HOW TO IMPROVE SUPPLIER SELECTION FOR COMPLEX ITEMS USING PRODUCT ENGINEERING: PERSPECTIVES FROM THE INDUSTRY

Abstract

The supplier selection process is a complex and difficult decision-making process for practitioners but also considered a core contributor to company performance. Game-theory can be applied to the supplier selection process for explanation, prediction, or prescription, which could provide superior bargaining power over suppliers by creating competition. Anyhow, the empirical evidences on the application of game theory to the supplier selection process has been mainly descriptive or prescriptive in nature (whats), lacking deeper knowledge regarding the design and application (hows and whys). Specifically, deeper knowledge regarding the importance of using product engineering methods and tools when applying game theory to supplier selection is needed (specially for complex and highly engineering goods). Therefore, this work has the objective to provide a unique description of two case studies that show how and why product engineering methods and tools can be applied to the supplier selection, as well as how they contributed to enhance performance in supplier selection processes inspired by selected game-theory concepts. Among others, Value-Analysis, Reverse Engineering, QFD or FMEA have been utilized in both cases. Key Words: supplier selection, negotiation, product engineering, value analysis, reverse engineering, QFD, FMEA, game theory