Supplier Selection in the International Environment: A Comparative Case of a Turkish and an Australian Company 1

Transcription

1 IBIMA Publshng IBIMA Busness Revew Vol (2011), Artcle ID , 14 pages DOI: / Suppler Selecton n the Internatonal Envronment: A Comparatve Case of a Turksh and an Australan Company 1 Arzu Tektas 1 and Aycan Aytekn 2 1 Department of Internatonal Trade, Bogazc Unversty, Istanbul, Turkey 2 Import assstant specalst, Istanbul, Turkey Abstract Internatonal suppler selecton, whch s becomng a domnant strategy n an ncreasng number of sectors, s a mult-crteron decson problem. Ths study ams to contrbute to ths contemporary global ssue ntally by developng a mult-crtera herarchcal model for suppler selecton utlzng the analytcal herarchy process (AHP). The AHP model ads decson makng by quantfyng the relatve mportance of each crteron and by rankng the supplers. Secondly, The AHP model s augmented wth a lnear programmng model whch ams to maxmze the buyer s total value of purchasng through optmal order splttng among supplers. The augmented model wll make t possble for the decson maker to observe the herarchy of the suppler selecton decson crtera, quantfy the relatve mportance rate for each crteron, rank the supplers, select the best suppler(s) and realze optmal order splttng among supplers. Thrdly, the model s appled to a Turksh chemcal company and an Australan one where the results pont to some mportant dfferences n the two companes decson crtera preferences and decson makng habts. Although the fndngs cannot be generalzed, ths mght pave the way for further analyses that wll be conducted at country level. Comparatve studes mght ad not only n suppler selecton but also n desgnng supply chans and suppler strateges. Keywords: Supply chan, nternatonal suppler, analytc herarchy process, lnear programmng, optmal allocaton, order splttng, senstvty analyss, Turkey, Australa 1 Ths study s supported by Bogazc Unversty Scentfc Research Projects Fund (Project #: 09N201D) Copyrght 2011 Arzu Tektas and Aycan Aytekn. Ths s an open access artcle dstrbuted under the Creatve Commons Attrbuton Lcense unported 3.0, whch permts unrestrcted use, dstrbuton, and reproducton n any medum, provded that orgnal work s properly cted. Contact author Arzu Tektas e-mall: tektas@boun.edu.tr

2 IBIMA Busness Revew 2 Introducton Effectve supply chan management has become a valuable way of mprovng organzatonal performance and sustanng compettveness n today s global busness envronment. Increases and varetes of customer demands, advances of recent technologes n communcaton and nformaton systems, competton n global envronment, decreases n governmental regulatons and ncreases n envronmental conscousness have forced companes to focus on the supply chan (Tracey and Tan, 2001). Consequently, these broadened the boundares of supply chans and nternatonalzed the suppler selecton process. Although the lterature contans abundant studes on domestc suppler selecton, research on nternatonal suppler selecton and the mpacts of globalzaton on nternatonalzaton are more lmted. Ths study ams to contrbute to the effectve supply chan development of nternatonally sourcng companes by developng a multcrtera herarchcal model for suppler selecton utlzng the analytcal herarchy process (AHP). It ads decson makng by quantfyng the relatve mportance of each crteron and by rankng and selectng the supplers. The approach s mplemented on a Turksh and an Australan company to note and nterpret the smlartes and dfferences n crtera prortzaton of the companes. Fnally, the AHP approach s augmented wth a lnear programmng (LP) model that would maxmze the total value of purchasng for the buyer through optmal order splttng among supplers. Prorty weghts calculated by AHP wll be used as nput coeffcents for LP. Usng the augmented model, t wll be possble for the decson maker to see the herarchy of the suppler selecton decson crtera, quantfy the relatve mportance rate for each crteron, rank the supplers, select the best suppler(s) and realze optmal order splttng among supplers. Internatonalzaton of Sourcng The offcal foundaton of the European Communty (EC) 1992 under the auspces of the Sngle European Act, the demse of Communsm n the Eastern bloc countres and the pendng ratfcaton of the North Amercan Free Trade Agreement contrbuted heavly to the globalzaton of the world economy (Mn, 1994). The progressve lowerng of trade barrers, the advancement of nformaton and communcaton technologes, the development of transport systems and nfrastructures have facltated nternatonal trade and ncreased the level of competton worldwde (Nassmben, 2003). Intensfyng degrees of global competton today greatly accelerated the growth n nternatonal sourcng whch allowed frms to utlze worldwde resources more effectvely by enablng them to decouple regonal economes from ther countres of orgn (Fawcett and Scully, 1998). Monczka and Trent (2003) pont to the ncreasng amounts and levels of nternatonal purchasng n ther study of 162 manly large companes worldwde. Fawcett and Scully (1998) de?ne nternatonal sourcng as materals and component purchases from supplers located outsde the natonal borders. Throughout ths study, nternatonal sourcng and nternatonal suppler selecton are used nterchangeably. Presence of factors such as complcated documentaton requrements, trade regulatons, quotas, customs dutes, currency exchange rates, cultural dfferences, unque ethcal standards n addton to complex dstrbuton channels (Mn and Galle, 1991) make t a more complex decson process compared to domestc sourcng. Eventually, many buyers unfamlar wth these factors often hestate to nternatonalze ther sourcng processes.

