Supplier selection for recycled plastic bag of vietnam ajinomoto company by using ahp approach

The thesis has defined six main criteria, including quality, delivery, price, warranty, reliability, and service; and 15 sub-criteria for choosing plastic bag suppliers for the Ajinomoto

THIS RESEARCH IS COMPLETED AT

HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY – VNU – HCM CITY Instructor: Dr Nguyen Thi Duc Nguyen

Examiner 1: Dr Do Thanh Luu

Examiner 2: Dr Phan Trieu Anh

Master’s thesis is defended at HCM city University of Technology, VNU- HCM City on 22/07/2022

The board of the Master’s Thesis Defense Council includes:

1 Chairman: Assoc Prof Pham Quoc Trung

2 Secretary: Dr Le Thanh Xuan

3 Reviewer 1: Dr Do Thanh Luu

4 Reviewer 2: Dr Phan Trieu Anh

5 Member: Dr Nguyen Thi Duc Nguyen

Verification of the Chairman of the Master’s Thesis Defense Council and the Dean of faculty of Industrial Management after the thesis being corrected (If any)

CHAIRMAN OF THE COUNCIL DEAD OF INDUSTRIAL MANAGEMENT

VIETNAM NATIONAL UNIVERSITY

HO CHI MINH CITY

HO CHI MINH CITY UNIVERSITY

OF TECHNOLOGY

SOCIALIST REPUBLIC OF VIETNAM

THE TASK SHEET OF MASTER’S THESIS

Nhi m v lu n v n th c s

Full name: Lam Tu Phuong Student code: 2070608

Date of birth: 05/08/1998 Place of birth: Tien Giang province Major: Business Administration Major code : 8340101

I THESIS TOPIC : Supplier selection for recycled plastic bag of Vietnam

Ajinomoto company by using AHP approach

TÀI LU N V N : L a ch n nhà cung c p bao bì nh a tái ch cho công ty

Ajinomoto Vi t Nam b ng ph ng pháp AHP

II TASKS AND CONTENTS :

- To set the priority of main criteria and sub-criteria in choosing the plastic bag provider based on the Vietnam Ajinomoto company’s requirements

- Apply this criteria list to choose the plastic bag supplier for Ajinomoto by AHP approach and expert choice 11.0 software

- To propose supplier managerial implication for Ajinomoto Vietnam company

III TASKS STARTING DATE: 01/03/2022

IV TASKS ENDING DATE: 30/06/2022

V INSTRUCTOR : Dr Nguyen Thi Duc Nguyen

HCM City, 20/06/2022

DEAN OF INDUSTRIAL MANAGEMENT

(Full name and signature)

ACKNOWLEDGMENTS

Firstly, looking back to the Master program of Business Administration at Technology University with a gratitude and confidence, I recognize that I have gained useful knowledge that can help my future career I would like to take this opportunity to thank all lecturers in this program who have conveyed knowledge to me with the enthusiasm and responsibility in teaching area

In addition, I am extremely thankful to my supervisor, Dr Nguyen Thi Duc Nguyen I would never have completed this thesis without her helpful guidance, priceless contribution, and consistent patience During this thesis, I have learnt much from her about the research, critical thinking, and career orientation

Moreover, I also would like to express my gratitude to those who made their research on this topic From that I can learn different effective method to solve the problem and develop my ideas to compete this thesis

Besides, I would like to thank my college, managers from departments at Ajinomoto Vietnam for giving me supports during this thesis

Finally, I would like to send a deep thank to my family, who has always been a solid spiritual prop for me so that I can concentrate on this MBA study

Ho Chi Minh City, June 2022

ABSTRACT

Recently, COVID-19 has affected global supply chains, causing disruptions in supply, production, and distribution Like most manufacturing companies, Vietnam Ajinomoto Company, one of the top popular MSG producers, has also been faced with the material shortage problem during the COVID-19 period, and because of the supply interruption, a significant reduction in production has been anticipated To improve the situation, the company is seeking the innovative best practices in supply chain risk management The revision of supplier selection criteria is urgent currently as a part of supply chain strategy By using the Kraljic model, plastic bag was defined as the strategic item of Ajinomoto and chosen for application in this study Therefore, this thesis focuses

on building a main and sub-criteria list for choosing plastic bag suppliers

AHP has been chosen as an approach for supplier selection with the support of data collection methods like depth-interview, analysis methods such as 5W1H, Pareto; and the software Expert Choice 11.0 Finally, a focus discussion group was conducted

to propose a procurement strategy based on the sensitive analysis

The thesis has defined six main criteria, including quality, delivery, price, warranty, reliability, and service; and 15 sub-criteria for choosing plastic bag suppliers for the Ajinomoto company The results showed that supplier 2 is the best option in general

