INTRODUCTION TO THE THESIS
Introduction
The first chapter provides an overview of the dissertation, outlining the problem statement that informs the research objectives and methodologies Additionally, it highlights the significance of the study and details the overall structure of the dissertation.
Problem statement
The Vietnamese textile and apparel (T&A) industry began in the late 1950s in the north and expanded to the south in the 1970s, with significant factory construction by the French in cities like Nam Dinh, Hai Phong, and Hanoi As one of Vietnam's top ten export items, the T&A sector plays a crucial role in the country's rapidly growing, export-driven economy, representing nearly 13% of total export turnover.
The Vietnamese textile and apparel (T&A) industry plays a crucial role in both the national economy and the global market, contributing over 2 million jobs (Thanh, 2019) Despite being one of the largest T&A exporters worldwide, the industry faces challenges, as 65% of companies engage only in basic garment manufacturing processes like cut-make-trim, resulting in limited value addition (Bidv, 2016) To address this, the Vietnamese government and the Vietnam Textile and Apparel Association are implementing various programs aimed at encouraging companies to enhance their production capabilities into higher value-added areas such as fabric sourcing, design, marketing, and branding (Le & Wang, 2017) Consequently, Vietnamese T&A companies are actively working to upgrade their manufacturing processes to improve competitiveness and profitability (Strategic Research Institute).
2012) (Thuy, 2017) Nonetheless, the ability to do so is conditioned by the sourcing of
Effective sourcing is crucial for gaining a competitive advantage in organizations, as highlighted by Novack & Simco (1991) and Murray (2001) However, the sourcing process is complex, requiring purchasers to identify suppliers who can deliver the right quality products and services at competitive prices, in appropriate quantities, and on time (Cengiz et al., 2017) To navigate this challenge, it is essential for purchasers to apply multiple criteria in their supplier selection process This approach is particularly important for Vietnamese textiles and apparel (T&A) companies seeking to identify the most suitable suppliers from a vast pool of candidates.
In Vietnam, a significant challenge faced by the textile and apparel (T&A) industry is the lack of access to high-quality materials, leading to a reliance on imports Currently, 35% of T&A companies are engaged in fabric sourcing, design, advertising, and marketing, with approximately 70% of their materials being imported (Viettrade, n.d.).
A significant portion (80%) of materials for Vietnamese textile and apparel (T&A) companies is sourced from China, Taiwan, and Korea (Virac, 2016) Despite the global sourcing of materials, many Vietnamese T&A firms lack formal criteria for selecting suppliers The need for established supplier selection criteria has been a longstanding concern among industry practitioners (Thiruchelvam & Tookey, 2011) Currently, decisions are often made based on managers' opinions or intuitive judgments focusing on basic factors such as cost, quality, and delivery For instance, a manager from a large garment corporation noted that they assess suppliers based on their ability to build trust and demonstrate responsibility for a long-term partnership Although research on supplier selection criteria dates back to the 1960s (Thiruchelvam & Tookey, 2011), the implementation of systematic selection methods remains limited in Vietnam’s T&A sector.
Research on supplier selection models has primarily focused on major textile and apparel exporting countries such as India, the USA, Hong Kong, and Iran, with limited studies addressing the Vietnamese T&A industry, which accounts for only 2% of global exports (Vietrade, 2017) Notably, while there is one article pertaining to sustainable performance evaluation in Vietnam, it does not specifically relate to supplier selection Applying the supplier selection criteria from larger countries is inappropriate for Vietnamese T&A companies, as these criteria must be tailored to their unique purchasing context (Thiruchelvam & Tookey, 2011) This highlights the urgent need for a comprehensive supplier selection model tailored to the Vietnamese T&A sector.
Research on supplier selection criteria has been extensive, yet existing studies often present these criteria in isolation across various topics (Rojniruttikul, 2017; Fallahpour et al., 2017; Su & Wood, 2018; Guarnieri & Trojan, 2019) There is a significant gap in the literature for a comprehensive framework that integrates micro and macro factors, short-term and long-term considerations, as well as internal and external, tangible and intangible criteria Furthermore, while multiple criteria decision-making methods have been utilized, they frequently overlook the interdependence among criteria and sub-criteria These issues highlight the necessity for further research in this area.
For all above reasons, the thesis “A multiple criteria supplier selection model for
Vietnamese textile and apparel companies” is expected to provide a model that helps
Vietnamese T&A companies select the best suppliers and manage well their sourcing activities.
Objectives of the research
The dissertation attempts to fulfil the following research objectives:
(1) to propose a critical multiple criteria supplier selection model, which has notable significance for the Vietnamese T&A industry
(2) to identify the set of supplier selection criteria and sub-criteria for T&A companies
(3) to identify the applicability of the multiple criteria supplier selection model in selecting the best suppliers for three T&A companies by applying Analytic Network Process (ANP) method
With the above research objectives, the thesis needs to answer the following research questions:
Firstly, what is the multiple criteria supplier selection model for Vietnamese T&A companies?
Secondly, what is the supplier selection criteria and sub-criteria?
Thirdly, how practical is the multiple criteria supplier selection model?