3 3 IBIMA Busness Revew A number of studes n the lterature cte major benefts of the nternatonalzaton n suppler selecton as reducng unt prces, ganng better access to product and process technology (Monczka and Trent, 2003), ganng access to new markets (Neureter and Nunnenkamp, 2010), buldng long term tes (Servas et al., 2007), mprovng suppler producton capablty; ntertwnng busness culture and practces; mprovng communcaton nfrastructure (Ruamsook, 2009), enrchng the manageral perspectve (Mol, 2005), maxmzng?nancal bene?ts (Grewal, 2008) among many others. Herarchcal Analyss of Suppler Selecton Crtera Internatonalzaton of sourcng requres the selecton of supplers n the nternatonal arena whle consderng poltcal, socal, economc and envronmental dmensons n related countres. Fluctuatons n exchange rates, nternatonal trade regulatons, poltcal nterventons, cultural dfferences, envronmental regulatons are some country specfc factors that should be consdered n addton to the crtera related to domestc sourcng. In the lterature, many studes exst on suppler selecton; however, most of them are lmted to domestc sourcng. Weber et al. (1991) classfy all publshed papers and dentfy qualty, cost and on-tme delvery as the most mportant suppler selecton crtera n evaluatng suppler performance. Barbarosoglu and Yazgac (1997) de?ne performance assessment, busness structure and qualty system assessment as factors affectng the suppler selecton. Ceb and Bayraktar (2003) emphasze logstcs, technology, busness and relatonshp as the related crtera. Suresh Babu and Kamana (2005) de?ne qualty, delvery, prce, technology, fnancal stablty, people, servce, strategc busness partnershp n addton to safety and envronmental concern as the sgnfcant factors. Chan and Kumar (2008) analyze the global suppler development problem and consder cost, qualty, servce performance, suppler profle and rsk factor as mportant decson varables. Ths paper attempts to construct a more comprehensve crtera herarchy by extendng the lterature wth global and contemporary aspects lke nternatonal trade, suppler s envronmental concern and country s globalzaton. In developng the man crtera, sub crtera and ther herarchy, prmary and secondary sources are utlzed. Addtonally, ntervews are conducted wth the Turksh and Australan company decson makers n order to defne sgnfcant and relevant crtera. The herarchy developed s presented n Fgure 1. Level 1 represents the overall goal, Level 2 the major crtera and Level 3 the sub crtera. For the purpose of selectng the fnal suppler(s), the herarchy can be extended wth Level 4 whch would nclude alternatve supplers. The goal s to select the best suppler n the nternatonal arena. Major crtera are defned as fnancal terms, suppler s profle, suppler s safety and envronmental concern, suppler s qualty management, delvery and global factors (Aytekn, 2009). These crtera wll be dscussed below along wth the related sub crtera.

