Development of Strategic Supplier Evaluation: A Case Study of Wood Suppliers in Furniture Industry

Abstract

This research aimed to develop decision support tools for management decision-making. The process of analyzing and choosing strategic suppliers of wood materials, which is regarded as a critical raw material in the furniture industry, was the issue of the case study. The goal of criteria development was to deal with supplier-related problems to comply with the company's strategic competitiveness. The literature review was determined to list factors that affect supplier evaluation. Then, these factors were proposed to three buying experts from the case using the index of item–objective congruence which is the assessment tool for concerned main and sub-criteria. After that, managers applied the analytical hierarchy process, which is a tool in multi-criteria decision making, to determine the weight of significance involved in the case study buying process. The evaluation process and criteria were established to assess present suppliers. As the result, the most significant three main criteria were product quality, delivery, and flexibility. According to the proposed method, the performance of five suppliers was not correlated to purchasing proportion because of price focus. The best performance supplier had 12 percent of purchasing proportion which ranked the third. The first rank of buying proportion got 35 percent which ranked before the worst performance supplier. The proposed method also supported actual supplier performance connected to improvement and strategic supplier relationship management in the future.