By Cuneyt Altinoz, Full-time Faculty
Published June 2016
Selecting among many options is one of the most common decisions a manager faces. Selection situations range from the mundane to the very critical. You don’t need to worry too much about choosing the cover for the TPS reports. However, if you are selecting a new supplier or a new employee, the decision can be much tougher.
In this article, we look at some symptoms you may observe in your decision-making process. These may lead you to diagnose a particular problem you would need to address. We will use the context of supplier selection in the discussion, but the ideas will apply to many selection contexts. Choosing between suppliers is very similar to choosing between projects to undertake, candidates to hire, or equipment to buy—the process and issues that complicate are the same.
In significant selection decisions, it is often easy to recognize major errors but not so easy to recognize suboptimal decisions. When suppliers miss shipment dates or go bankrupt, everyone can see the problems. However, if there are no disasters, just subpar performance, it may not be easy to identify the need for improving the decision process.
There are generally signs of things not working as they should, but they may be easy to miss. If these are recognized as symptoms of a systemic
The issues that arise in supplier selection can be symptomatic at three levels of supplier selection activities:
- At the lowest level is the analysis, with limitations and problems relating to the evaluation of information to reach a decision.
- At the next level is the process, which refers to all the activities that must take place before the analysis can begin. These include examining the current market conditions, gathering of requirements, determining the strategy, etc.
- At the highest level is the expertise management, which refers to learning from the experiences, converting mistakes into improvements, and keeping the new knowledge in a manageable form.
Symptoms of Analysis Problems
Can't See Details
Supplier analysis is not only about which supplier to select. You desire more information, such as why some alternatives weren't selected, what they were lacking and how much. This may be
Problem Definition is Limited
You want to consider many different factors in preliminary
Analysis is Limited
You want to do ratings, rankings, and comparisons of the
Symptoms of Process Limitations
Somebody in the Company Always Complaining About the Decisions
Even when buyers seem to be doing their job well and there aren’t any major problems, there’s always someone complaining about the decisions. It seems like the concerns of one group (manufacturing, finance, etc.)
Company Policies and Strategies Aren't Being Factored Into Selection Decisions
Although high-level management has set a supply chain strategy for the company, this is not reflected in the supplier selection efforts. This may be because the analysis is limited in its scope to take into account the strategy and the policies, there is a communication breakdown between the higher levels of management and the decision-makers, or simply because the decision-makers focus on other issues.
Lack of Consistency
Everyone looks at a different set of attributes or has a different understanding of factors and priorities involved. Selections are not consistent between decision-makers, which makes it difficult to follow an overall strategy. It may be that each decision-maker has developed his or her own methodology and criteria instead of sharing
Selections Working Fine, But Still Can't Reach the Goals Set by the Company
The decision-makers believe they are doing well and there are no major problems, but the goals set by the company are still not being met. This points to a breakdown between the goals of the company and goals of the decision-makers. Decision-makers’ performance is judged with criteria that
Symptoms of Expertise Management Limitations
You want to keep track of how the alternatives were evaluated and rated, but this information always gets lost. It is not possible to examine previous decision processes to improve upon them by discarding unnecessary steps or
Same problems come up time and again; decision-makers don’t seem to learn how to foresee/prevent some issues. This is similar to checking rationale, but here the goal is finding out why a poor decision was made and what additional factors need to be evaluated to prevent it from happening again.
Decision-makers leave the company all the time and they take their expertise with them. Particularly for buyers, the criteria that they follow and their knowledge of the potential suppliers are critical. When a buyer leaves a company, all of this is lost unless captured and documented in a useful form.
What to Do Next
Simply recognizing that there are different levels