This study helps Ajinomoto company to have a procurement strategy for plastic bags in the short term and long term Besides, other companies in the food industry can also apply the built criteria model from this study for plastic bag supplier selection The plastic bag suppliers can also refer to this built criteria model to prepare their resources and make the suitable supply proposals to the buyers This study also contributes a list

of criteria to researchers who need to study the supplier selection topic

Keywords: Supplier selection; AHP

TÓM T T LU N V N TH C S

G n đây, COVID-19 đã nh h ng đ n chu i cung ng toàn c u, gây ra s gián

đo n trong cung ng, s n xu t và phân ph i Gi ng nh h u h t các công ty s n xu t khác, Công ty Ajinomoto Vi t Nam, m t trong nh ng nhà s n xu t b t ng t ph bi n hàng đ u, c ng ph i đ i m t v i v n đ thi u nguyên li u trong giai đo n COVID-19, và

do ngu n cung b gián đo n, s n l ng s n xu t gi m đáng k c i thi n tình hình, công ty đang tìm ki m các ph ng pháp c i ti n t t nh t trong qu n lý r i ro chu i cung

ng Vi c s a đ i các tiêu chí l a ch n nhà cung c p là c p thi t hi n nay nh là m t

ph n c a chi n l c chu i cung ng B ng cách s d ng mô hình Kraljic, bao bì nh a tái ch đ c xác đ nh là m t hàng chi n l c c a Ajinomoto và đ c l a ch n đ ng

d ng trong nghiên c u này Vì v y, lu n v n này t p trung xây d ng danh m c tiêu chí chính và tiêu chí ph đ l a ch n nhà cung c p bao bì nh a tái ch

AHP đã đ c ch n làm ph ng pháp ti p c n đ l a ch n nhà cung c p v i s h

tr c a các ph ng pháp thu th p d li u nh ph ng v n sâu, ph ng pháp phân tích

nh 5W1H, Pareto; và ph n m m Expert Choice 11.0 Cu i cùng, m t nhóm th o lu n

t p trung đã đ c ti n hành đ đ xu t m t chi n l c mua hàng

Lu n án đã xác đ nh sáu tiêu chí chính, bao g m ch t l ng, giao hàng, giá c , tính b o đ m, đ tin c y và d ch v ; và 15 tiêu chí ph đ l a ch n nhà cung c p bao bì

nh a tái ch cho công ty Ajinomoto K t qu cho th y nhà cung c p 2 là l a ch n t t

nh t

Nghiên c u này giúp công ty Ajinomoto có chi n l c mua bao bì nh a tái ch trong ng n h n và dài h n Bên c nh đó, các công ty khác trong ngành th c ph m c ng

có th áp d ng mô hình tiêu chí đã xây d ng t nghiên c u này đ l a ch n nhà cung

c p Các nhà cung c p bao bì c ng có th tham kh o mô hình tiêu chí đã xây d ng này

đ chu n b ngu n l c và đ a ra các đ xu t cung c p phù h p cho ng i mua

T khóa: L a ch n nhà cung c p; AHP

DECLARATION FROM HORNOR

I confirm that I have conducted and written the thesis “Supplier selection for recycled plastic bag of Vietnam Ajinomoto by using AHP approach This is my own study with the guidance from my instructor Dr Nguyen Thi Duc Nguyen The contents from the sources are explained in the thesis as a citation or narration This thesis has not been published in other researches previously

