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Optimising vendor and supplier evaluation and collaboration
We use Data Envelopment Analysis (DEA), which is a non-parametric, pareto-optimal Operations Research methodology and allows us to analyse each Decision Making Unit (DMU) separately without using total averages and being much more complicated than statistical methods.
End-to-end supply chain management often focuses on transformation (manufacturing, material handling, inventory policies, operations, etc.) and distribution of materials.
However, overall supply chain performance is directly affected by supplier and vendor performance as much as it is from transformation. The upstream and downstream end points of the chain also requires same attention at least in order to have a seamless flow.
Suppliers VendorsTransformation and distribution
Managing the performance of suppliers and vendors is a challenge as well in terms of two major concepts:
➢ They are usually different organisations.
➢ The performance consists of many drivers based on commercial, financial, supply chain-wise dimensions.
Supplier management
Supplier performance management
Supplier qualification
Supplier phase-out
We bring a scientific yet practical approach to evaluate the efficiency and improve the collaboration throughout the whole supply chain.
‘Suppliers’ and vendors’ efficiencies are taken at a multi-dimensional level where several drivers that have active role are considered and unit-agnostic efficiency evaluation is gathered.
We can therefore incorporate several inputs and outputs separately to run the optimal score.
Supplier management cycle
Optimisation results
Specific outcomes for eachsupplier/vendor
Improvement roadmap
➢ Build drivers set based on company priorities, culture and competition requirements
➢ Build and run Data Envelopment Analysis Model
➢ Obtain optimisation results, slack and excess variables
➢ Conduct sensitivity analysis for the constraints
➢ Define performance criteria based on drivers
➢ Obtain data for each criterion with analysis and workshops
➢ Statistically test correlated criteria and finalise criteria set
➢ Define improvement areas for each decision making unit (DMU)
➢ Prioritise improvement areas for each DMU based on optimisation results
➢ Quantify improvement metrics and generate roadmap
Dimensions Criteria Optimisation Improvement
EY Optimised Vendor and Supplier Evaluation and Collaboration Methodology
Our methodology consists of four sequential steps in order to evaluate supplier and vendor performance. Once we obtain the drivers set and determine criteria, we will run the optimisation model and obtain the optimal score for each supplier or vendor separately. The outcomes of the model enables us to run the sensitivity analysis where we can have the improvement areas and amount
Since the methodology is specifically run for each supplier or vendor, it lets us to have customised improvement roadmaps as well.
Collaboration being the golden rule of effective supply chain management, EY believes collaborative improvements adds massive value to the performance of complex structures with quantifiable financial impacts.
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© 2019 EY Turkey.All Rights Reserved.
This material has been prepared for general informational purposes onlyand is not intended to be relied upon as accounting, tax, or otherprofessional advice. Please refer to your advisors for specific advice.
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Arda KaraçelebiAssociate Partner, Advisory ServicesPhone: +90 212 315 30 00E-mail: [email protected]
Burak Kandemir (PhD)Senior Manager, Advisory ServicesPhone: +90 212 315 30 00E-mail: [email protected]
Gökhan GümüşlüPartner, Advisory Service Line LeaderPhone: +90 212 315 30 00E-mail: [email protected]
Adem KazazManager, Advisory ServicesPhone: +90 212 315 30 00E-mail: [email protected]
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