2 European Journal of Operational Research50 (1991) 2-18

North-Holland

Invited Review

Vendor selection criteria and methods

Charles A. Weber, John R. Current and W.C. Benton
Faculty of Management Sciences, College of Business, The Ohio State University, 1775 College Road,
Columbus, OH 43210-1399, USA

Abstract: The vendor selection process has undergone significant changes during the past twenty years.
These include increased quality guidelines, improved computer communications, and increased technical
capabilities. Given radical changes in the purchasing selection process, it is appropriate to review the past
research and to determine its relevance to the supplier selection decision. This paper reviews, annotates,
and classifies 74 related articles which have appeared since 1966. Specific attention is given to the criteria
and analytical methods used in the vendor selection process. In response to the increased interest in
Just-In-Time (JIT) manufacturing strategies, and analysis of JIT's impact on vendor selection is also
presented. Finally, conclusions and potential areas for future research are presented.

Keywords: Materials planning, production planning, supply management

1. Introduction One major aspect of the purchasing function is

Strategic management decisions impact all areas
of a firm. Once such decisions have been made,
the criteria for making subsequent operational de-
cisions must be re-examined. New strategic direc-
tions may require new criteria a n d / o r a re-empha-
sis of existing criteria used in making the oper-
ational decisions necessary to implement them. An
important area of operational decision making is
that of purchasing. In this paper, we review the
purchasing literature published since Dickson
(1966) in order to provide a comprehensive view
of the criteria that academicians and practitioners
have found to be important in vendor selection.
We limit this review to vendor selection by in-
dustrial purchasers because such environments
formed the basis of the Dickson study and most of
the research since then.
Received August 1990
vendor selection, the acquisition of required
material, services and equipment for all types of
business enterprises. By its very nature the
purchasing function is a basic part of business
management. In today's competitive operating en-
vironment it is impossible to successfully-produce
low cost, high quality products without satisfac-
tory vendors. Thus one of the most important
purchasing d~isions is the selection and mainte-
nance of a competent group of suppliers.
The selection of competent suppliers has long
been regarded as one of the most important func-
tions to be performed by a purchasing depart-
ment. For example, Howard Lewis in one of the
early purchasing texts (1943), stated: " I t is prob-
able that of all the responsibilities which may be
said to belong to the purchasing officers, there is
none more important than the selection of a proper
source. Indeed, it is in some respects the most
important single factor in purchasing" (Lewis, p.
249). For many firms, purchases from outside

0377-2217/91/$03.50 © 1991 - ElsevierSciencePublishers B.V. (North-Holland)

