Multi-Criteria Supplier Selection in the Edible Oil Industry: The Case of a New Oils & Fats Plant in China

Multi-Criteria Supplier Selection in the Edible Oil Industry: The Case of a New Oils & Fats Plant in China

Nispeling, T.

Rezaei, J. (mentor)
Tavasszy, L.A. (mentor)
Pang, Y. (mentor)
Wan Ahmad, W.N.K.B. (mentor)

Civil Engineering and Geosciences

Transport, Infrastructure & Logistics

Engineering

2015-08-27

The process of supplier selection is regarded as a critical step in the development of a competitive supply chain. The share of raw material purchasing in the total turnover of industrial companies can range between 50 to 90%, which underlines the importance of selecting the right suppliers for a company. This thesis aims to create a framework for the selection of suppliers. A ranking will serve as the basis for advice on the optimal supply base. Multiple criteria are extracted from the organization and integrated in a framework that ranks the suppliers based on their performance. This is subsequently implemented in a problem situation in order to reflect on the value of the framework for with respect to the supplier selection process. The realization of a new oils and fats plant in China provides the problem situation and it is used as a case for this thesis. Currently the company is not aware of the availability of suppliers and the method of selection. Implementing a framework within a case company will be beneficial in two ways. On the one hand this thesis will allow a scientific theory to be implemented in the structure of a commercial corporation so its actual use can be determined, a step that in literature is often recommended but not taken. On the other hand the company will be provided with an insight in value of academic knowledge and how it can contribute to the development of a supply chain strategy. In order to reap these benefits a literature research is conducted on supplier selection and the related topics like sourcing, selection criteria and sustainability. This will provide a knowledge-base to work from. Subsequently the methodology describes the specific method used to create the framework, which is called the Best-Worst Method. This method is chosen because of its ability to produce reliable results with a low amount of comparison data. An extensive data collection has a twofold approach. Data is required for the design of the selection method. This involves obtaining industry specific criteria and their weights in order to make a distinction on their importance. A more practical approach is required for the rest of the data collection. This is on the available suppliers, located not only in China, but also in Asia and beyond. Once identified, contact with the suppliers is required to determine their abilities and characteristics. Substantial effort is made on the exploration of the transportation market in Asia, as different products with different modes will be transported to the new plant. The analysis of this data will be conducted according to the steps of the Best-Worst Method. The obtained data is used to determine the scores of the suppliers on the different criteria. Together with the weights of the criteria a final score can be calculated, which is the basis for the supplier ranking. To come to a meaningful advise that aligns with the operations of the case company, optimizations are performed on product importance and the transportation mode. This outcome is complemented with a presentation of the practical implications encountered during the research. These regard the transportation, the storage of raw materials, the certification and qualification in the Chinese market and on the management and organization of the new plant. The conclusion provides an answer on how a multi-product company can execute its supplier selection process. Finally the discussion reflects on the method, which is perceived to be a valuable and easy to use tool. A fragility of the method is the possibility for validation as no robust options for this are available. The framework is perceived to be valuable, because it allows the company and its employees a better insight on the selection problem, by which the complexity is reduced. Its ability to deal with extreme values however, is limited and must be kept in mind. A note on the dynamics of the problem situation concludes the thesis. It is incorporated in the thesis, to increase the usability and value of the framework over time. It provides an overview of the most important and likely factors that will affect the problem context in the near future.

Supplier Selection
Multi-Criteria Decision-Making
Best-Worst Method
Edible Oil Industry
China

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Student theses

master thesis

(c) 2015 Nispeling, T.