Methodology of the research
The primary aim of this research is to develop a supplier selection model that identifies key criteria and employs a multiple criteria decision-making method to choose the best suppliers for three case studies This model is designed to assist Vietnamese textile and apparel companies in selecting appropriate suppliers, thereby enhancing overall supply chain performance The proposed research framework, depicted in Figure 1.1, outlines the research process, which is categorized into four distinct parts.
Part A is a review of literature with around 200 high impact journal articles of building up a supplier selection model and a set of supplier selection criteria covering
The article highlights key topics in the T&A industry, focusing on research concepts and theories related to decision-making and supplier selection It emphasizes the importance of supplier selection criteria and methods for defining the weights of these criteria Despite the abundance of academic and industrial publications on supply chain management, there is a notable lack of literature that integrates supplier selection models with specific criteria.
The next step involves conducting in-depth interviews and discussions with industry experts to examine their existing supplier selection criteria and methods.
The authors adopt an exploratory, qualitative approach to collect and analyze data, aiming to develop explanatory theories that enhance the understanding of social and psychological phenomena (Chenitz & Swanson, 1986) This study integrates theories such as Total Quality Management (TQM), agency theory, Transaction Cost Economics (TCE), relational theory, the knowledge-based view, and core competence theory, focusing on supplier selection and criteria mapping Utilizing a multiple case study design with expert interviews, the authors seek to gain a deeper insight into complex issues (Yin, 2013).
The research sampling approach combines purposeful and theoretical sampling to effectively gather data Purposeful sampling involves the intentional selection of participants based on specific criteria tailored to the study's needs, allowing for a diverse representation of the population, particularly in contexts with unique production methods such as CMT, FOB, ODM, and OBM This strategy enhances the potential for obtaining valuable insights through interviews Additionally, theoretical sampling is employed as a robust method for developing a theory, ensuring a comprehensive understanding of the subject matter.
This article discusses an integrated approach to data collection and analysis, as outlined by Glaser & Strauss (1967), which allows for a diverse sample range within the textile and apparel (T&A) industry This industry encompasses various sectors, including sewing, weaving, knitting, dyeing, and spinning, along with ancillary companies across southern, central, and northern Vietnam A total of 20 companies will be interviewed to gather comprehensive insights (Le & Wang, 2017).
The QSR NVIVO 10.0 software program will be used for the theme generation and data transcription
Part B presents a proposed supplier selection model that utilizes the Analytic Network Process (ANP) approach, acknowledging the interdependent relationships among criteria and sub-criteria Notably, this study is the first in the T&A field to implement the ANP method for supplier selection, making it a highly suitable choice for the dissertation.
Part C of the research will be quantitative approach to determine the set of supplier selection criteria for the model
The authors will conduct a literature review and in-depth interviews to inform statistical tests based on the findings from part A Initially, a pilot study will be performed to ensure the reliability and validity of the measurement scale, resulting in an official set of criteria Following this, an official survey will be implemented, utilizing a five-point Likert Scale from 1 to 5 to gather data on the significance of supplier selection criteria, while also quantifying certain factors such as cost and capability This approach aims to evaluate the perspectives of sourcing managers effectively.
7 agree or disagree with a particular statement, for example “The initial price of materials affects the supplier selection decision”
In this study, SPSS software version 20 will be utilized to analyze data for assessing the reliability (using Cronbach’s alpha) and validity of the criteria and sub-criteria based on factor loading Various statistical tests will be performed to confirm the results The dissertation focuses on applying supplier selection criteria to identify the optimal supplier using the ANP method, concluding with an exploration of criteria through Exploratory Factor Analysis (EFA) within the industry scope, followed by a validation of their reliability and validity.
After conducting Cronbach’s alpha and Exploratory Factor Analysis, any deleted criteria or sub-criteria will prompt a follow-up interview with T&A experts to investigate the reasons behind these changes and validate the findings The identified criteria will then assist T&A companies in establishing relationships among the criteria and sub-criteria, ultimately defining their global and local weights.
Vietnam is home to around 6,000 textile and apparel (T&A) companies, with 62% situated in the south, 30% in the north, and 8% in the central region To achieve comprehensive results, a stratified random sampling method will be employed, specifically proportionate stratified sampling, ensuring that the sample reflects the distribution of the population Respondents will be selected from the Vietnam T&A industry directory.
In determining the sample size for the dissertation, the use of stratified random sampling necessitates the application of the design effect (DEFF) for accurate calculations The sample size will be computed using OpenEpi software to ensure precision and reliability.
As the survey covers businesses in across regions, it is unavoidable that the information will be missed The author will design a particular program to identify each
8 business based on the number of reported characteristics, such as address, business registration certificate.
Part D of the research focuses on implementing the supplier selection model in real-world scenarios by selecting three representative companies that encompass various production methods The analysis will involve applying the ANP method to evaluate supplier selection for each case Based on the findings, policy recommendations will be provided for T&A companies to effectively utilize this criteria set.
In this section, we provide conclusions and recommendations for Vietnamese textile and apparel (T&A) businesses on selecting suitable auxiliary material suppliers during the integration period Utilizing a logical reasoning approach, we outline essential strategies that T&A companies should adopt to ensure they choose the right suppliers for their auxiliary materials in this evolving market landscape.