Ho Chi Minh City, June 2022

Lam Tu Phuong

TABLE OF CONTENTS

ACKNOWLEDGMENTS iv

ABSTRACT v

DECLARATION FROM HORNOR vii

TABLE OF CONTENTS viii

LIST OF FIGURES x

LIST OF TABLES xii

LIST OF ABBREVIATIONS AND SYMBOLS xiii

CHAPTER 1 INTRODUCTION 1

1.1 Rationale of the study 1

1.2 Problem statement 6

1.3 Objectives of the study 7

1.4 Significances of the study 8

1.5 Scope of thesis 8

1.6 Process of implementation 9

1.7 Information need analysis 11

1.8 Thesis structure 13

CHAPTER 2 LITERATURE REVIEW 15

2.1 Multiple-criteria decision making (MCDM) 15

2.2 Supplier selection 17

2.2.1 Supplier selection as a decision-making problem 17

2.2.2 Supplier selection criteria 17

2.3 Supplier selection techniques 26

2.4 Analytical Hierarchy Process (AHP) 31

2.4.1 Steps for AHP 31

2.4.2 Checking for consistency 34

2.5 Interview techniques 35

2.5.1 In-depth interview 35

2.5.2 Focus group interview 35

2.6 Supporting tool 36

2.6.1 Pareto analysis 36

2.6.2 Systematic questioning technique - 5W1H 36

2.6.3 Kraljic model technique 36

2.6.4 Expert choice software 37

CHAPTER 3 DEFINDING MAIN AND SUB-CRITERIA FOR RECYCLED PLASTIC BAGS SUPPLIER SELECTION AT AJINOMOTO VIETNAM 38

3.1 Overview of Ajinomoto Vietnam 38

3.1.1 Company introduction 38

3.1.2 Organizational structure of Ajinomoto Vietnam 38

3.1.3 Plastic bag material planning, ordering and receiving cycle at Ajinomoto Vietnam 41

3.2 Defining main and sub criteria for supplier selection of recycled plastic bags at

Ajinomoto Vietnam 47

3.2.1 Quality 50

3.2.2 Delivery 51

3.2.3 Price 51

3.2.4 Warranty 51

3.2.5 Reliability 51

3.2.6 Service 52

3.3 Determining weight for each criterion 52

CHAPTER 4 AHP METHOD APPLICATION FOR PLASTIC BAGS SUPPLIER SELECTION AND THE MANAGERIAL IMPLICATION AT AJINOMOTO VIETNAM 57

4.1 Application of AHP method for choosing provider of plastic bags at Ajinomoto Vietnam 57

4.2 Result validation 60

4.2.1 Consistency indicator 60

4.2.2 Sensitive analysis of the result 60

4.3 Focus group discussion and recommendation for supplier priority of recycle plastic bag at Ajinomoto 65

4.3.1 Discussion on the current company problem of plastic bag material shortage 65

4.3.2 Discussion on the company target of fiscal year 2022 66

CHAPTER 5 CONCLUSION 68

5.1 Summary of key findings 68

5.2 Thesis managerial contributions and recommendations 69

5.2.1 For Ajinomoto company 69

5.2.2 For suppliers 70

5.3 Limitation and future study direction 70

5.3.1 Thesis limitation 70

5.3.2 Future study directions 71

REFERENCES 72

APPENDIX A: RAW DATA 81

APPENDIX B: SURVEY TO BUILD THE KRALJIC MODEL 83

APPENDIX C: SURVEY TO DEFINE THE CURRENT CRITERIA 88

APPENDIX D: DEPTH-INTERVIEW TO DEFINE AND SCORE THE MAIN AND SUB CRITERIA 90

APPENDIX E: FOCUS GROUP INTERVIEW TO DEFINE THE PROCUREMENT STRATEGIES 116

LIST OF FIGURES

Figure 1-1: Demands per month in 2020 and 2021 at Ajinomoto Vietnam 2 Figure 1-2: Stages of purchasing sophistication 6 Figure 1-3: Kraljic’s supply matrix of packing materials 6

Figure 2-1: Paper distribution of the application areas for MCDM methods 16 Figure 2-2: Top three MCDM methods of considered supply chain functions 16 Figure 2-3: Summary the proportions of the individual methods used for supplier

selection between 2001 to 2014

27

Figure 2-4: Sector-based distribution of the methods used in supplier selection 27 Figure 3-1: Material planning, ordering and receiving cycle 43 Figure 3-2: 80/20 chart of reasons of plastic bag shortage 45 Figure 3-3: Ajinomoto’s supplier selection process demonstration 46 Figure 3-4: Main and sub criteria from depth interview 48 Figure 3-5: Ranking on main criteria for supplier selection 52 Figure 3-6: Ranking of sub criteria with respect to main criteria “quality” 53 Figure 3-7: Ranking of sub criteria with respect to main criteria “delivery” 54 Figure 3-8: Ranking of sub criteria with respect to main criteria “pricing” 54 Figure 3-9: Ranking of sub criteria with respect to main criteria “service” 55 Figure 3-10: Ranking of sub criteria with respect to main criteria “reliability” 55 Figure 3-11: Ranking of sub criteria with respect to main criteria “warranty” 56 Figure 3-12: Ranking of sub criteria with respect to the goal “Best supplier” 56 Figure 4-1: The tree view in expert choice 11.0 58 Figure 4-2: Ranking of suppliers with respect to the goal “Best supplier” 59

Figure 4-8: Focus more on warranty criterion 63 Figure 4-9: Focus more on reliability criterion 64 Figure 4-10: Focus more on quality and service criteria 66 Figure 4-11: Focus more on quality and delivery criteria 67