4 IBIMA Busness Revew 4 Fgure 1. Herarchy of Internatonal Suppler Selecton Crtera Fnancal terms: s a crtcal crteron whch drectly affects the cost and proft levels. It s subdvded as Total logstcs cost and payment terms. Before the decson makers decde on a specfc suppler, they partcularly consder the overall cost of recevng the product and the length of tme nterval that they can make the payment. Total logstcs cost crteron nvolves purchase prce, mport dutes, freght cost and orderng cost as defned n Ghodyspour and Bren s study (2001). Internatonal trade regulatons, level of tarffs, presence of free trade agreements are some of the country specfc factors that would affect the fnal cost. Suppler s profle crteron can be measured n terms of the followng sub crtera: Suppler s fnancal strength, market reputaton and poston n ndustry, flexblty, nnovatve capablty, nformaton sharng and collaboraton duraton. Suresh Babu and Kamana (2005) state that the suppler should have adequate funds to complete the project gven and should be?nancally stable for at least 3-5 years.they also pont to the advantages of suppler flexblty. Flexblty would facltate the adaptaton to changng demands and needs. Chan et al. (2008) emphaszes that the suppler s nnovatve capablty s of prmary concern n

5 5 IBIMA Busness Revew nternatonal suppler selecton. Innovaton s regarded as the drvng force behnd ncreasng productvty and compettve power. Informaton sharng and collaboraton duraton would facltate communcaton and, thus, transactons between buyer and suppler. Suppler s safety and envronmental concern s ncorporated n the model due to the ncreasng legal as well as publc pressure on protecton of envronment and polluton. More companes lnk the partcular supply chan management strategy wth ther suppler s envronmental performance. Lterature search and dscussons wth sourcng and producton managers resulted n defnng sub crtera as ISO cert4caton, use of envronmentally-frendly products, conformance to Materals Safety and Documentaton Sheet (MSDS) data and waste treatment-dsposal. ISO spec?es the requrements of an envronmental management system for small to large organzatons. If management antcpates new envronmental ssues, ntegrates envronmental concerns throughout the manufacturng process and extends these deas to nter-organzatonal lnkages along the supply chan, envronmental supply chan management wll be successful (New and Westbrook, 2004, pg. 231). Conformance to MSDS, whch requres controls for handlng and storng of especally dangerous and posonous materals, s also a crtcal ssue for management. Suppler s qualty management s a core ssue snce fnal product qualty affects not only the relatonshp between the suppler and the buyer but the whole supply chan. Ths factor also consttutes one of the most mportant reasons for nternatonal sourcng. It s measured by product qualty, qualty awards/certfcates, qualty control, process capablty, contnuous mprovement programs, qualty plannng and response to customer complants. Qualty s an ntegral concept that s related to all the steps n the value chan. It covers the desgn qualty of the product, the fnal product s conformance to specfcatons and after sale servces such as respondng to customer complants. Therefore, these factors are taken nto account as sub crtera. The awards/cert?cates such as ISO 9001, HACCP receved by the suppler at the natonal or nternatonal level are regarded as ndcatons of qualty standards. The role of suppler s qualty plannng s mportant snce the presence of polces could prevent varous knds of qualty problems. Complance wth company specfcatons, prototype pre-producton controls, traceablty of shpped products, performance of qualty mprovement actvtes, follow-up of qualty costs and the avalablty of a qualty control database are the man ndcators of the suppler s success n qualty plannng (Barbarosoglu and Yazgac, 1997). Process capablty s sgnfcant snce t asssts n nvestgatng the suppler s capablty to produce the qualty products (Chan et al., 2008). The output of an ncontrol process s compared to the specfcaton lmts usng capablty ndces and the process s ablty to create a product wthn specfcaton lmts s measured effectvely.