Literature review + Student’s original work Supplier selection criteria
Building up an official model of supplier selection
Assessment of current supply chains and current supplier selection model
Literature review + Student’s original work
Apply the model into practice
Scope of the research
The Vietnamese textile and apparel (T&A) industry began in the 1950s under French colonial influence, with major factories established in northern regions such as Nam Dinh, Hai Phong, and Ha Noi, which collectively house around 30% of the country's T&A companies (Manpower, 2015) In contrast, southern Vietnam, particularly Ho Chi Minh City and its neighboring provinces like Binh Duong and Dong Nai, is home to 62% of T&A companies (Vu, 2015; Vitas, 2017; Kikuchi & Vo, 2016) The remaining 8% of T&A firms are located in central Vietnam Consequently, this study will encompass the entire country, examining the T&A industry from the South to the North.
To the author’s knowledge, this is the first and official study on supplier selection criteria made in Vietnam
• Geographical limit: Vietnamese textile and apparel companies in Vietnam
• Time limit: The research was done from October 2017 to July 2019
• Field limit: Textile and Apparel industry
The research explores theories related to supply chain management, specifically focusing on sourcing and supplier selection, as outlined by Ho et al (2002) The primary aim of the thesis is to develop a model that assists Vietnamese textile and apparel companies in selecting optimal suppliers for their procurement activities based on multiple criteria To achieve this, various theories pertinent to sourcing will be utilized to establish effective selection criteria.
Supplier selection is a complex decision-making process that involves setting sourcing goals, establishing criteria, and collaborating with chosen suppliers (Kannan & Tan, 2002) The multi-criteria decision-making (MCDM) method simplifies this process by addressing multiple conflicting criteria, making it a valuable approach for supplier selection Total quality management (TQM) focuses on managing the entire organization to excel in product and service dimensions that matter to customers (Jacobs & Chase, 2011) Selecting capable suppliers who provide high-quality materials is crucial for ensuring overall quality in production management and supply chain operations Key philosophies on quality, such as Juran’s approach, Crosby’s Absolutes of Quality Management, and Deming’s perspective, play a significant role in this selection process.
Research gaps
In supply chain management, there is a notable absence of a holistic supplier selection framework that encompasses both micro and macro perspectives This gap includes the need for criteria that integrate organizational characteristics with performance metrics, address short-term and long-term considerations, and balance tangible and intangible factors, as well as internal and external influences.
12 criteria into a supplier selection model, especially for a particular industry like T&A one Thus, this confirms the need for the thesis
Previous research on decision-making methods for selecting suppliers in the textile and apparel (T&A) industry has explored various approaches; however, these methods fail to address the interrelations among criteria and sub-criteria highlighted by sourcing managers To date, no study within the T&A sector has implemented the Analytic Network Process (ANP) method, indicating a gap in the existing literature.
Previous studies on supplier selection criteria in the T&A industry primarily rely on literature reviews, which may not align with the practical needs of companies Additionally, while some research has utilized surveys, these typically involve a limited number of respondents (fewer than 50), resulting in findings that do not accurately represent the entire industry.
The T&A industry faces a significant gap in research concerning a comprehensive multiple criteria supplier selection model that encompasses all production stages, including CMT, OBM, spinning, dyeing, weaving, and sewing.
The majority of studies on supplier selection employ a literature review to establish selection criteria, followed by the use of Multi-Criteria Decision Making (MCDM) methods for supplier selection Some research also incorporates qualitative methods, such as interviews or focus groups, to investigate selection criteria before applying MCDM techniques However, there is a notable absence of comprehensive research methodologies that integrate both qualitative and quantitative approaches, which would enhance the practical applicability of findings across the industry.
The identified gaps in the literature highlight the need for a thesis that proposes a multiple criteria supplier selection model specifically for the textiles and apparel (T&A) industry This model aims to address the challenges of establishing a comprehensive set of supplier selection criteria and understanding the interrelations among them.
The article outlines 13 criteria and sub-criteria applicable across the entire textile and apparel (T&A) industry, encompassing processes from spinning and dyeing to weaving and sewing, and addressing all production levels It emphasizes the importance of utilizing both qualitative and quantitative approaches in supplier selection Furthermore, it highlights that many Vietnamese T&A companies currently rely on intuition rather than structured methods, underscoring the practical necessity for this research.
Significance of the proposed research
The lack of a complete set of supplier selection criteria in supply chain and sourcing theories highlights the importance of a detailed list of criteria and sub-criteria specifically for the textiles and apparel (T&A) industry This contribution significantly enhances the theoretical framework of sourcing, particularly in the selection phase and overall supply chain management.
The dissertation introduces a multiple criteria supplier selection model that utilizes a multi-criteria decision-making method, incorporating both qualitative and quantitative approaches Specifically, the analytic network process (ANP) is employed to identify the optimal supplier, effectively addressing the interdependence among selection criteria in the textile and apparel (T&A) industry This method offers a more reliable solution compared to other approaches, filling a gap in existing research as no prior studies in the T&A sector have applied the ANP method.
The proposed methodology serves as a valuable benchmarking tool for future resource allocation, focusing on suppliers' performance Additionally, it significantly enhances the theoretical framework surrounding supplier selection and supply chain management.
The research is innovative because this is the first multiple criteria supplier selection model for the T&A field Textile and apparel companies can use the model to
To enhance their production capabilities and reduce risks and costs, companies should seek reliable suppliers as partners in their supply chain By actively adjusting the criteria weights, purchasing companies can efficiently streamline the selection process, ensuring it aligns with their specific needs and minimizing complexity and time investment.
