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5 September 2024

A Perspective on Supplier Selection and Order Allocation: Literature Review

,
and
1
Department of Mechanical, Industrial, & Mechatronics Engineering, Toronto Metropolitan University, Toronto, ON M5B 2H3, Canada
2
Information Technology Management, Toronto Metropolitan University, Toronto, ON M5B 2H3, Canada
*
Author to whom correspondence should be addressed.

Abstract

Purchasing and procurement managers should make informed decisions in selecting materials at the right time, in sufficient quantities, and at affordable prices. Supplier selection and order allocation (SSOA) is a vital aspect of purchasing and procurement processes. In this research, the techniques and decision-making methods used in SSOA from peer-reviewed journals published from 2021 to 2023 are examined. This research explores the publications through three major categories, including literature reviews (LR), deterministic optimization (DO) models, and uncertain optimization (UO) models. The related operations research techniques are also discussed. Furthermore, observations, conclusions, and suggestions for future studies are provided with details.

1. Introduction

All around the world, companies rely on procurement, logistics, and supplier selection and order allocation (SSOA) to help their organizations run successfully. As such, many research studies have been conducted on various ways to best utilize the resources in a supply chain. While many papers have been published on supplier selection or order allocation individually, few research papers conjointly cover SSOA. The main research question in this paper is: What are the recent techniques and trends in the supplier selection and order allocation field? This unique literature review summarizes 43 papers published from 2021 to 2023 covering SSOA and its applications. This period was chosen because other literature reviews have covered the papers in this field up to 2020. The small volume of papers found further emphasizes the need for increased research, as there is a deficit in the number of papers incorporating quantitative and qualitative criteria in the evaluation of supply chain suppliers and their uncertain environments (Hu et al. 2022). The papers in this literature review paper have been retrieved using databases and websites such as Taylor and Francis, Google Scholar, ScienceDirect, Scopus, and Web of Science. ‘Supplier selection and order allocation’ is the main keyword used to find the related papers in this study. SSOA involves optimization models that help influence decisions in an organization, usually for maximizing profit, minimizing costs, and increasing efficiency (Bai et al. 2022).
Various multi-criteria decision-making (MCDM) methods like data envelopment analysis (DEA), fuzzy analytical hierarchy process (FAHP), and best–worst method (BWM) are used to determine the priority and usefulness of a decision in the supply chain. These techniques can be applied in various industries, such as agriculture, food and beverage, green supply chain, textile, manufacturing, and automotive. Common sources of uncertainty in SSOA may include demand, cost, supplier, availability, delivery, and quality (defect rate).
Given the ongoing climate change crisis, individuals, industries, and countries around the world are committed to achieving carbon neutrality and lessening the effects of anthropogenic activities (Bai et al. 2022). The focus of more recent SSOA papers has been on green supply chains, with multi-objective models including equations for reducing carbon emissions. In a constantly changing environment, many companies feel pressure to transition their strategies to incorporate a circular economy (CE) in their supply chains (Mirzaee et al. 2023). Due to this, procurement of resources focuses on the ability to recycle, refurbish, and remanufacture. In addition, recent socio-economic, political, and environmental factors have incentivized more research on the effects of natural calamities on uncertain parameters; the effects of COVID-19, and the higher occurrence of natural disasters like floods and earthquakes affect delivery rates and supplier availability (Ali and Zhang 2023). Natural disasters, bankruptcies, and equipment failures are also external factors affecting the supply chain and the related SSOA (Hosseini et al. 2022).
This paper will continue to discuss these fundamental ideas and will further elaborate on the types of models and solution methods to tackle SSOA problems. This paper has several research contributions. Unlike other literature review papers in this field, new papers (2021 to 2023) are considered and analyzed in this study. In addition, the related operations research techniques are categorized and discussed in detail. Another research contribution of this paper is providing unique observations and future research directions in the field of supplier selection and order allocation. Section 2 contains the taxonomy and classification, such as literature reviews and deterministic and uncertain optimization models. Then, Section 3 discusses key observations. Section 4 provides conclusions and suggestions for future avenues of research.

3. Observations

In this section, recommendations and observations are made based on the 43 collected publications.

3.1. The Most Popular Category

Three elements were categorized for optimization models in the papers related to SSOA: LR, DO, and UO. Based on Figure 1, the most popular domain was UO, taking up 56% of the distribution of papers, followed by DO and LR at 30% and 14%, respectively.
Figure 1. Distribution of domain categories.

3.2. The Most Popular Source of Uncertainty

Based on the results, the greatest source of uncertainty was demand. A total of 32% of the selected papers considered demand as an uncertainty source. This parameter was commonly used to determine the demand of customers to procure supplies. A few examples include the demand for juice beverages (Islam et al. 2022), part suppliers in the manufacturing industry (Ahmad et al. 2022), demand for food produce (Islam et al. 2021), and demand for supplier parts in the aerospace industry (Hosseini et al. 2022).

3.3. Common Objective Functions

Referring to Table 4, the most popular single-objective functions involve models related to minimizing costs and maximizing profit, while multi-objective models have many objectives related to minimizing costs and reducing carbon emissions or negative environmental impacts.

