A comprehensive framework for supplier segmentation, development, and appreciation

Abstract

The literature on supplier relationship management (SRM) lacks a comprehensive framework to support the underlying interrelations between its components. This paper introduces a novel decision-making framework supported by multi-attribute decision-making and mathematical modeling approaches to address those interrelations and decision problems related to supplier segmentation, development, and appreciation as the three fundamental pillars of SRM. First, the criteria identified for segmenting, developing, and appreciating suppliers are weighted by field experts’ subjective assessment using the best-worst method. Then, two optimization models are proposed for supplier development and appreciation steps under specific objectives and resource constraints to find their optimal allocation pattern. The framework’s applicability is validated through an illustrative case study conducted at a mobile telecommunications company. The findings reveal that segmenting, developing, and appreciating suppliers are closely interrelated and should be implemented sequentially to have a comprehensive portfolio of decisions. Besides, the framework can minimize experts’ subjective evaluations and enhance segmentation, development, and appreciation decisions by enabling suppliers’ information integration and analytics. Derived insights reveal that isolating these processes without considering their interactions within a comprehensive decision framework for companies with many supplies outsourced can lead to higher costs and weak supplier relationships. Potential areas further facilitating the decision-making process are also highlighted and introduced for future research.