6 IBIMA Busness Revew 6 Contnuous mprovement programs lke Kazen and Sx Sgma are tools for mprovng standardzed actvtes and productvty. They are vtal consderng today s fast changng customer requrements along wth hgh level of competton. Delvery s another crtcal factor n the nternatonal suppler selecton model. Advances n on-lne nformaton systems ease nternatonal operatons n custom brokers and freght forwarders and the lead tme requred for purchasng process decreases. Mn (1994) emphaszes that the buyer should assess the relablty of the suppler s commtment for on-tme delvery. Moreover, the frm must comply wth packagng standards, predetermned order quantty and document management. Global factors are embedded n the model due to the selecton of an ncreasng number of supplers from foregn countres. Subcrtera consdered are geographcal locaton, economc, poltcal and socal envronments n the suppler s country. Geographcal locaton of the suppler s country and the transportaton route requre careful analyss n order to elmnate the rsk of dsrupton n the supply chan. Sourcng from supplers of dfferent locatons also dversfy certan rsks of beng n a sngle country such as strkes etc. The economc envronment of the suppler s country s also sgnfcant snce concepts lke currency exchange rate, local prce control, nflaton rate, level of tarffs are drectly related wth t. The poltcal envronment and the atttude towards busness polces n the suppler s country may affect the long-term relatonshp between suppler and the buyer (Chan et al., 2008). For nstance, durng the Bejng Olympc Games n 2008, n an effort to reduce polluton and traffc congeston before, durng and after the Games, Chnese government mplemented a varety of measures to restrct and close down heavy polluton ndustres. These measures had a detrmental effect on nternatonal trade ssues lke dsrupted cargo transportaton and delayed delveres. Addtonally, poltcally more stable governments should be preferred snce changng foregn polces may create major problems n mantanng relatons wth the suppler. In terms of the socal envronment, t would generally be advantageous for the buyer to consder attrbutes lke cultural and ethcal smlarty. The Analytc Herarchy Process AHP s a subjectve decson makng tool developed by Saaty (1977) that evaluates and weghs a number of crtera and sub crtera whch affect the fnal decson. Unlke the subjectve and pror weght assgnments n a number of mult-attrbute decson models, AHP calculates crtera weghts systematcally throughout the process tself whch reduces subjectvty sgnfcantly. Usng the same herarchy and the crtera, one mght end up wth dfferent crtera weghts dependng on the strateges or preferences of the decson makers (Saaty, 1990). In an AHP model, a herarchy s developed where the hghest level s the overall goal followed by crtera and sub-crtera respectvely, down the herarchy. The crtera are compared and evaluated by the decson maker by constructng par-wse comparson matrces for each herarchy level. The decson maker answers the queston of How mportant s factor A compared to factor B n reachng the fnal goal? The responses are evaluated usng a scale of 1 (equally mportant) to 9 (extremely mportant) as suggested by Mller (1956). The comparsons are recprocal. If factor A compared to factor B s rated 9 then B compared to A s rated 1/9 (extremely less mportant). After comparng all possble pars, mathematcal operatons are appled to the comparson

7 7 IBIMA Busness Revew matrx to obtan the relatve prortes (weghts) for each factor. Varous matrces are prepared to evaluate the crtera at each level of the herarchy. Matrces that show the par-wse comparsons of the decson maker are checked for nconsstency to valdate the responses of the decson maker (Saaty, 1990). By employng ths approach, not only are the rankngs of crtera defned by a decson maker compared relatvely, but also the mportance gven to those weghts by two dfferent companes n dfferent countres can be examned. Hence, by creatng a common AHP herarchy that can be appled by decson makers n dfferent countres, nternatonal sourcng strateges of organzatons can be compared easly and systematcally. Applcaton of AHP to a Turksh and an Australan Company The AHP Model s appled to two chemcal companes one operatng n Turkey and the other n Australa. Applcaton to two dstnct companes from dfferent countres would both test the dfferentaton power of the model and also hghlght some country specfc as well as company specfc approaches to suppler selecton problem. For ths study, the major objectve s to develop and apply the proposed multcrtera herarchy and to nterpret the crtera prorty weghts. For ths reason, data about alternatve supplers and ther evaluaton as well as the fnal selecton are not ncluded n ths case analyss. The Australan company s a leadng manufacturer of prvate label cosmetcs, toletres and theurapeutc goods located n Tullamarne, Vctora. It specalzes n formulatng and producng hgh qualty products for leadng retalers and major local and nternatonal brands. The Turksh chemcal company s a worldwde suppler of nnovatve specalty chemcals and nutrtonal ngredents. The company, located n Izmt, delvers natural source raw materals and ngredents for nutrton and healthcare markets, cosmetcs, detergents and cleaner ndustres. Chemcal ndustry plays a key role n both countres foregn trade; moreover, there s an upward trend on the mport of chemcals n both countres. The countres chosen depct some smlartes economcally such as level of mports and trade defct. Some major dfferences exst poltcally such as dfference n ther geo-strategc poston and culturally (socal and busness cultures). Selectng companes from two dstant countres reduce the mpacts of regonal proxmty. Sector dfferences are also mnmzed by choosng companes from the same sector. As a result, dfferences n the results mght be attrbuted more to country and company specfc factors. Data are acqured after a number of company vsts and face to face ntervews wth each company s Sourcng Dvson manager and Supply Chan Manager. The managers are asked to make par wse comparsons for each level n the herarchy. Based on ths data, crtera weghts are obtaned usng Expert Choce Software. Results wll be dscussed at three levels. Frst, man crtera and then the sub crtera wll be evaluated wth respect to the goal. Fnally, related sub-crtera wll be evaluated wth respect to each crteron. The two companes demonstrate some major dfferences n terms of ther emphass on each suppler selecton crteron (Fgure 2).