The evaluation of the selection criteria through various statistical tests, combined with the dissertation's supplier ranking model, ensures that purchasing managers make informed decisions rather than relying on intuition when selecting suppliers.
The supplier selection model prioritizes suppliers, enabling sourcing managers to choose multiple suppliers by establishing standards based on criteria derived from top-ranked suppliers.
Further, through the supplier selection model analysis, sourcing managers can allocate orders easily and effectively to candidate suppliers through their strength and their ranks
The findings serve as valuable guidelines for suppliers aspiring to become material or auxiliary providers for Vietnamese textile and apparel (T&A) companies Additionally, with slight adjustments, the model can assist businesses in various industries in improving their supply chain operations by identifying and collaborating with capable suppliers.
Structure of the research
The dissertation opens with an introductory chapter that outlines the dissertation process, clearly defining the problem domain and research objectives Following this, Chapter 2 presents a literature review that examines the key concepts underpinning the research Chapter 3 emphasizes the significance of these findings in relation to the overall study.
15 research model and methodology that were used to perform the research process Chapter
The research findings and discussion in Chapter 4 present the final supplier selection criteria and evaluate the applicability of the multiple criteria supplier selection model The concluding chapter summarizes these findings, offering insights and suggesting potential directions for future research Additionally, the Appendices provide further information, and a comprehensive list of all publications is included at the end of the dissertation.
THEORETICAL BASIS AND REVIEW OF LITERATURE ON
Introduction
The second chapter of the dissertation reviews existing literature on key issues relevant to the research while identifying gaps that highlight the dissertation's contribution It aims to develop a model for T&A companies to effectively select their most capable suppliers within their supply chain The review encompasses concepts related to sourcing, decision-making, and supplier selection, alongside relevant theories and empirical studies to support the proposed model Ultimately, this chapter establishes a foundation for the research and draws significant conclusions.
Overview on Supply chain in textile and apparel industry
The textile and apparel (T&A) industry is significantly impacted by macroeconomic trends, experiencing a recovery with an anticipated growth rate of 6% in the coming years following the 2009 global economic crisis (Virac, 2016) China leads the world in T&A manufacturing, benefiting from a comprehensive supply chain, advanced machinery, and low labor costs In contrast, developed nations like the United States, Italy, South Korea, and Hong Kong excel in producing higher value-added products, including design, marketing, and branding The largest consumers of T&A products are the EU, America, China, and Japan, while developing countries present a substantial market opportunity due to their sizable populations.
Per capita expenditure on textiles and clothing varies widely between developed and developing countries
The global textile and apparel trade is expected to grow from $708 billion in 2012 to $1.7 trillion by 2025, with a Compound Annual Growth Rate of 6.5% As China's share of this market declines from 40% to 35%, other producing countries will benefit from this shift, particularly Bangladesh and Vietnam, which are poised to become the primary beneficiaries of the changing landscape in global T&A trade.
The value chain of textiles and apparel (T&A) is significantly shaped by buyer influence, as the production of final products involves multiple stages across various countries Key players, including renowned brand manufacturers, major traders, and retailers, establish production networks and drive mass consumption through powerful branding and global outsourcing to meet consumer demand The global T&A value chain comprises five essential stages.
1) Supply of raw materials, including natural cotton, fiber, etc.;
2) production of input products; The products of this stage are thread and yarns made by textile companies;
3) product design; production of finished products by garment companies;
Figure 2.1: Value added to the product 2.1.2 Vietnamese T&A industry
Since entering the global apparel market in the late 1990s, Vietnam's textile and apparel (T&A) industry has excelled, climbing from the twenty-first to the fifth position among global apparel exporters by 2016, a rank it has maintained (Nadvi et al., 2004; Vietrade, 2017; Thanh, 2019) Despite this success, 65% of Vietnamese T&A companies operate under the cut-make-trim (CMT) production model, where they only handle cutting, sewing, and finishing, with all materials supplied by clients (Bidv, 2016) This model limits companies to processing fees, as they may only purchase certain auxiliary materials while adhering to strict client specifications.
In Vietnam, a significant 97% of companies are classified as small and medium-sized enterprises, which often face challenges in sourcing suitable materials and have limited financial resources (Ha, 2012) This situation has led to a high level of participation in CMT (Cut, Make, Trim) among these businesses Additionally, the prevalent production mode for Vietnamese textile and apparel companies is the free on board (FOB) method.
In the Vietnamese textile and apparel (T&A) industry, the FOB/OEM model is characterized by two main categories: FOB1, where firms purchase raw materials from client-designated suppliers, and FOB2, where firms receive product designs from clients and are responsible for sourcing raw materials and production Currently, 20% and 10% of Vietnamese T&A companies operate under FOB1 and FOB2, respectively FOB2 offers higher value than FOB1 and CMT, though it still faces challenges related to excessive processing Above OEM/FOB is ODM, where firms control most of the product design, while the highest level, OBM, involves companies developing their own brands, conducting R&D, and managing sales and distribution Only 5% of Vietnamese T&A companies engage in ODM and OBM, with those firms having greater autonomy in supplier selection To enhance value and profits, Vietnamese T&A companies are increasingly transitioning from CMT and FOB1 to FOB2 and ODM.