LIST OF TABLES

Table 1-3 Primary and secondary data for each objective 11 Table 2-1 Summary the most important supplier criteria from 1966 to 2015 18 Table 2-2 Summary criteria of supplier selection in food industry through

research from 2016 to 2021

19

Table 2-3 Summary main and sub criteria of supplier selection in food industry 20 Table 2-4 Comparison of different decision-making methods in supplier selection 30

Table 3-1 Summary function of departments at Ajinomoto Vietnam 38 Table 3 2 The top reasons of plastic bag material shortage 44 Table 3-3 Current criteria for supplier selection at Ajinomoto Vietnam 46 Table 3-4 Main and sub criteria for supplier selection at Ajinomoto Vietnam 49 Table 4-1 Summary the results of sensitive analysis 64

LIST OF ABBREVIATIONS AND SYMBOLS

AHP Analytic hierarchy process

MADM Multiple-attribute decision-making

MCDM Multiple-criteria decision-making

MODM Multiple-objective decision-making

CHAPTER 1 INTRODUCTION

The chapter presents the reasons behind for this thesis, defines the problem statement, establishes the thesis objectives, defines the impacted scope involved and the importance of the project The implementation process, the data requirement, and thesis structure are also mentioned

1.1 Rationale of the study

With increasing competition, technological advancement, and increasing customer expectations, businesses must manage their supply chains to effectively respond to competition, maintain and increase market shares, and achieve profit and customer satisfaction goals According to Simchi-Levi et al (1998), the supply chain, also known as the logistics network, is comprised of suppliers, manufacturing centers, warehouses, distribution centers, and retail outlets, as well as raw materials, work-in-progress inventory, and finished goods that flow between facilities Supply chain management has been exploited as a competitive advantage of companies over their competitors, covering certain specific areas to develop them and turn them into their competitive advantage (Lee, 2016) The management of the food supply chain covers production, distribution, and consumption activities and operations, managing food quality and safety problems efficiently and effectively Weak food supply management can result in perishable foods (Gangurde, 2016) The success of businesses depends on the performance and efficient operation of the supply chain,

in which the suppliers are the most critical elements Supplier selection decisions play

a key role in reducing overall purchasing costs, maintaining quality standards, and improving performance (Ulutaş, 2015)

Like other large multinational food manufacturers, supplier selection for sustainable material sourcing and effective company competition is always a strategic challenge at Ajinomoto Vietnam (Ajinomoto, 2021) Ajinomoto Vietnam Co., Ltd is

leading food and beverage company offering seasonings and sauces (Ajinomoto, 2021)

Since 2020, when COVID-19 has been a low-frequency, high-impact event on the supply chains of global manufacturers and can be considered the leading cause of supply chain disruptions for most businesses, material sourcing has become more and more complex (Sherman, 2020) The fourth wave of COVID-19 in Vietnam has led

to a sourcing shortage risk while the demand of some food companies has kept quite stable because of the popularity of online grocery shopping (Samuel, 2020)

In the weekly meeting between procurement team and planning team on December 09th, 2021, Ajinomoto Vietnam procurement manager emphasized that some materials have had the risk of supply stopping since suppliers is dealing with the lack of energy for production and the shortage of material input during and after Covid 19 However, according to the sales report of Ajinomoto (2021), the demands

of company from 2020 to 2021 have not been decreased

Figure 1-1: Demands per month in 2020 and 2021 at Ajinomoto Vietnam (Source:

presented by the author) Therefore, when the demand has not been decreased but supply has been reduced, Ajinomoto Vietnam faced with the materials shortage situation There are two types

of materials, including raw materials and packing materials Based on the data from Appendix A – Table A2, packing materials had more risk impact to the production operation than raw material by 6% in 2021 Currently, Ajinomoto is sourcing over

100 items of packing materials, which are classified into 7 item classes: bag, roll film, carton, inner, decal, box, and bottle (Ajinomoto, 2021) Adopting the theory of Kraljic (1983), the plastic bag was chosen for this study since it was the strategic item with the highest profit impact and supply risk