 C.A. Weber et al. / Vendor selection criteria and methods
vendors account for a large percentage of their
total operating costs. The raw material purchased
for most U.S. firms constitutes 40-60% of the unit
cost of a product. For large automotive manufac-
turers, the cost of components and parts purchased
from outside vendors may total more than 50% of
sales. Purchased material and services represent
up to 80% of total product costs for high technol-
ogy firms (Burton, 1988). Coal purchases for large
electric utilities, such as TVA, approach $1 billion
annually (Bender et al., 1985).
Vendor selection decisions are complicated by
the fact that various criteria must be considered in
the decision making process. The analysis of
criteria for selection and measuring the perfor-
mance of vendors has been the focus of m a n y
academicians and purchasing practitioners since
the 1960's. In his seminal work, Dickson (1966)
suggests: " F r o m the purchasing literature, it is
fairly easily to abstract a list of at least 50 distinct
factors (characteristics of vendor performance)
that are presented by various authors as being
meaningful to consider in a vendor selection deci-
sion" (Dickson, p. 5).
The primary purpose of this paper is to review
the literature since the Dickson study in order to
provide a comprehensive view of the criteria that
academicians and purchasing practitioners feel are
important in the vendor selection decision. Anno-
tations for 74 articles are presented in the next
section. In the third section, a review of criteria is
presented.
Since the Dickson article was published the
world of purchasing has undergone some signifi-
cant changes. A significant impetus for these
changes has been the increased interest in, and
implementation of, Just-In-Time (JIT) manufac-
turing strategies. The implementaion of J I T may
impose a reordering of the criteria by which
vendors are selected (see Ansari and Modarress,
1986; Bender et al., 1985; Burton, 1988; H a h n et
al., 1983; Manoochehri, 1984; Newman, 1988).
Given the recent interest in J I T manufacturing
strategy, a review of J I T ' s impact on vendor selec-
tion is presented in the fourth section.
In view of the economic importance, and inher-
ent complexity of purchasing decisions, such deci-
sions are an appropriate area for the application
of quantitative analysis. Consequently, any quan-
titative methods for vendor selection presented in
the various articles are listed in the annotations.
3
In addition, these approaches are categorized and
discussed in the fifth section of this paper. Con-
clusions, potential areas for future research, and a
summary are presented in the final section.
It should be noted that this literature review
includes only articles published in major journals
written in English. Consequently, working papers,
books, Master's and Doctoral theses and non-En-
glish articles are not reviewed. Every effort has
been made to be thorough and any oversights are
unintentional and regretted.
2. Annotation
The structure of this study will be to categorize
the articles based on the 23 vendor selection
criteria of the Dickson study shown in the Ap-
pendix. It should be noted that categorization of
some articles into one of the Dickson study's
criteria was not clear cut and required some judge-
ment. These decisions were based on our percep-
tion of the article's primary focus. For example,
' p e r f o r m a n c e history' of vendors m a y be captured
in the vendor's 'delivery' or 'quality' performance.
Similarly, 'warranties and claim' policies may be
reflected in a vendor's 'price' structure.
Finally, one additional caveat is in order. The
Dickson results were based on a survey of pur-
chasing agents and managers whereas this review
is primarily based on academic literature. Conse-
quently, any comparisons between our findings
and those of Dickson must be made with the
realization that the two studies were based on two
different 'populations'. In spite of this, however,
we believe that the Dickson study is a valid bench-
mark from which to identify possible trends in the
importance of various vendor selection criteria.
The Dickson study was based on a questioneer
sent to 273 purchasing agents and managers
selected from the membership list of the National
Association of Purchasing Managers. The list in-
cluded purchasing agents and managers from the
United States and Canada. A total of 170 (62.3%)
responses were received. Table 1 summarizes the
findings of Dickson's study regarding the impor-
tance of the 23 criteria for vendor selection.
In general, the articles in this review examine
more than one of Dickson's criteria. In s o m e
cases, the authors chose to look in detail at just
one of the criteria. In these, the authors typically
4 C.A. Weber et al. / Vendor selection criteria and methods

Table 1 purchasing environment mentioned, an entry of

Dickson's vendor selection criteria a 'general industrial purchasing' is given.
Rank Factor Mean Evaluation The final subentry briefly describes any tech-
rating niques or analytical methods which were used to
1 Quality 3.508 Extreme measure or analyze the criteria. If specific tech-
importance niques were not used, the study was categorized as
2 Delivery 3.417 either ' c o n c e p t u a l ' or 'empirical'.
3 Performance history 2.998
4 Warranties and claim 2.849 In total, 74 articles were reviewed. The annota-
policies tions are n o w presented in alphabetical order by
5 Production facilities Considerable the author's last name:
and capacity 2.775 importance Ansari and Modarress (1986), "Just-in-time
6 Price 2.758 purchasing: Problems and Solutions",
7 Technical capability 2.545
8 Financial position 2.514 - quality, delivery, net price, geographical lo-
9 Procedural compliance 2.488 cation, attitudes,
10 Communication system 2.426 - JIT,