8 IBIMA Busness Revew 8 Australan Turksh Fgure 2. Major Crtera Rankng for the Companes For the Australan company, suppler s qualty management s the major factor for the nternatonal suppler selecton wth 51.6 percent. Ths hgh value mght be a reflecton of tght qualty control mechansm n the country. Suppler s delvery, whch drectly affects the just-n-tme producton strategy and the customer relatons of the buyer, s ranked the second, wth 13.3 percent. Fnancal terms crteron s rated almost as mportant as delvery. Smlarly, suppler s safety and envronmental concerns and the global factors are rated equally and there s no sgnfcant dfference n the weghts of these four crtera. Ths mght ndcate that the recent developments n the global arena are consdered n nternatonal sourcng decsons. The suppler s profle consttutes the lowest percentage among them mplyng that the buyer does not care much about the suppler profle as long as requrements are met. On the other hand, there s no sngle leadng crteron for the Turksh company. Delvery and fnancal terms are assgned hgher prorty weghts than qualty whch surprsngly consttutes the smallest percentage. The suppler s profle s found to be the thrd mportant crtera. Ths mght be due to the dfference n the trust level of companes for ther supplers. Ths s consstent wth the fact that the level of rsk s hgher and trust s lower n Turksh busness envronment. The weght of global factors s found to be slghtly hgher than that of Australan company. However, a weght of 12.7 percent mght ndcate that the global envronment n the suppler s countres s stll not much concerned wth nternatonal sourcng decson. Addtonally, suppler s safety and envronmental concern s rated even much lower whch shows that although the Turksh company consders global factors more than ts Australan counterpart, t stll does not place as much emphass on protecton of envronment as ts counterpart. As a next step, the analyss s made at subcrtera level for the two companes.

9 9 IBIMA Busness Revew Australan Turksh Fgure 3. Sub-crtera Rankng for the Companes Fgure 3 shows that product qualty, qualty control and response to customer complants are the most mportant factors among 27 sub-crtera for the Australan company that emphaszes especally the mportance of product qualty. Furthermore, the hghest ranked ten sub-crtera belong to varous major crtera except suppler s profle. The most mportant sub-crtera regardng profle s observed to be collaboraton duraton, followed by nformaton sharng. Consderng the global factors, socal envronment s ranked qute lower than economc and poltcal envronments and t accounts for the lowest percentage along wth flexblty, market reputaton as well as fnancal strength. On the other hand, the Turksh company s rankng shows that delvery s the greatest determnant n nternatonal suppler selecton. Unlke ts counterpart, the Turksh company pays great attenton to flexblty whch reflects the general busness envronment n Turkey. Among the hghest ranked ten sub-crtera, there doesn t exst any sub-crtera belongng to suppler s qualty management. Addtonally, although fnancal terms s ranked hgher than suppler s profle and global factors, the number of sub-crtera of these two crtera n top ten s hgher than that of fnancal terms. Unlke past research results n the lterature, total logstcs cost and product qualty are ranked fourteenth and ffteenth respectvely (see Fgure 12).

