Supplier evaluation and selection in the constrained environment of advance purchasing

Abstract

Purpose The purpose of this study is to address supplier evaluation and selection in a constrained environment of advance purchasing. The study presents the potential solutions to supplier evaluation and selection issues in the Indian automobile sector where advance purchases are carried out to fulfill the supply chain demand. Design/methodology/approach Based on the literature review and expert elicitation, nine major factors which are responsible for the successful implementation of supplier selection in a constrained environment of advance purchasing are identified. This paper explores supplier selection in constrained environment issues based on an integrated method based on Shannon entropy, analytic hierarchy process (AHP) techniques and failure mode effects analysis (FMEA). Findings Analysis of the results of the study suggests that traditional suppliers are not suitable in advance purchasing scenarios; hence, criteria developed in this paper to accommodate the requirement of advance purchasing with possible risk considerations are of high importance. This research paper is an original attempt to develop supplier selection criteria for advance purchasing with special identification of deliverability, flexibility, innovation and productivity factors through a case demonstration. Research limitations/implications This study uses data from secondary sources, literature reviews and expert opinions. It formalizes the important factors of successful supplier selection in the constrained environment of advance purchasing in the automotive industry context. Practical implications The paper shows how the engagement of suppliers through advance purchasing helps automotive companies in developing a competitive advantage. The integrated approach of Shannon entropy, AHP techniques and FMEA is an effective and useful method that can be applied to the supplier selection process. Originality/value The proposed FMEA-AHP method integrated with Shannon entropy used for evaluation represents a useful tool to embrace the suitable functioning tactics for efficient supplier selection. The study is unique as supplier evaluation and selection in a constrained environment of advance purchasing is not investigated much and has good industry applicability.