The Vietnamese T&A industry has recently experienced positive developments, highlighted by the successful conclusion of negotiations on both multilateral and bilateral free trade agreements, including the Free Trade Agreement between Vietnam and Korea (VKFTA).
Vietnam stands to gain significantly from its participation in key trade agreements like the EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) The EVFTA, in particular, is expected to reduce tariffs on 99% of Vietnam's exports, greatly benefiting the country's textiles and apparel (T&A) sector.
The EU-Vietnam Free Trade Agreement (EVFTA) aims to facilitate Vietnamese businesses in entering and profiting from European markets (Thuy Van, 2016) Over the past decade, the textile and apparel (T&A) industry has experienced consistent export growth, averaging over 10% annually, thanks to various free trade agreements (WTO Center, 2017) However, domestic companies face challenges in effectively leveraging these opportunities, as they must comply with stringent quality, technical, and origin requirements to benefit from the special preferences offered by these trade agreements (Vitas, 2016).
To fully leverage the opportunities presented by free trade agreements and enhance the global competitiveness of Vietnamese textiles and apparel (T&A), it is essential for companies to transition from traditional production modes like CMT and FOB1 to more advanced models such as FOB2, ODM, and OBM A critical step in this process is for Vietnamese companies to proactively source input materials by selecting qualified suppliers who meet specific criteria regarding price, quality, and origin However, the existing supplier selection criteria in the Vietnamese T&A sector are often unclear, resulting in higher production costs compared to other countries This situation underscores the need for further research and improvement in supplier selection practices.
Concepts and theories on supplier selection decision
The growing importance of supplier selection is prompting organizations to reevaluate their sourcing and evaluation strategies, leading to increased focus on supplier selection in sourcing literature.
Supplier selection is best understood by applying multiple theoretical perspectives (Sanderson et al., 2015)
2.2.1 Theories on Supply Chain Management
The term “Supply chain management” (SCM) is believed to stem from the physical distribution and transport of the logistics process (Croom et al., 2000; Forrester,
1961) From then, SCM has been motivated by many fields Therefore, a number of SCM definitions can be found
In 2002, Ho et al defined Supply Chain Management (SCM) as a management philosophy focused on the integration and management of key business processes from end users to original suppliers This approach aims to deliver products, services, and information that enhance value for customers and stakeholders through collaboration among supply chain members.
In 2008, a comprehensive definition of Supply Chain Management (SCM) was introduced, describing it as a pipeline that ensures the efficient and effective flow of products, materials, services, information, and financials This flow extends from suppliers through various intermediary organizations to the end customers, illustrating the interconnected networks between original vendors and the final financial consumers (Jacobs & Chase, 2011).
From the viewpoint of a manufacturer, supply chain can be classified into planning, sourcing, making, delivering, and returning as the following figure
- Planning comprises the processes needed to manage a current supply chain strategically
- Sourcing involves the selection of suppliers to provide materials needed to make the firm’s product
- Making is the process in which the main product is yielded, or the service provided
- Delivering is pertaining to logistics activities
- Returning covers processes in which suppliers receive worn-out, defective and excess products back from clients and support clients who have problems with delivered products
Figure 2.2: Supply Chain Operations Reference Model
Source: Supply-chain Council (www.apics.org)
In the above process, all phases are of importance, however, sourcing is the phase that affects the remaining phases
Sourcing involves a complex array of activities and roles that can create various organizational and executive challenges It is a focal point for businesses primarily due to financial motivations, as all purchasers aim to minimize costs Additionally, sourcing is critical for enhancing quality, skills, and technology within an organization.
23 improvement; and many other reasons such as effectiveness improvement, flexibility improvement … (Jacobs & Chase, 2011, p.405)
To enhance the understanding of these activities and assist enterprise managers in effectively managing these processes, various theories related to sourcing can be utilized.
Agency theory posits that a principal delegates tasks to an agent to mitigate expertise gaps or focus on core competencies (Eisenhardt, 1989) This theory encompasses two types of agents: the principal-agent relationship and positivist agency theory In this dynamic, the principal aims to minimize agency costs while the agent seeks to maximize rewards and lessen the principal’s oversight To effectively manage agency issues such as information asymmetry, preference mismatches, effort discrepancies, and capability differences, the principal must strategically navigate the relationship with their agents.
Transaction Cost Economics (TCE) examines the costs associated with completing transactions through different institutions, as highlighted by Williamson (1975) This concept encompasses a wide range of interactions, including not just buying and selling, but also everyday emotional exchanges and informal gift-giving TCE provides valuable insights into the complexities of various transactional relationships.
The costs associated with utilizing the price mechanism are significant, as buyers aim to minimize their transaction expenses A valuable aspect of Transaction Cost Economics (TCE) is its application in analyzing and selecting sourcing contracts, as highlighted by Vaxevanou and Konstantopoulos (2014).
The third is Relational theory, which explains how enterprises obtain and sustain a competitive advantage in regard to their relationships with other organizations (Mclvor,
In 2005, it was highlighted that relationships are a remarkable benefit arising from exchange interactions that cannot be achieved by companies operating in isolation These relationships between firms can be examined at both micro and macro levels, as noted by Ebers in 1997 At the micro level, the focus is on the individual interactions and connections between businesses.
