An Analysis of the Supplier Selection Process

Abstract

Customers select suppliers based on the relative importance of different attributes such as quality, price, flexibility, and delivery performance. This study examines the difference between managers' rating of the perceived importance of different supplier attributes and their actual choice of suppliers in an experimental setting. We use two methods: a Likert scale set of questions, to determine the importance of supplier attributes; and a discrete choice analysis (DCA) experiment, to examine the choice of suppliers. The results indicate that although managers say that quality is the most important attribute for a supplier, they actually choose suppliers based largely on cost and delivery performance.