10 IBIMA Busness Revew 10 The envronment related sub crtera ISO Cert?caton and Waste treatment/dsposal are rated almost the lowest; however, conformance to MSDS Data whch s a sgnfcant part of suppler s safety concern s ranked among top ten. Fnally, companes evaluaton of sub-crtera wth respect to relevant crtera s dscussed. The sub-crtera under fnancal terms are ranked dfferently by the two companes (Fgure 4). Australan Turksh Fgure 4. Fnancal Terms Sub-crtera Rankng for the Companes For the Australan company cost s three tmes as mportant as payment term whereas Turksh company evaluates payment term seven tmes as mportant. Ths ndcates that the Turksh company does not want to te up ts captal and wants to select the suppler that offers t the longest tme nterval to make the payment or else cash flow s strctly mportant for hm. Results show that there s no sgnfcant dfference between the two companes vew regardng sub-crtera under delvery, suppler s qualty management and suppler s safety and envronmental concern whch matches wth the expectatons. Australan Turksh Fgure 5. Global Factors Sub-crtera Rankng for the Companes

11 11 IBIMA Busness Revew Fgure 5 depcts that despte ts remoteness from other countres, the Australan company does not consder geographcal locaton of the suppler s country as much as the Turksh company. Ths mght be due to tensons and conflcts between the neghbor countres of Turkey and the possblty of supply chan dsrupton especally n transportaton of the products. In ths respect, the mode and route of transportaton creates a sgnfcant dfference n decson maker s preference regardng locaton. Snce the mode of transportaton for the Australan company does not necesstate ground transportaton as much as the Turksh one, t mght not have consdered locaton as much as ts counterpart. Interestngly, the Australan company consders economc and poltcal envronment more than geographcal locaton (Fgure 5). The weghts gven to the poltcal envronment by the two companes s surprsng snce Turksh company was expected to rate hgher due to the less publc senstvty observed n Australa towards the poltcal developments n other countres. However, the results show that the weght of Turksh company s almost half of the latter. In addton, lke Turksh company, socal envronment n the suppler s country s found to be the least sgnfcant factor among other consttuents of global factors. The emphass gven to economc envronment of the suppler s country by the two companes s qute smlar whch may result from the smlartes n the economc as well as trade ndcators of two countres such as exchange currency rates, tarff rates, mport values, GDP ratos. Australan Turksh Fgure 6. Suppler s Pro2le Sub-crtera Rankng for the Companes Fgure 6 shows that for the Australan company, collaboraton duraton s the utmost mportant factor related wth suppler s profle. Ths may mply that n case of suppler selecton n a multple-sourcng envronment, the company cannot dsregard the exstng supplers f they have been cooperatng for a long tme and there s a mutual gan and satsfactory relatonshp between the suppler and the company. On the other hand, for the

12 IBIMA Busness Revew 12 Turksh company, suppler s response to changes n demand and order frequency s an utmost crtcal factor. It s also worth to note that nether company takes nto account market reputaton and fnancal strength as much as the other factors. Two companes are analyzed to note for company based and country based smlartes and dfferences. Although not ncluded n ths applcaton, t can easly be taken a step further to evaluate and rank varous supplers. After determnng crtera weghts for each company, alternatve supplers are evaluated by company managers usng par wse comparsons and suppler weghts are calculated smlarly for each suppler on each crteron. The fnal weght of each suppler s calculated by multplyng the weght of each crteron wth the suppler s weght on that crteron and summng up the terms for all crtera. Supplers wll be ranked n a decreasng order of weghts. Extendng the Approach to Incorporate Order Splttng AHP model systematcally weghs and evaluates the prortes of a company n suppler selecton decson. By multplyng the weght of each crteron and suppler s ratng, the overall weght of each suppler s determned. In case of sngle sourcng, that would suffce to rank the supplers. For the case of multple sourcng, order splttng can be acheved by ntegratng a quanttatve model such as lnear programmng (LP) to the AHP approach. Ths study wll only propose the bascs of such a model both for the sake of completeness and to show that a hybrd model can easly be formed to propose an optmal soluton. The LP model presented below selects the best supplers and allocates the orders among them optmally. The constrants state that a suppler cannot exceed ts capacty (1), total order quanttes must equal the demand (2), supplers aggregate capacty must be above demand (3), logstcs cost cannot exceed the budget (4), number of supplers have a lmt (5), each order wll exceed the mnmum lmt (6). The objectve s to maxmze the total purchasng value (TPV). Purchasng value for each suppler s calculated through the AHP process, by multplyng the weght of each crteron wth the suppler weght on that crteron and then summng all related terms. Subsequently, the purchasng values are used as coeffcents of the objectve functon n LP to allocate order quanttes to the supplers. Hence, not only does the hybrd model gve ndcatons about how the two countres approach the nternatonal sourcng problem but also ads the decson maker n selectng the external supplers that best match hs expectatons. Optmal Order Splttng Model n Max TPV = w x = 1 s.t. x C y = 1,... n x = D n =1 n = 1 n x mn C c x D B mn y n max Q y = 1,... n where, x = Order quantty for the th suppler w = AHP-calculated weghts for the th suppler c = Unt logstcs cost of the th suppler C = Capacty of the th suppler D = Demand for the perod

