BestChoice: A Decision Support System for Supplier Selection in e-Marketplaces
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Transcript of BestChoice: A Decision Support System for Supplier Selection in e-Marketplaces
BestChoice: A Decision Support System BestChoice: A Decision Support System
for Supplier Selection in e-Marketplacesfor Supplier Selection in e-Marketplaces
June 26, 2006
Dongjoo Lee, Tahee Lee, Sue-kyung Lee, Ok-ran Jeong, Hyeonsang Eom, and Sang-goo Lee
Seoul National University, Korea
DEECS 2006 - 2Copyright 2006 by CEBT Center for E-Business Technology
ContentsContents Introduction
Supplier Selection Problem in e-Procurement Agency BestChoice
Supplier Evaluation Supplier Evaluation Policy Analysis of Supplier Evaluation Results
Implementation Architecture Application Validation of BestChoice
Conclusion
DEECS 2006 - 3Copyright 2006 by CEBT Center for E-Business Technology
Supplier Selection ProblemSupplier Selection Problem Problems
supplier selection depends on experience of agents not enough experienced agents that deal with supplier
selection which is excessively time-consuming Benefits of decision support system
evaluate suppliers by logical evaluation model support visualization and analysis of evaluation store knowledge of experienced agents to be transferred to
inexperienced agents speed up the selection process
DEECS 2006 - 4Copyright 2006 by CEBT Center for E-Business Technology
BestChoiceBestChoice Framework for supplier evaluation
supplier evaluation is expressed as numeral value : Utility five-step supplier evaluation process once the evaluation is done, necessary information to
evaluate suppliers is stored in Supplier Evaluation Policy (SEP)
DEECS 2006 - 5Copyright 2006 by CEBT Center for E-Business Technology
Five-Step Supplier Evaluation ProcessFive-Step Supplier Evaluation Process
price deliveryquality
financial stateperformance
history...
factor pool
pricedeliveryquality
2) determine factors
3) select utility functions
4) assign weights
1) establish the goal
pricequality
delivery
5) calculation of utilitiesName Utility Rank
A 0.85 1
B 0.62 2
C 0.32 3
service
DEECS 2006 - 6Copyright 2006 by CEBT Center for E-Business Technology
Supplier Evaluation Policy - exampleSupplier Evaluation Policy - example
Factor Utility Function Weight Constraint
sPrice Linear 0.4 NoneDelivery Step 0.2 NoneQuality Log 0.2 NoneService Linear 0.2 None
Furniture Factor Utility Function Weight Constraint
sPrice Linear 0.1 NoneDelivery Step 0.2 NoneQuality Log 0.3 NoneDefective Ratio Linear 0.4 None
Bearing
Factor Utility Function Weight Constraint
sPrice Linear 0.5 NoneDelivery Step 0.3 10 daysQuality Log 0.2 None
Stationery
Different evaluation settings for products
DEECS 2006 - 7Copyright 2006 by CEBT Center for E-Business Technology
Supplier Evaluation PolicySupplier Evaluation Policy
Rule for evaluating the suppliers when item involved in S is requested to purchase, evaluate
suppliers by this method Reuse of SEP for similar purchase requests speeds up the
selection process SEP allows the inexperienced to learn from the expertise of
experienced agents
DEECS 2006 - 8Copyright 2006 by CEBT Center for E-Business Technology
Supplier EvaluationSupplier Evaluation Multi Attribute Utility Theory (MAUT)
The value of alternatives consist of measures over the criteria contributing to worth; all converted to a common scale of utility
Factors indicate suppliers’ characteristics and performance qualitative – product quality, service satisfaction quantitative – delivery, price and financial state
DEECS 2006 - 9Copyright 2006 by CEBT Center for E-Business Technology
Utility CalculationUtility Calculation Raw values of factors are calculated to the normalized
numeral values through Utility Function Utility functions are used for the property of the factors
DEECS 2006 - 10Copyright 2006 by CEBT Center for E-Business Technology
NormalizationNormalization Convert raw values to fit in a common range, (0, 1) Hard to know min and max before evaluating Dynamic normalization
Normalization formula0
1
DEECS 2006 - 11Copyright 2006 by CEBT Center for E-Business Technology
Weight AssessmentWeight Assessment Weight : numeral expression of importance of the factor Various methods AHP
technique for converting subjective assessments of relative importance into a set of weights.
By using simple Pairwise comparison, importance of factor can be calculated as numeral value
DEECS 2006 - 12Copyright 2006 by CEBT Center for E-Business Technology
Analysis ofAnalysis of supplier evaluation resultssupplier evaluation results the agents can grasp the evaluation results with ease help inexperienced agents to acquire experience and
knowledge of experienced agents Methods
What if analysis Similarity analysis Sensitivity analysis
DEECS 2006 - 13Copyright 2006 by CEBT Center for E-Business Technology
ArchitectureArchitecture
Data Warehouse Factor Pool Utility FunctionPoolSEP Pool
Supplier EvaluationEngine Factor Manager Utility Function
ManagerSEP Manager
Supplier Evaluation ResultAnalysis GUI Manager UI
Database Layer
Logic Layer
Interface Layer
Read only Read & Write
DEECS 2006 - 14Copyright 2006 by CEBT Center for E-Business Technology
ApplicationApplication installed at iMarketKorea, one of the major e-
procurement agency in Korea
SEP ListViewer
SupplierList Viewer
AnalysisUI
SEPViewer
DEECS 2006 - 15Copyright 2006 by CEBT Center for E-Business Technology
Validation of BestChoiceValidation of BestChoice
Effectiveness
Evaluation accuracy
* RFQ : Request For Quote
*
DEECS 2006 - 16Copyright 2006 by CEBT Center for E-Business Technology
Conclusion & Future WorkConclusion & Future Work Other decision support systems are focused on
evaluation model but BestChoice is focused on reuse of domain expertise and making selection process quick
BestChoice reduce human effort and time to evaluate suppliers make knowledge base to utilize domain expertise effectiveness and evaluation accuracy was validated with
application installed in iMarketKorea Future Work
Integrating BestChoice into the Supplier Relationship Management System