The Kraljic method was applied to define the procurement strategies for each type of packing material In the Kraljic method, the items were analyzed in two dimensions of supply risk (x axis) and profit impact (y axis), which qualify from lowest to highest impact with a score of 1 to 5 points (Kraljic, 1983) To assess the profit impact dimension, Kraljic (1983) considered the volume of purchase and the percentage of total purchase cost, the impact on product quality or business growth; while to assess the supply risk dimension, he considered the supply market complexity, which includes availability, number of suppliers, competitive demand, make-or-buy opportunities, storage risks, and substitution possibilities However, despite the relevance of each one of these criteria, not all can be applied to the food industry Thus, a survey questionnaire was conducted to define and evaluate the profit impact and supply risk for packaging materials The interviewees included 8 experts with different positions from different departments, including planning control manager, procurement manager, procurement supervisor, production manager, logistics manager, sales manager, quality manager, warehouse manager Based on Appendix B, for the supply risk, seven characteristics were considered, including S1: variation of market, S2: flexibility of volume, S3: number of suppliers, S4: competitive demand, S5: difficulty of substitution, S6: difficulty of transport, and S7: difficulty of storage The profit impact includes criteria such as P1: impact on product quality, P2: % of total purchase value, P3: price variation, P4: volume purchased, P5: frequency Assumption: each criterion has the same weight Tables 1-1 and 1-2 summarize the evaluation for supply risk and profit impact of each type of packing material

Table 1-1 Risk of supply of packing material (Source: calculated by the author)

(%) S1 S2 S3 S4 S5 S6 S7

Table 1-2 Profit impact of packing material (Source: calculated by the author)

Criteria Quality Cost Volume Total Percentage

Consider the matrix, which is 50 percent divided on each dimension axis According

to Kraljic (1983), strategic parts are those that score more than 50% in both strategic impact and supply risk dimensions (high profit impact, high supply risk), while non-critical parts score less than 50% in both strategic impact and supply risk dimensions (low profit impact, low supply risk), bottleneck (low profit impact, high supply risk), and leverage (high profit impact, low supply risk)

price and materials flow management

Typical sources: Multiple suppliers,

chiefly local

Time horizon: Varied, typically

12-24 months

Items purchased: Mix of

commodities and specified materials

Supply: Abundant

Decision authority: Mainly

decentralized

Strategic items Key performance criteria: Long-

term availability

Typical sources: Established

global suppliers

Time horizon: Up to ten years

Items purchased: Scarce and or

high-value materials

Supply: Natural scarcity Decision authority: Centralized

Non-critical items Key performance criteria:

Items purchased: Commodities,

some specified materials

Supply: Abundant

Decision authority: Decentralized

Bottleneck items Key performance criteria: Cost

management and short-term sourcing

Typical sources: Global,

predominantly new suppliers with new technology

Time horizon: Variable, depending

on availability, short-term flexibility, and trade offs

Items purchased: Mainly

Figure 1-2: Stages of purchasing sophistication (Source: Kraljic, 1983)

Based on the score from Table 1-1 and Table 1-2, the supply matrix of all packing material types was presented in Figure 1-3 Adopting the theory of Kraljic (1983), the plastic bag was chosen for this study since it was the strategic item with the highest profit impact and supply risk

Figure 1-3: Kraljic’s supply matrix of packing materials (Source: presented by the

author)

1.2 Problem statement

Chen and Guo (2013), conducted a research of supplier selection benefits are mitigate supply chain risk, increasing competitive advantage, and forming strategies for company In the situation of highly lacking packing materials for production, Ajinomoto Vietnam needs to find new suppliers for recycled plastic bag and rearrange

the priority between the new and the current suppliers The supplier selection is known as a multi- criteria decision-making problem which includes both quantitative and qualitative criteria (Liao & Rittscher, 2007) To select the best suppliers, it is necessary to make a tradeoff between these criteria Hence, the thesis aims to build a list of criteria for choosing the most appropriate recycled plastic bag suppliers regarding to each business situation There are many approaches to solve the supplier selection problem Based on 91 studies which performed from 2001 to 2014 on the multi-criteria supplier selection, Yildiz & Yayla (2015) summarized the proportions

well-of 12 individual methods used for supplier selection including Analytical hierarchy process (AHP), Analytical network process (ANP), Data envelopment analysis (DEA), Grey Relational Analysis (GRA), Artificial neural networks (ANN), Goal programming (GP), Linear programming (LP), Multi-objective programming (MOP), Simple multi-attribute rating technique (SMART), Case-based reasoning (CBR), Genetic algorithm (GA), Technique for order preference by similarity to ideal solutions (TOPSIS) It was observed that AHP was most preferred among researchers According to the analysis based on the sector-based distribution, Yildiz

& Yayla (2015) indicated that AHP was applied mostly and successfully in the electrical-electronics and manufacturing sectors Besides, AHP provides a framework for making effective decisions in complicated decision situations and helps to simplify and accelerate the natural process of decision making by breaking down complicated, unstructured situations into simpler parts, resulting in a problem with a hierarchical framework Therefore, this thesis will use AHP to build supplier selection strategy for recycled plastic bag of the Ajinomoto Vietnam company

1.3 Objectives of the study

In this paper, the main objectives include:

- To set the priority of main criteria and sub-criteria in choosing the plastic bag provider based on the Vietnam Ajinomoto company’s requirements

- Apply this criteria list to choose the plastic bag supplier for Ajinomoto by using the AHP approach and expert choice 11.0 software

- To suggest supplier managerial implications for Ajinomoto Vietnam

1.4 Significances of the study

For Ajinomoto company, the findings of this thesis will directly benefit the company with a procurement strategy of choosing supplier providing plastic bag which is the strategy item of the company The result of main and sub-criteria list building from this thesis has the long-term value at least 3 years with the consideration of business target, government food quality policy From that, the company can improve the current material shortage problem, have a better resource allocation, keep the sustainability for production, mitigate of risks associated with supplier such as delivery delays, quality issues, availability problems to avoid sale loss due to material shortage, minimize costs by saving time, money, and effort

For the suppliers, the plastic bag suppliers who aim to expand the market to the food industry can consider the main and sub-criteria list built from this thesis to analyze the market and prepare their suitable resources

For the food industry, this thesis will contribute a list of main and sub criteria for plastic bag material in food industry and may serve as a literature review for further studies to innovate the current supplier selection method

1.5 Scope of thesis

The thesis demonstrates the effort of building the main and sub-criteria for selecting the plastic bag supplier for Ajinomoto company It has been running since the fourth quarter of 2021.The strategic plan was completed in the fourth quarter of 2021, while data collection and implementation were completed in the first quarter of 2022.The final target is to propose the supplier selection strategy for plastic bags in 2022 for

Ajinomoto Vietnam by applying the AHP method, utilizing the Expert choice software 11.0 and conducting a depth interview with eight people with different positions from different departments, including planning control manager, procurement manager, procurement supervisor for plastic bags, production manager, logistics manager, sales manager, quality manager, warehouse manager

1.6 Process of implementation

The supplier selection strategy will be achieved after completing the three study objectives with the implementation of the AHP approach and Expert Choice 11.0 supporting tool

Figure 1-4: Study framework (Source: from study of the author)

Analyze the results and propose supplier managerial implications

Focus group discussion (8 experts)

Survey questionnaires (8 experts)

AHP approach Expert choice

Define current Ajinomoto criteria for recycled plastic bag supplier selection

Problem identification

Literature overview and chosen

approach

- Overview MCDM problem,

supplier selection problem, MCDM

method and AHP method

- AHP is the chosen approach

Ajinomoto Vietnam’s supplier selection process overview

- Ajinomoto Vietnam supplier selection process

- Ajinomoto Vietnam supplier selection criteria for recycle plastic bag

Survey questionnaires (8 experts)

Conclusion and recommendations

Objective 1

1.7 Information need analysis

Table 1-3: Primary and secondary data for each objective (Source: From study of

the author)

Scholars

Books and research articles related to supplier selection in supply chain management

Comparing the previous research

28/01/2022

05/12/2021

29/11/2021-Method for

supplier

selection

Books and research articles related to supplier selection method

12/12/2021

28/01/2022

22/11/2021-Primary data

Vietnam Ajinomoto company

Company experts

Procurement, Sales,

Financial, Logistics, Warehouse, Production department

at Vietnam Ajinomoto company

Questionnaire survey by google form

13/03/2022

evaluate the important level of criteria

In-depth interview through

18/03/2022

Multiple choice survey

25/03/2022

21/03/2022-Objective 2

Primary data Weight

Scholars

Books related to AHP method

Follow the steps of books

03/04/2022

Author Ajinomoto

Vietnam

Calculate from the data collected in objective 1

20/04/2022

04/04/2022-Objective 3

Secondary data

Company experts

Procurement, Sales,

Financial, Logistics, Warehouse, Production department

at Vietnam Ajinomoto company

Focus group discussion

16/05/2022

21/04/2022-1.8 Thesis structure

Chapter 1 explains why supplier selection is an urgent problem at Ajinomoto Then, the three objectives are stated in the scope of plastic bag packing material The primary and secondary data needs are also defined

In Chapter 2, literature about multiple-criteria decision making problem theory, the popular methods to solve those kinds of problems, supplier selection problems, and common methods of supplier selection applied such as AHP, DEA, ELECTRE, PROMETHEE, TOPSIS, is discussed In addition, this chapter explains why AHP was chosen as an approach for choosing suppliers providing plastic bags to Ajinomoto Vietnam and introduces the supporting tools used for calculating and analyzing the results

