The article incorporates an approach that could assist businesses in evaluating and selecting suppliers. According to the scholar, conventional approaches concentrate on the needs of particular organizations, resulting in a failure to understand the complexities of the supply chain as a whole. The formal approach begins with identifying the prospective supplier’s business plan by SWOT analysis. This is the foundation upon which a company’s management selects requirements and benchmarks for collection. The prospective suppliers are then screened using data envelopment analysis (DEA). The author insists that this is necessary to ensure that the supplier selected is appropriate and proven. The ultimate step of this structured methodology is the ranking of the potential suppliers which is achieved through a decision-making method referred to as “Technique for Order Preference by Similarity to Ideal Solution” (TOPSIS). Chen’s methodology has been applied in the Taiwanese textile industry to great effect.
The article is a perfect illustration of the how firms evaluate and select suppliers as we learned in class. It particularly focuses on the aspect of limiting suppliers in a selection pool. Using the SWOT analysis, an organization can learn about the business of the supplier and decide whether it is worth taking the risk. Financial risk analysis and evaluation of the performance of the supplier over the years is catered to by the DEA screening. Financial stability is a key emphasis of the screening process proposed by the article. As covered in the assigned topic, a financially weak supplier could sabotage a firm’s business since they can go out of business at any time or might not have sufficient resources to honor their obligations.
The proposed methodology provides a holistic view of the process of evaluating and screening potential suppliers. It is the buyer’s responsibility to evaluate the suitability of each potential supplier to the task at hand. The article provides a complete and detailed process which can be adopted by any organization. The fact that it has proved successful in a pilot project is a testament to its suitability.