A supplier selection model for a hi-tech consumer electronic manufacturer

Pao Yue-kong Library Electronic Theses Database

A supplier selection model for a hi-tech consumer electronic manufacturer

 

Author: Tong, Kwok-wai
Title: A supplier selection model for a hi-tech consumer electronic manufacturer
Degree: M.Sc.
Year: 2000
Subject: Household electronics industry -- China -- Hong Kong -- Case studies
Business logistics -- China -- Hong Kong -- Case studies
Industrial procurement -- China -- Hong Kong -- Case studies
Hong Kong Polytechnic University -- Dissertations
Department: Multi-disciplinary Studies
Institute of Textiles and Clothing
Pages: vii, 147 leaves : ill. ; 30 cm
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b1535375
URI: http://theses.lib.polyu.edu.hk/handle/200/3303
Abstract: This dissertation is done in the background of a multinational company in the telecommunication industry. The Asia Pacific headquarter of this company is located in Hong Kong. One of the major functions being: the sourcing and procurement of components and materials for the manufacturing unit. The existing supplier selection method adopted is rather informal and subjective. The objective of this project is to review the existing supplier selection process and to develop a new model for this function. The literature studied examines the fundamentals about procurement and the commonly used supplier selection methods. The concept about Total Cost of Ownership (TCO) has also been presented. In order to tackle the existing problem, the seven steps Method Study methodology was adopted. Firstly, the supplier selection method was selected as the process to be studied. The existing supplier selection process was recorded. The information recorded has been carefully examined and the limitations of the existing process were established. A new supplier selection model tackling the existing limitations, based on the TCO concept was developed. The new model was then clearly defined and submitted to the management of the company for review and approval. With the success of the pilot run, full implementation, resource requirement & budget estimation were proposed. Structure and procedures were developed to enhance the on-going maintenance. The essence of this model is the incorporation of the major values associated with the acquisition and uses a given item. These values, specific to the organizations, are used to develop a set of criteria to assess the supplier and the results are represented in the form of a ratio. For example, the ability to produce and supply high quality products is a value to the buying organization. Various standards are established to measure the quality level of the supplier. Tools are then developed to translate these quality measurements to a ratio of the quoted unit price of the product. Combining the ratio with the quoted price of the item, an adjusted TCO price is derived. This adjusted TCO price is used to compare the different suppliers and the one with the lowest adjusted TCO price should be selected. Due to the limitations on the availability of costing information, this model has been tested and developed based on the Value Based Approach the of TCO concept. The results show that this dissertation was able to develop a new model, which eliminate the shortcoming of the existing process. The model provides a structured framework which presented the value/cost implications of critical selection criteria and allow more informed supplier selection decision to be made. It is recommended that as the company's accounting and information technology system evolve, more fact based measurement tools can be developed to replace the existing subjective judgment in the future. Especially if the company decided to adopt the Activity Based Costing system, this framework can be used to develop a true Dollar Based TCO model.

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