Chapter 3 presents the overview of Ajinomoto, the current procedure and criteria for choosing plastic bag suppliers at Ajinomoto, and then builds the main and sub-criteria for choosing suppliers providing recycled plastic bags at Ajinomoto by depth interview with eight experts from the company which achieves the first objective of the thesis The result of this chapter will be the input for the supplier selection process

of recycled plastic bags in the next chapter

Chapter 4 applies the AHP method for prioritizing the list of available suppliers based

on the main and sub criteria list defined in Chapter 3 and the final recommendations will be made accordingly Then, the procurement strategy for plastic bag of Ajinomoto is presented through an expert focus group discussion

Chapter 5 provides the summary of key findings, the managerial contribution and limitations of this thesis, and the future study directions

CHAPTER 2 LITERATURE REVIEW

The chapter presents a theoretical review of supplier selection strategy, criteria decision-making approaches such as AHP, DEA, ELECTRIC, PROMETHEE, TOPSIS, and finally suggests AHP as the main approach for supplier selection strategy based on the summary of previous studies The chapter also mentions a list of supporting tools used to achieve the project objectives

multiple-2.1 Multiple-criteria decision making (MCDM)

According to Jahan et al (2016), MCDM means the process of determining the best feasible solution according to established criteria and problems that are common occurrences in everyday life

MCDM problems can be classified into two categories: discrete MCDM or discrete Multi-attribute Decision-Making (MADM) and continuous Multi-objective Decision-Making (MODM) methods MADM is associated with problems involving discrete decision spaces with a predetermined number of alternatives The decision maker is required to select or prioritize a limited number of action plans MODM is associated with problems involving multiple competing objectives that must be simultaneously optimized and where the alternatives are undetermined

Khan & Dweiri (2018) studied 157 papers which were performed from 2005 to 2017 and presented the distribution of MCDM method applications in terms of area of application as Figure 2-1 In supply chain function, the top three methods were applied for four main supply chain function including procurement, manufacturing, warehousing, and logistics showed as below Figure 2-2

Figure 2-1: Paper distribution of the application areas for MCDM methods

(Source: Khan & Dweiri, 2018)

Figure 2-2: Top three MCDM methods of considered supply chain functions

(Source: Khan & Dweiri, 2018)

General models, 34%

Supplier selection Manufacturing Warehousing Logistics

Top three MCDM methods of considered supply chain

functions

Fuzzy, FAHP with others Fuzzy systemsAHP with others

2.2 Supplier selection

2.2.1 Supplier selection as a decision-making problem

Supplier selection is a well-known example of a multi-criteria decision-making problem (Liao & Rittscher, 2007), which follows the four phases of the general decision process described by De Boer et al (2001) The process consists of four phases:

(1) Define the problem to determine whether supplier selection or deselection is required

(2) development of criteria for evaluating prospective and existing suppliers (3) Qualification to identify a subset of suppliers who meet the specifications (4) Final supplier selection based on assessment results and performance ranking

2.2.2 Supplier selection criteria

Supplier criteria are divided into quantitative and qualitative attributes The selection of appropriate criteria is also contingent upon the purchasing context and business strategy One of the well-known works was written by Dickson (1966) who presented 23 criteria that should be investigated and taken into the account regarding the vendor selection His research was based on a questionnaire sent to 273 purchasing agents and managers from the United States and Canada selected from National Association of Purchasing Managers members list (Lyès, Ding, and Xie, 2003) His study is still relevant and gives a good base for further development of approaches for specific industries to adopt his idea for relevant needs

Stević, Ž (2017) summarized the most important criteria that are commonly used in practice from 1966 to 2015 as Table 2-1

Table 2-1: Summary the most important supplier criteria from 1966 to 2015

(Source: Stević, 2017)

Criteria

Price of material Financial stability Method of payment Price of transport Volume discounts Delivery time Reliability Flexibility Logistics capacity The percentage of correct realization of delivery Quality of material Warranty period Certification of products Reputation

Awards and honors Communication system Speed of response to requirements

Reactions to reclamation Information technology Clean of business

Table 2-2: Summary criteria of supplier selection in food industry through research from 2016 to 2021 (Source: from study of the author)

Table 2-3 shows the main and sub-criteria for supplier selection in food industry according to the above researchers

Table 2-3: Summary main and sub criteria of supplier selection in food industry

(Source: From study of the author)

Cost Purchase cost

Ramlan, et al

(2016)

Transportation cost Operation cost Quality Audit result

Defect result Documentation Service Supply capacity

Fast responsiveness Follow up

Delivery Delivery reliability

Delivery time Fill rate Management

and organization

Financial status Good reputation among industry Geographical location

Anggani, et.al

(2017)

