Research On Supplier Evaluation And Selection Based On TCO

Supplier evaluation and selection have a major influence on company's cost control,xvhich will affect the financial performance of the company.With the supply chain management being accepted,the relationship between the enterprise and suppliers is getting more and more close.And as a important participant,suppliers play an increasingly important role in the enterprises' operation.Selecting supplier scientifically not only could help the enterprise control cost but also creat more value-added,and will contribute to to make enterprise value maximum come through.In view of the above matters,based on the concept of TCO(total cost of ownership),this research tries to build an assessment and selection model for suppliers' evaluation and selection,which contains an preliminary evaluation model based on AHP and a final selection model based on TCO.In the process of preliminary evaluation,this paper constructs a index system and use analytic hierarchy process to calculate weight,and build a preliminary evaluation mode.After that,according to the experts 'score,the suppliers are divided into 4 types:strategic supplier,risk supplier,alternative supplier and ordinarily supplier.And in the key part of the paper,for these suppliers through the initial selection,this paper studies the quantitative influence in cost that they will bring.In order to calculate the cost and expense precisely,the author tries to apply the ABC to the building of the TCO model.The TCO model aims to analysize the composition of procurement costs and calculate the total cost of ownership,which will support the decisions from the perspective of cost minimization.In the last part ot the paper,the paper applies the research results to the case of enterprises,which proved the availability of the,nethod to a certain degree.This paper puts forward the idea of the initial evaluation,classification and final selection of the suppliers,and the supplier evaluation and selection model takes suppliers' own competition and cooperation ability and the importance of suppliers to enterprises,and provides a basis for the ultimate choice of the supplier from the point of the total cost of ownership minimization.This evaluation and selection model can reduce the subjectivity in the evaluation process,but also avoid risks that paying too much attention to the cost brings.The application of the case shows that the evaluation and selection model can effectively improve the scientific nature of supplier evaluation and selection.In addition,the TCO model is suitable for a wide range of procurement decisions,and is particularly useful for the essential or constant materials' procurement.Meanwhile,this paper also points out the considerations for model's application.The TCO model requires higher cost data,and is not suitable for the use of small and medium-sized enterprises whose cost accounting system is not perfect.At the same time,the TCO model should pay attention to the principle of cost-effectiveness and is not suitable for the analysis of low-frequency and small-value purchases.Finally,the paper summarizes the shortcomings of the research and puts forward some suggestions and expectations for future research.