Noorizadeh, A; Rashidi, K and Peltokorpi, A (2018) Categorizing suppliers for development investments in construction: Application of DEA and rfm concept. Construction Management and Economics, 36(9), pp. 487-506. ISSN 01446193
Abstract
Supplier development plays a significant role in the cost, quality and delivery improvements of construction projects. However, there is limited research on analytical methods of categorizing and prioritizing a high number of suppliers for effective allocation of scarce development resources. This research aims to develop an objective model to categorize a general contractor’s suppliers. To do so, we use three concepts from different research backgrounds–recency, frequency and monetary value (RFM); data envelopment analysis (DEA); and the customer pyramid–and add the number of projects (P) shared with each supplier as a context-related variable to build a novel RFMP model. The model categorizes suppliers into four levels of the supplier pyramid, utilizing historical data on supplier–contractor transactions. To test the model in practice, we adopt a case study of an international construction company in Finland. The results reveal that a supplier’s RFMP score reflects its contribution to the contractor’s business; therefore, development investments should vary, based on a supplier’s position in the supplier pyramid. This research contributes to the knowledge on supply chain management in construction by combining three approaches–RFM, DEA and the customer pyramid–into a single objective model to categorize suppliers for effective development investments.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | benchmarking; customer pyramid; data envelopment analysis; recency, frequency and monetary value; supplier development; supply chain management |
| Index terms: | international construction, data envelopment analysis, case study, prioritizing, Finland, construction project, benchmarking, general contractor |
| Subjects: | data analysis and analytics, strategic management, data collection methods, practitioner, decision analysis, performance measurement, Geography, production management |
| Topics: | International Construction, Quality Management, Geographical Context, Project Management, Research Practice, Roles and Professions, Risk Management |
| Descriptive scope: | 4 PCEA |
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