Quality Supplier quality

Supplier flexibility Supplier certification Preventive action Continuous quality improvement Delivery On time delivery

Flexibility of supplier delivery Quantity Shipment quantity

Pricing Competitiveness of cost

Appropriateness of the materials price to the market

Discount price Transportation cost on delivery by supplier

Warranty Supplier delivery warranty

Supplier response for under quality product

Wang et al

(2018)

Financial Capital and finance status

Prices Transportation cost to the geographical location Delivery and

services

Delivery Customer service Communication system Production capacity Qualitative Quality of products

Operational control Expert labor

Technical capabilities Business experience and position among competitors

Environmental management system

Environmental emissions (carbon footprint)

Environmental planning Environmentally friendly material Environmentally friendly

technology Sulistyoningarum,

Supplier reliability Information of price changes Flexibility Payment flexibility

Flexibility of changing orders Flexibility of delivery time Lau et al (2020) Product Availability

Reliability Value-added activities Packaging

Warranty Innovation Quality Conformance to specification

Rejection and return rate Process capability

Quality management systems Quality improvement

Quality assessment technique Certified

safety

ISO9001 Procedural compliance Continuous food safety training Traceability

Price Price representation

Price decreased ratio Total logistics management cost Tariff and taxes

Payment term Delivery Delivery on time

Lead time

Compliance with quantity and packaging standard

Transportation facility Delivery performance Ability and willingness to expedite order

Serviceability Service quality

Responsiveness to demand change Ability to modify product/service Information sharing

Technical support Management of complaints Administration for return, sell-back, and reverse logistics Commercial

position

Market reputation Market share Performance history Asset specificity and infrastructure Financial position and

stability Technological capability Supplier

relationship

Relationship connectors Duration of relationship Annual average amount of past business over the last three years Communication and conflict resolution

Long-term commitment

Risk factors Geographical location

Political stability and government policies

Exchange rates and economic position

Labor relations Terrorism and crime rate

Stakeholder relations and community recognition Pay rates

Labor conditions and work environment

Compliance to international human rights

Alshehri et al

(2021)

Cost reduction plan Warranty cost Operating cost Freight

Quality Durability

Conformity Certification Design Consistency SPC

ISO Technical support

Responsiveness Service Delivery

Attitude Packaging ability Flexibility

Warranties and claims policy Order process

Customer service Geographical location Repair service

Technology Technical capability

Demand capability Future potential Reliability Financial position

Impression Production facility and capability Delivery Speed

Delivery lead time Management

and organization

Reputation and position Communication system Business desire

Financial strength Lopes (2021) Cost Product price

Transportation cost Quality Quality assurance

Reject rate Delivery Delivery capability

Order fulfilment rate

Protection Environmental protection system

Safety Distance Road distance Technology Technological capability Financial

position

Financial Stability

2.3 Supplier selection techniques

Numerous researchers have developed and categorized a variety of well-known selection techniques over the years for various objectives and applications Mukherjee et al., (2014) summarized 21 supplier selection single models into three group, including mathematics, statistics, and artificial intelligence

- In mathematics group, there are 9 methods including Analytic Hierarchy Process (AHP), Analytic Network Process (ANP), Compromise Programming: TOPIS, VIKOR, Multiple-Objective Programing (MOP), Total Cost Ownership, Goal Programming (GP), Data Envelopment (GP), Simulation, and Heuristics

- In statistics group, there are 5 methods including Cluster Analysis, Multiple Regressions, Discriminant Analysis, Conjoint Analysis, and Principal Component Analysis (PCA)

- In Artificial Intelligence group including 7 methods including Neural Network (NN), Software Agent, Case Based Reasoning (CBR), Expert Systems, Fuzzy Set Theory (FST), Rough Sets Theory (RST), Grey Set Theory (GST)

Based on 91 studies conducted between 2001 and 2014 on multi-criteria supplier selection, Yildiz & Yayla (2015) summarized the proportions of 12 individual methods used for supplier selection in Figure 2-3 These methods include the Analytical hierarchy process (AHP), Analytical network process (ANP), Data

envelopment analysis (DEA), Grey Set Theory (GST), Artificial Neural Networks (ANN), Goal programming (GP), Linear programming (LP), and Multi-objective programming (MOP), TOPSIS From Figure 2-3, AHP was observed to be the most popular approach among researchers According to the sector-based distribution analysis conducted by Yildiz and Yayla (2015), AHP was applied most frequently and successfully in the electrical-electronics and manufacturing sectors, as shown in Figure 2-4

Figure 2-3: Summary the proportions of the individual methods used for supplier

selection between 2001 to 2014 (Source: Yildiz & Yayla, 2015)