Models for supply chain vendor selection in e-markets

One of the projected applications of internet technology, in the product manufacturing industry, is the procurement of parts from suppliers through E-Markets. In an E-Market the manufacturer or buyer and the supplier will be linked up through a web based electronic exchange, which acts as a cyber intermediary. The primary motivation for the evolution of this form of parts procurement is that the resulting disintermediation and global networking will significantly reduce procurement costs. More importantly, it is expected that less resourceful manufacturers will be able to establish effective supply chains in less time and less cost as compared to large global reach manufacturers. A key question in this proposition is how does the manufacturer identify candidate suppliers and then select the best set of suppliers from the proposals presented to it by the E-Market. In this paper we present first a schema for constructing an E-Market and second a model to support the supplier selection decision. The E-Market schema includes a description of the Vendor Performance History database, which is used to derive two key measures that can be used by the manufacturer to get an evaluation of the supplier's performance and thus build enough confidence to issue a supply order. An Intelligent Vendor Selection model that evaluates the submitted E-Market proposals and prescribes a supply strategy is also presented. This model is formulated as a mixed integer program which is solved with thin the E-Market negotiation template.