The quality of relationships between companies significantly influences the benefits derived from the sourcing process, as it encompasses various flows of information, resources, and mutual expectations Additionally, macro-level factors such as relational, institutional, political, social, economic, technological, and legal elements play a crucial role in shaping these interactions (Yanhong, 2011).
Knowledge is a company's most valuable asset, as it is unique and challenging to replicate, unlike technology, design, or products It can be categorized into two main types: information and know-how, highlighting its significance in maintaining a competitive edge.
The Knowledge-Based View theory highlights that companies excel in sharing and transferring knowledge compared to markets, which is crucial for effective sourcing This theory emphasizes the importance of knowledge-sharing during the relationship management phase of the sourcing process, as it significantly contributes to achieving successful sourcing agreements.
Core competence theory emphasizes the unique combination of resources and skills that set a company apart from its competitors, serving as a foundation for its competitiveness (Galunic & Rodan, 1998) Core competencies lead to the development of specialized skills or techniques essential for creating core products It is recommended that companies focus on their core activities while outsourcing non-core competencies (Lonsdale, 1999) Thus, building core competencies is crucial, and suppliers must possess specific capabilities that meet the unique requirements of purchasers to ensure the distinctiveness of their materials.
Organizational capabilities refer to an organization's ability to execute a series of tasks effectively, leveraging its resources to achieve specific outcomes (Helfat & Peteraf, 2003) Leonard (2002) identifies three distinct types of these capabilities, highlighting their significance in driving organizational success.
A company's capabilities can be categorized into three types: Core capabilities, Enabling capabilities, and Supplemental capabilities Core capabilities are unique, built over time, and difficult to imitate, forming the foundation of a company's competitive advantage Enabling capabilities support these core functions but are not sufficient on their own to differentiate a company in the market Supplemental capabilities enhance the value of core capabilities, contributing to the overall effectiveness and success of the organization.
+ Physical capability: machinery, plants, software systems … + Managerial systems: the management of operations
+ Skills and knowledges: team skills and knowledge + Values and norms: regulation of behaviors and objectives
Empirical studies on supplier selection criteria
2.3.1.1 Selection criteria in other industries
Supplier selection criteria have been studied for over 60 years, with Dickson (1966) proposing 23 key criteria based on a survey of 300 organizations While these criteria are beneficial for companies and researchers alike, the selection process is influenced by specific purchasing circumstances This review highlights the importance of developing a multiple criteria supplier selection model tailored for the Vietnamese textile and apparel industry.
A number of studies have been devoted to examining the multi-criteria supplier selection However, according to a study of Yildiz andYayla (2015), during the period of
Between 2001 and 2014, only 2% of supplier selection studies focused on the textile industry, while the vast majority, 98%, were concentrated in sectors like electrical-electronics, automotive, and manufacturing This indicates a significant lack of attention to supplier selection criteria within the textile sector, highlighting the need for further research in this area.
37 studies on other industries Based on literature review, the author extracted some frequently-used criteria as followed:
The total costs of acquiring materials significantly influence corporate competitiveness, particularly in pricing strategies Among the various factors related to costs, the price of materials stands out as a key determinant, as highlighted by research from Sarkis & Talluri (2002) and Chan & Chan (2004).
Numerous studies highlight the significance of various factors influencing costs in logistics and supply chain management, including freight costs alongside pricing (Jaramillo, 2005; Kirytopoulos et al., 2008; Ordoobadi, 2009; Sim et al., 2010; Wang, 2010; Shen & Liu, 2012; Vijayvagy, 2012; Li et al., 2013; Chang, 2013; Shi et al., 2014; ệztỹrk & ệzỗelik, 2014; Kang et al., 2016; Yadav & Sharma, 2015a, 2015b; Fallahpour et al., 2017; Guo et al., 2017) These studies collectively emphasize the need to consider freight costs as a critical component of overall pricing strategies in supply chain operations.
Research by various authors, including Zubar (2013) and Yadav & Sharma (2015), highlights the significance of factors such as discounts and tariff/customs duties in influencing consumer behavior Studies indicate that discounts play a crucial role in purchasing decisions (Sim et al., 2010; Muralidharan et al., 2002), while tariffs and customs duties are also critical considerations for businesses (Kirytopoulos et al., 2008; Li et al., 2013).
To assess quality, various metrics are employed, including conformance to requirements, as highlighted in studies by Sarkis & Talluri (2002), Chan & Chan (2004), Kirytopoulos et al (2008), Sim et al (2010), Shen & Liu (2012), Vijayvagy (2012), Chang (2013), Shi et al (2014), and Kang et al (2016).
& Sharma, 2015), presence or absence of the supplier’s quality certifications (Teng & Jaramillo, 2005; Gencer & Gürpinar, 2007; Ting & Cho, 2008; Kirytopoulos, Leopoulos, & Voulgaridou, 2008; Sim et al., 2010; Ávila et al.,
Numerous studies have examined the defect and scrap ratio in various contexts (Muralidharan et al., 2002; Ting & Cho, 2008; Ordoobadi, 2009; Sim et al., 2010; Palanisamy & Abdul Zubar, 2013; Li et al., 2013; ệztỹrk & ệzỗelik, 2014; Kang et al., 2016; Yadav & Sharma, 2015a; Fallahpour et al., 2017; Guo et al., 2017) Additionally, the implementation of continuous quality improvement programs has been highlighted as a crucial strategy for enhancing product quality (Teng & Jaramillo, 2005; Shi et al., 2014).
