Supplier development: A decision making problem

Supplier development is considered here as a decision making problem. The decision should be made by the buying firm to dedicate efficiently its limited resources to develop its suppliers, based on their strategic importance. The proposed model has three stages. Suppliers are clustered according to their eligibility for resource allocation, using Self Organizing Maps (SOMs). Then the gap between their current and desired statuses during cooperation is measured. Strategies are designed to improve suppliers to reach the desired status. Different relationship and development strategies should be employed for each cluster according to their characteristics. An industrial case is presented to show how the model can be used in real life.