing time	20%	0%	90%	50%	60%
payment terms	20%	100%	100%	100%	100%
delivery lead time	20%	100%	100%	100%	100%
open work in progress activities	20%	100%	100%	100%	100%
defects part per million	20%	100%	93%	12%	100%
Quotation for the project (10%)
	Weight	Supplier1	Supplier2	Supplier3	Supplier4
Supplier quotation	100%	4900	9000	7250	6100
Average quotation		6812.5
Variance with average quotation		-1912.5	2187.5	437.5	-712.5
Worst variance		2187.5
Best variance		-1912.5
Quotation for future projects (15%)
	Weight	Supplier1	Supplier2	Supplier3	Supplier4
Supplier quotation	100%	15150	27000	21550	21200
Average quotation		21225
Variance with average quotation		-6075	5775	325	-25
Worst variance		5775
Best variance		-6075
Quotation for repairing and maintenance (5%)
	Weight	Supplier1	Supplier2	Supplier3	Supplier4
Supplier quotation	100%	38	40	40	35
Average quotation		38.25
Variance with average quotation		-0.25	1.75	1.75	-3.25
Worst variance		1.75
Best variance		-3.25
Supplier dependence rate (5%)
	Weight	Supplier1	Supplier2	Supplier3	Supplier4
Supplier dependence rate	100%	0.16	0.66	0.42	0.01