2015), country of origin (Cordell, 1991; Agarwal & Teas, 2000; Baker & Ballington, 2002; Ahmed et al., 2010)
Delivery performance is crucial, highlighting a supplier's capability to provide goods promptly and in excellent condition Among various delivery aspects, on-time delivery stands out as the most significant factor, as emphasized in multiple studies (Kannan & Tan, 2002; Sim et al., 2010; Wang, 2010; Shen & Liu, 2012; Kumar).
Numerous studies have highlighted the importance of on-time delivery in supply chain management, emphasizing factors such as supplier location, lead-time, and delivery quality Research by Chan and Chan (2004) and Teng and Jaramillo (2005) indicates that these elements significantly influence overall supply chain efficiency Additionally, various authors, including Muralidharan et al (2002) and Palanisamy and Abdul Zubar (2013), have examined the impact of lead-time on delivery performance, while Kannan and Tan (2002) stress the critical role of delivery quality in maintaining customer satisfaction Understanding these factors is essential for optimizing supply chain operations and enhancing competitive advantage.
& Cho, 2008; Sim et al., 2010; Wang, 2010; Tabar & Charkhgard, 2012) …
When selecting suppliers, purchasers prioritize services that enhance their overall experience, as highlighted by Ting and Cho (2008) Key elements of excellent customer service include superior responsiveness, flexibility to accommodate changes, effective after-sales support, and clear communication Research by various authors (Kirytopoulos et al., 2008; Shahgholian et al., 2012; Kang et al., 2016; Muralidharan et al., 2002; Chan & Chan, 2004; Sarkis) underscores the importance of these factors in shaping the perception of service quality provided by suppliers.
& Talluri, 2002; Vijayvagy, 2012; Shen & Liu, 2012; Palanisamy & Abdul Zubar, 2013; Yadav & Sharma, 2015a; Fallahpour et al., 2017)
Suppliers must meet specific criteria to ensure their capability, including adequate production capacity, financial stability, and a strong reputation Research indicates that production capacity is essential for meeting demand (Ávila et al., 2012; Kang et al., 2016), while financial capacity is crucial for sustaining operations (Kirytopoulos, Leopoulos, & Voulgaridou, 2008; Chang, 2013; Li, Wong & Kwong, 2013; Kang et al., 2016) Additionally, a supplier's reputation significantly impacts their reliability and trustworthiness in the market (ĩnal & Gỹner, 2009; Shen & Liu, 2012; Chan, 2013; Garoma & Diriba, 2014; Orji & Wei, 2014).
When considering relationships, buyers often evaluate several key criteria, including the potential for a long-term partnership, trustworthiness, honesty, and the willingness to share information Research has highlighted the importance of these factors in fostering strong and effective business relationships.
In the manufacturing industry, strong relationships with suppliers are increasingly essential, as they play a vital role in product development, quality enhancement, cost reduction, and improving delivery performance.
In conclusion, the thesis reveals that the most frequently used supplier selection criteria include cost, quality, delivery, service, flexibility, financial status, technical support, reliability, and relationship This distribution of criteria across various studies highlights a significant gap in the availability of a comprehensive set of supplier selection criteria.
After synthesizing more than 100 articles related to supplier selection criteria, including the T&A industry, the most popular supplier selection criteria table is as in Table 2.1
Table 2.1: The most used supplier selection criteria
Ordinal No Criteria Sub-criteria Authors
Sarkis & Talluri, 2002; Chan & Chan, 2004; Kirytopoulos, Leopoulos, & Voulgaridou, 2008; Sim et al., 2010; Shen & Liu, 2012; Vijayvagy, 2012; Chang, 2013; Shi et al., 2014; Kang et al., 2016; Yadav & Sharma, 2015
Teng & Jaramillo, 2005; Gencer & Gürpinar, 2007; Ting
& Cho, 2008; Kirytopoulos, Leopoulos, & Voulgaridou, 2008; Sim et al., 2010; Ávila et
41 al., 2012; Shi et al., 2014; ệztỹrk & ệzỗelik, 2014; Su & Wood, 2018
& Deshmukh, 2002; Ting & Cho, 2008; Ordoobadi, 2009; Sim et al., 2010; Palanisamy & Abdul Zubar, 2013; Li, Wong
& Kwong, 2013; ệztỹrk & ệzỗelik, 2014; Kang et al., 2016; Yadav & Sharma, 2015a; Yadav & Sharma, 2015, Fallahpour et al., 2017; Guo et al., 2017
Teng & Jaramillo, 2005; Shi et al., 2015
