Case study: Supplier selection-multiple-attribute-selection model-MSM.
The role of the purchasing departments has changed significantly in today’s competitive
environment. A purchasing department can take on both the active and effective role
by applying the lean supply principles as much as possible.
The objectives of lean supply are the following: to improve purchasing efficiency, to
improve quality and delivery performance of suppliers, to isolate factors that influence
the cost of materials, and to remove unnecessary cost factors in the materials supply
system.
In order to achieve these objectives, supply chain integration is key, and therefore,
companies should adopt different tactics for effective integration of suppliers. For
example, regarding suppliers as an extension of the internal manufacturing process and
cultivating them as long-term business partners; establishing long-term purchasing and
supply commitments; improving communications with suppliers; involving suppliers in
early stages of new product planning; and using supplier expertise to improve design
manufacturability and reducing product cost.
Purchasing efficiency is improved by working with fewer suppliers of a higher caliber
who provide better service and product cost over a longer period of time. In general,
the managers can reduce the supplier base in the following three ways: reducing the
number of suppliers for each part, reducing the number of suppliers for each family of
parts, and outsourcing fewer parts. Most lean producers rely on a single lean supplier
for each part, trusting that particular supplier to deliver near-perfect products on time.
This case study is proposed to apply MSM model. This provides a method of analytically
matching a supplier’s capability to the company needs, permits comparison of the
abilities of several suppliers, and serves to evaluate the possibility of improving a
supplier’s performance.
Steps
1)Generate criteria for prescreening suppliers.Some criteria and constraints, such as
applying lean production, having quality assurance systems, or ownership position in
competitive companies, etc. are identified in this step. This information is used to
establish the criteria for prescreening suppliers.
2)Selecting the attributes for the MSM. Relevant attributes required by suppliers, that
will be used to measure supplier capability, are identified. Ten or 15 attributes are
proposed as a practical limit for MSMs. Each attribute is evaluated by detailed
questionnaire. Financial conditions, production capability, lead time requirements,
facility, process control capacity, special equipment, etc.
3) Developing the MSM criteria. Each attribute is measured by a series of criteria, each
of which has the range of 0 to 100 percent (e.g financial stability and investors; number of designs produced per year and current available capacity; prototype and production;
geographic location…-)
(4)Determining the proportional value of the attributes. In this step, the attributes are
listed and the relative importance of each are determined by assigning a number
between 0 and 100. These numbers then are added together and the proportional value
of each attribute is obtained by dividing the number assigned to each attribute by the
sum of all the attribute values. The sum of the proportional values must equal 1.0.
(5)Constructing the MSM evaluation form. The form is designed to present the
normalized values, proportional values, expected utilities of each attribute, and the
ranking of suppliers according to the total expected utilities. Thus, the values of various
attributes for the suppliers may be monitored at the same time.
The company.
The considered company is active in the glass industry. Four basic products are produced
in the company, such as glass molding machines, their spare parts, glass molds and their
accessories, parts and machines for the defense industry.
The procurement activities are carried out traditionally and purchases are done by
methods, such as offering, bargaining or covering in the company. The receiving control
is applied on the purchased parts and materials through 100 percent inspection or
sampling methods. Scrap, return, correction, and standard repair decisions are made for
inappropriate parts or materials by the receiving team.
There is a study of conversion to the cellular manufacturing in the company, which is
the reason why this company is chosen for applying MSM. It is necessary to reduce the
number of the suppliers as much as possible for successful implementation of acellular
system. Thus, it is possible to work with proper suppliers and realize the supply activities
according to their schedules for supplying the parts and materials at the required
quality, in the required number, in the required specifications, and just in time. Reducing
the number of suppliers in a company under cellular manufacturing is more rational than
a company with functional layout. If there is a defect or a delay in a cell, ithas a negative
effect on only its cell, but the whole system is not affected, whereas, any problem in
material supply in a functional layout affects the output of the whole system negatively.
Because of this, it is useful to say that the manufacturers with functional layout must
operate with multiple suppliers to reduce the problems of material supply.
Generating Criteria for Prescribing Suppliers
Since the glass mold and spare parts production are the main activities of the company,
the suppliers concerned with these activities are considered for evaluation. In the
company, some products are sent to the subcontractors for processing or complete
manufacturing.The processes are done by the products in these subcontractors such as metal cutting, casting, modeling, pantograph, welding, special operation, threading,
steel construction, grinding, polishing, cutting and bending, spring, etc. These processes
are listed separately for two basic production types, which are mold and spare parts
production. The bases of product, producer (supplier) or process are taken into account,
as the selection criteria for considering which suppliers will be evaluated. It is decided
that the selection and evaluation of suppliers on the process basis is more effective as a
consequence of discussions with managers.
Table I shows the number of subcontractors by the types of processes and the basic
types of productions. The number of suppliers is examined for mold and spare parts
production according to the processes cited above, and the metal cutting process with
the most assortments is selected for the application of MSM. As seen in Table I, the
company works with 58 suppliers for metal cutting process which of 43 for spare parts
and 15 form old production.
Ten subcontractors are decided for the selection process, which can be alternatives for
each other, and the company prefers them at most. 
Table 1 | Number of subcontractors by the products

Process Type | Spare parts manufacturing | Glass molds manufacturing
Metal cutting | 43 | 15
Casting | 17 | 7
Modeling | 3 | 1
Threading | 3 | -
Special process | 3 | -
Grinding | 2 | -
Pantograph | 2 | 1
Cutting and bending | 3 | -
Welding | 3 | -
Spring | 1 | -
Steel construction | - | 3
Polishing | - | 3
Special operation | - | 2 The company works under lean supply principles, and therefore, reliability, capability, quality
organization, geographic location, financial condition, service level and price.
Using MSM evaluation, what recommendations should be made? Sucontractor
No.
Years in
Business
Customer
Referred
Years
work
together
Technology
Level
Number
of
Machines
Total monthly
capacity(machine
hours)
Quality
Performance
Certification Quality
Control
Applications
Geographic
proximity
Financial
Stability
Deeping
promise
of due
dates
Keeping
the right
amount
of orders
Sale
Prices
1 1 1 16 Medium 6 1056 91.62 Si 0.87 Yes 80 0.9 31/48 40
2 30 1 20 Low 15 2640 92.10 Si 0.89 Yes 100 0 1/5 40
3 21 3 10 Medium 6 1056 81.13 No 0.73 Yes 80 0.4 3/5 40
4 10 1 7 Medium 3 528 89.79 No 0.83 Yes 60 0.1 8/8 40
5 9 6 9 High 9 1584 97.67 Si 0.81 Yes 100 0.3 11/45 40
6 1 1 1 High 6 1056 97.29 Si 0.52 Yes 80 0.5 7/15 40
7 141 1 2 Medium 5 880 89.31 No 0.86 No 60 1 6/29 40
8 25 1 5 Medium 5 880 87.58 Si 0.82 No 60 0.6 13/13 40
9 15 1 2 High 10 1760 92.26 Si 0.85 Yes 60 0.6 5/5 40
10 16 1 5 Low 7 1232 96.97 No 0.87 Yes 80 1 8/18 40