A comprehensive quality based model for vendor evaluation
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Product quality from a buyer's (customer) point of view is a function of the product's performance, cost and timeliness. To assure quality in the end product, it is necessary for purchasing management to adopt a similar approach towards vendor evaluation. Moreover, according to Deming, the strategy of purchasing should be to reduce the supplier base and move towards working with a single vendor for a single part. This research integrates the above two concepts through the use of cluster analysis for vendor evaluation. If the goal is working towards a single vendor for a single part, then the proposed vendor evaluation model helps management to focus on an initial group of vendors with the most favorable characteristics. The model evaluates vendors in four categories: according to their abilities to meet performance, cost and timeliness requirements as well as the compatibility of the vendor's quality system with respect to the ISO 9000 guidelines. Cluster analysis was used to classify the vendors into groups in order to locate the group with the most favorable characteristics. Various clustering methods were used with simulated vendor inputs. Sensitivity analyses were performed. The results indicate that the tool may be used effectively in situations where similarities exist among vendors in order to identify a group of vendors with the most favorable characteristics.