In: Operations Management
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.
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 |