An effective supplier development methodology for enhancing supply chain performance

Supplier performance has a critical effect on the competitiveness of the entire supply chain. In this work, the effect is analyzed and demonstrated with a mathematical model that calculates the total cost of supply chain according to the supplier delivery performance. Considering the importance of suppliers within the supply chain, this work also suggests a methodology for developing the supplier performance effectively. The methodology identifies managerial criteria using information derived from the supplier selection process where AHP (analytic hierarchy process) is used. The managerial criteria consist of key criteria and weak criteria. The key criteria are defined as major criteria required by the manufacturer for the best part quality, and the weak criteria explains the shortcomings of the selected suppliers as compared with alternative suppliers. An example of supplier development in an air conditioner manufacturer in Korea showed the effectiveness of the methodology through the correlation analysis of collected data.