13 13 IBIMA Busness Revew B = Total budget allocated for the gven perod n = Number of supplers Q = mn Mn order quantty of the th suppler y = 1 f th suppler s selected; 0 otherwse Concluson The objectve of the paper s to dscuss the relevant and contemporary decson crtera that can be nvolved n nternatonal suppler selecton, propose an approach that could ad decson makers when makng decsons about suppler selecton and order splttng. The paper especally contrbutes by dentfyng and complng the mportant crtera along wth ntroducng crtera lke suppler s safety and envronmental concern, poltcal envronment, socal envronment nto the selecton problem. Applyng the AHP approach to an Australan and a Turksh company s another nterestng and orgnal aspect of ths study. The results ndcate some structural dfferences n crtera prortzatons and decson makng habts of the two companes. Although the fndngs cannot be generalzed at country level due to the small sample sze, ths mght pave the way for further analyses that wll be conducted at country level. Comparatve studes mght ad not only n suppler selecton but also n desgnng supply chans and suppler strateges. References Aytekn, A. (2009). Internatonal Suppler Selecton and Order Allocaton Decson: A Comparson of a Turksh and an Australan Company, Unpublshed Master Thess, Bogazc Unversty, Turkey. Barbarosoglu, G. & Yazgac, T. (1997). An Applcaton of the Analytc Herarchy Process to the Suppler Selecton Problem, Producton and Inventory Management Journal, 38, Ceb, F. & Bayraktar, D. (2003). An Integrated Approach for Suppler Selecton, Logstcs Informaton Management, 16, Chan, F. T. S., Kumar, N., Twar, M. K., Lau, H. C. W. & Choy, K. L. (2008). Global Suppler Selecton: a Fuzzy-AHP Approach, Internatonal Journal of Producton Research, 46, Fawcett, S. E. & Scully, J. I. (1998). Worldwde Sourcng: Facltatng Contnued Success, Producton and Inventory Management Journal, 39, Ghodsypour, S. H. & O Bren, C. (2001). The Total Cost of Logstcs n Suppler Selecton, under Condtons of Multple Sourcng, Multple Crtera and Capacty Constrants, Internatonal Journal of Producton Economcs, 73, Mller, G. A. (1956). The Magcal Number Seven, Plus or Mnus Two: Some Lmts on Our Capacty for Processng Informaton, Psychologcal Revew, 63, Mn, H. (1994). Internatonal Suppler Selecton: a Mult-attrbute Utlty Approach, Internatonal Journal of Physcal Dstrbuton and Logstcs Management, 24, Mol, M., Tulder, R. & Beje, P. (2005). Antecedents and Performance Consequences of Internatonal Sourcng, Internatonal Busness Revew, 14(5)., Monczka, R. M. & Trent, R. J. (2003). Understandng Integrated Global Sourcng, Internatonal Journal of Physcal Dstrbuton and Logstcs Management, 33, Nassmben, G. (2003). Local Manufacturng Systems and Global Economy: Are They Compatble? The Case of the Italan Eyewear Dstrct, Journal of Operatons Management, 21, Neureter, M. & Nunnenkamp, P. (2010). Modes of Internatonal Sourcng and the Compettveness of Frms: An Analyss of

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