Cordell, 1991; Agarwal & Teas, 2000; Baker & Ballington, 2002; Ahmed et al.,
Sarkis & Talluri, 2002; Chan & Chan, 2004; Teng & Jaramillo H., 2005; Kirytopoulos, Leopoulos, & Voulgaridou, 2008; Ordoobadi, 2009; Sim et al., 2010; Wang, 2010; Shen & Liu, 2012; Vijayvagy, 2012; Li, Wong & Kwong, 2013; Chang, 2013; Shi et al., 2014; ệztỹrk
2016, Yadav & Sharma, 2015a; Yadav & Sharma, 2015b, Fallahpour et al, 2017; Guo et al., 2017
Ting & Cho, 2008; Kirytopoulos, Leopoulos, & Voulgaridou, 2008; Li, Wong
& Kwong, 2013; Kang et al., 2016; Ordoobadi, 2009; Sim et al., 2010; Palanisamy & Abdul Zubar, 2013; Kumar & Singh, 2012; Ávila et al., 2012; ệztỹrk
& ệzỗelik, 2014; Yadav & Sharma, 2015; Guo et al., 2017
Sim et al., 2010; Yadav & Sharma, 2015a; Yadav & Sharma, 2015b; Muralidharan, Anantharaman & Deshmukh,
Kirytopoulos, Leopoulos, & Voulgaridou, 2008; Li, Wong
& Kwong, 2013; ệztỹrk & ệzỗelik, 2014; Kang et al.,
Kannan & Tan, 2002; Sim et al.; 2010; Wang, 2010; Shen & Liu, 2012; Kumar & Singh, 2012; Palanisamy & Abdul Zubar, 2013; Ho, Dey & Lockstrửm., 2011; Chang, 2013; ệztỹrk & ệzỗelik, 2014; Yadav & Sharma, 2015a; Yadav & Sharma, 2015b; Teng
Chan, 2004; Teng & Jaramillo, 2005; Ordoobadi, 2009; Sim et al., 2010; Wang, 2010; Tabar & Charkhgard, 2012; Shen & Liu, 2012; Vijayvagy, 2012; Palanisamy & Abdul Zubar, 2013; Shi et al., 2014; ệztỹrk
& ệzỗelik, 2014; Yadav & Sharma, 2015a; Yadav & Sharma, 2015b; Kirytopoulos, Leopoulos, & Voulgaridou, 2008; Li, Wong & Kwong, 2013; Fallahpour et al., 2017; Charkha & Jaju, 2020
Kannan & Tan, 2002; Chan & Chan, 2004; Ting & Cho, 2008; Sim et al., 2010; Wang, 2010; Tabar & Charkhgard, 2012
Chan & Chan, 2004; Teng & Jaramillo, 2005; Kumar & Singh, 2012
Shahgholian et al., 2012; Kang et al., 2016; Muralidharan, Anantharaman & Deshmukh, 2002; Chan & Chan, 2004; Sarkis & Talluri, 2002; Vijayvagy, 2012; Shen & Liu, 2012; Palanisamy & Abdul Zubar, 2013; Yadav & Sharma, 2015a; Ordoobadi, 2009
& Deshmukh, 2002; Chan & Chan, 2004; Selc áuk Perc áin, 2006; Ordoobadi, 2009; Sim et al., 2010; Kumar & Singh, 2012; Shen & Liu, 2012; Shi et al, 2014
Selc áuk Perc áin, 2006; Kirytopoulos, Leopoulos, & Voulgaridou, 2008; Wang, 2010; Yadav & Sharma, 2015; Kang et al., 2016;
& Deshmukh, 2002; Teng & Jaramillo, 2005; Sim et al.,
Shahgholian et al., 2012; Shi et al, 2014; Yadav & Sharma, 2015; Charkha & Jaju, 2020
Production capacity Ávila et al., 2012; Kang et al.,
Kang et al., 2016; Li, Wong & Kwong, 2013; Chang, 2013; Kirytopoulos, Leopoulos, & Voulgaridou, 2008; Gencer & Gürpinar, 2007; Barbarosoglu
Reputation ĩnal & Gỹner, 2009; Sarkis and Talluri, 2002; Shen & Liu, 2012; Chang, 2013; Garoma & Diriba, 2014; Orji & Wei, 2014; Yadav & Sharma, 2015
Sarkis & Talluri, 2002; Sim et al., 2010; William Ho, 2011;
Teng & Jaramillo, 2005; Hosmer, 2008; Yadav & Sharma, 2015; Akrout, 2015 Honesty Yadav & Sharma, 2015
Fashion apparel is characterized by a short life cycle and unpredictable demand, while supply remains stable due to a mature manufacturing process (Lee, 2002) For basic apparel, an efficient process focusing on cost efficiency is optimal, whereas fashion apparel requires a responsive and flexible supply chain to meet diverse customer needs Teng and Jaramillo (2005) developed a supplier evaluation model for global textile and apparel supply chains based on five criteria: delivery, flexibility, price, quality, and trust, emphasizing flexibility and price Building on this, Koprulu and Albayrakoglu (2007) introduced a sixth criterion, innovation, resulting in a comprehensive supplier selection model that includes price, quality, delivery, flexibility, innovation, and trust.
Conceptual framework
According to the reviewed literatures, supplier selection framework is as follows:
Figure 2.6: Supplier selection criteria in the hierarchy
Summary
This chapter examines the current state of the textile and apparel (T&A) industry in Vietnam and globally, highlighting the importance of developing a supplier selection model It discusses various theories related to supply chain management, supplier selection, sourcing, and frameworks for supply chain uncertainty, including those proposed by Fischer and Lee Additionally, it incorporates concepts from Total Quality Management (TQM) and decision-making processes, alongside empirical studies on supplier selection criteria and methods, ultimately leading to the establishment of a conceptual framework for the research.