3.4. Most and Least Popular Techniques

Based on Table 3, the commonly used methods for solving optimization models were various types of mixed-integer linear programming (MILP) and mixed-integer nonlinear programming (MINLP). A common linear programming technique was data envelopment analysis (DEA), which evaluates suppliers based on selected criteria (Kaur and Singh 2021). Multiple papers also employed the techniques of the analytical hierarchy process (AHP) or fuzzy analytical hierarchy process (FAHP) to calculate weights, assign importance to supplier selection criteria, and analyze factors for decision-making attitudes (Ali and Zhang 2023). TOPSIS was used in conjunction with AHP/FAHP to verify and reinforce the criteria defined in that method. Another popular MCDM was the fuzzy and non-fuzzy best–worst method (BWM) mentioned in papers by Nayeri et al. (2023) and Wu et al. (2022). Nasr et al. (2021) used BWM to select suppliers based on factors such as environmental, social, economic, and circular criteria. Another used technique is particle swarm optimization (PSO), employed by Wu et al. (2022), Esmaeili-Najafabadi et al. (2021), and Alejo-Reyes et al. (2021). Less popular methods included by Nayeri et al. (2023) used the seasonal autoregressive integrated moving average (SARIMA) and the utility function (CMCGP-UF) technique with Chebyshev multi-choice goal programming.

3.5. Popular Applications

Table 5 classifies the papers based on the applications of the techniques. Most papers applied their objective functions to a general SSOA application, but the second-highest applications were both in the green supply chain industry and the material/equipment manufacturing industry. The green supply chain industry included applications of models that incorporated reducing carbon footprint in their supply chain. The material/equipment manufacturing industry includes papers that cover manufacturing industries such as steel, medical equipment, and AC units.
Table 5. Industry applications of the models.

3.6. The List of Publications

Table 6 includes the list of publications and the names of their respective journals. Some common journals include Computers & Industrial Engineering, International Journal of Production Economics, and Expert Systems with Applications.
Table 6. The publications list.

3.7. Classification of the Articles Based on Year

Table 7 presents the grouping of the publications by the year of publication and their respective domain. For this review, papers published after 2020 were included. The number of articles reviewed is based on the number of articles collected at the time of this publication.
Table 7. Grouping of the papers by the year.

4. Discussion and Conclusions

Overall, this paper addresses LR, DO, and UO models related to supplier selection and order allocation. A total of 43 papers published from 2021 to 2023 were collected. The papers were classified based on their operation research methods. This paper has several research contributions. New papers were considered and analyzed in this study. In addition, the related operations research techniques were categorized and discussed in detail.
Observations on the most popular methods show the use of MILP and MINLP to solve DO and UO models. FAHP/AHP were the common decision-making techniques for determining specific criteria for SSOA. Recent publications have significantly modeled more multi-objective functions than single-objective ones; many of the multi-objective models include functions that maximize profit, minimize costs, and minimize carbon emissions. This can be due to a rise in company interest to save costs and government incentives, policies, and attitudes to reduce carbon footprint (Bai et al. 2022). This point also becomes evident when there was a significant prevalence of green supply chain applications followed by an expected high number of SSOA application uses in the manufacturing industry. For future study, a few recommendations on the topics that should be explored are as follows:
(i)
Simultaneously consider multiple sources of uncertainty in the objective function. Many papers focused on one factor for uncertainty and used that as a basis to help determine their fuzzy or stochastic model. In real cases, multiple factors should be measured under uncertainty and incorporated into the optimization models.
(ii)
Increased research on SSOA in the healthcare industry other than how it relates to manufacturing equipment. Sudden events like COVID-19 show how disruptive events can significantly impact the supply of medical supplies and staff to meet in-hospital care. SSOA can be used to improve existing hospital systems that can prevent short staffing and insufficient medical supply in predictable and unpredictable situations.
(iii)
Overall, more research should be conducted in the field of supplier selection and as a result, extra literature reviews can be written. Many papers cover the topics on solely supplier selection or order allocation. Increasing studies on SSOA can provide a more comprehensive view of the topic of SSOA and the implementation of its techniques in real-world situations.
(iv)
There are several future opportunities to explore the applications of data science techniques, such as machine learning methods in SSOA. For instance, neural networks can be combined (e.g., Yang et al. (2008a, 2008b); Zhang et al. 2005).

Author Contributions

Conceptualization, T.N., S.H.A. and B.S.; methodology, T.N., S.H.A. and B.S.; software, T.N. and S.H.A.; validation, T.N. and S.H.A.; formal analysis, T.N. and S.H.A.; investigation, T.N. and S.H.A.; resources, T.N. and S.H.A.; data curation, T.N. and S.H.A.; writing—original draft preparation, T.N., S.H.A. and B.S; writing—review and editing, T.N., S.H.A. and B.S; visualization, T.N. and S.H.A.; supervision, S.H.A.; project administration, S.H.A.; funding acquisition, S.H.A. All authors have read and agreed to the published version of the manuscript.

Funding

This research was funded by the Natural Sciences and Engineering Research Council of Canada (NSERC).

Conflicts of Interest

The authors declare no conflict of interest.

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