11 Reputation and position - conceptual.

in industry 2.412 Ansari and Modarress (1988), " J I T purchasing
12 Desire for business 2.256
13 Management and as a quality and p r o d u c t i o n centre",
organization 2.216 - quality, delivery, net price, geographical lo-
14 Operating controls 2.211 cation, attitude, packaging,
Average
15 Repair service 2.187 - JIT,
importance
16 Attitude 2.120 - conceptual.
17 Impression 2.054
18 Packaging ability 2.009 A n t h o n y and Buffa (1977), "Strategic purchas-
19 Labor relations record 2.003 ing scheduling",
20 Geographical location 1.872 - delivery, net price,
21 Amount of past business 1.597 - general industrial purchasing,
22 Training aids 1.537 - linear p r o g r a m m i n g model based on trans-
23 Reciprocal arrangements 0.610 Slight
importance portation model.
Banerjee (1986), " A joint economic-lot-size
a See Dickson (1966). model for purchaser and vendor",
- net price, delivery,
- general industrial purchasing,
- joint e c o n o m i c lot sizing model conceptually
focused on methods to measure the criterion or developed.
ways to incorporate it into a larger vendor selec- Banerjee (1986), " O n " A quantity discount
tion process and were not advocating the sole use pricing model to increase v e n d o r profits .... ,
of the criterion for v e n d o r selection. - net price,
In the following annotation each entry includes - , general industrial purchasing,
author(s), year of publication, and title of the - EOQ.
article. The full citations are provided in the Ref- Bender, Brown, Isaac and Shapiro (1985), " I m -
erence section at the end of the article. proving purchasing productivity at I B M with a
Each annotation lists three subentries. The first normative decision support system",
subentry identifies which of Dickson's 23 vendor - q u a l i t y , delivery, p r o d u c t i o n facilities and
selection criteria were discussed in the article. The capacity, net price,
keyword(s) for the criteria used by Dickson are - I B M for wide range of commodities,
used. -mixed integer optimization p r o g r a m m i n g
T h e second subentry describes the purchasing model as part of a decision support system.
environment in which the criteria are discussed. Benton (1983), " P u r c h a s e quantity discount
Possible purchasing environments include J I T or procedures and M R P " ,
M R P , a specific industry or items, large project - net price,
purchases, etc. In cases where there is no specific - MRP,
 CA. Weber et a L / Vendor selection criteria and methods
- EOQ, Least Unit Cost procedure,
McLaren's Order Moment procedure studied
by a simulation model.
Benton (1985), "Multiple price breaks and al-
ternative purchase lot-sizing procedures in material
requirements planning systems".
- net price,
- MRP,
- EOQ, Least Unit Cost procedure, McLaren's
Order Moment procedure studied by a simu-
lation model.
Benton (1985), "Purchase lot sizing research for
MRP systems",
- net price,
- MRP,
- review of lot sizing techniques.
Benton and Krajewski (1990), "Vendor perfor-
mance and alternative manufacturing environ-
ments",
- quality, delivery, service,
- MRP/JIT,
- simulation.
Benton and Whybark (1982), "Material re-
quirements planning (MRP) and purchase dis-
counts",
- net price,
- MRP,
- EOQ, Least Unit Cost procedure, McLaren's
Order Moment procedure studied by a simu-
lation model.
Bernard (1989), "Managing vendor perfor-
mance",
- quality, delivery, net price, management and
organization, service,
- general industrial purchasing,
- conceptual.
Bragg and Hahn (1982), "Material require-
ments planning and purchasing",
- delivery, production facilities and capacity,
- M R P ,
- conceptual.
Browning, Zabriskie and Huellmantel (1983),
"Strategic purchasing planning",
- delivery, net price, technical capability, pro-
duction facilities and capacity,
general industrial purchasing,
- quantity discounts",
- conceptual.
Buffa and Jackson (1983), " A goal program-
ming model for purchase planning",
- quality, delivery, performance history, net
price,
general industrial purchasing,
- - delivery, quality, net price, repair service,
5
- goal programming optimization model.
Burton (1988), "JIT/Repetitive sourcing strate-
gies: 'Tying the knot' with your suppliers",
- quality, delivery, production facilities and
capacity, net price, technical capability,
packaging ability, geographic location, train-
ing aids, management and organization, op-
erational controls,
- J I T ,
- conceptual.
Cardozo and Cagley (1971), "Experimental
study of industrial buyer behavior",
- net price, delivery, quality, reputation and
position in industry, past business,
- general industrial purchasing,
- empirical.
Chakravarty and Martin (1988), "An optimal
joint buyer-seller discount pricing model",
- net price,
- general industrial purchasing,
- EOQ.
Chapman (1989), "Just-in-time supplier inven-
tory: An empirical implementation model",
- q u a l i t y , delivery, production facilities and
capacity,
- J I T ,
- empirical.
Chapman and Carter (1990), " S u p p l i e r /
customer inventory relationships under just-in-
time",
- delivery, quality,
- J I T ,
- multiple regression analysis.
Cooper (1977), " A total system for measuring
delivery performance',
- delivery,
- general industrial purchasing,
- delivery performance analysis worksheet with
linear weighted model.
Croell (1980), "Measuring purchasing effective-
ness",
- quality, delivery, net price,
general industrial purchasing,
-
- conceptual.
Dada and Srikanth (1987), "Pricing policies for
- net price,
- general industrial purchasing,
EOQ.
-
Dempsey (1978), "Vendor selection and the
buying process",
6 C.A. Weber et al. / Vendor selection criteria and methods
technical capability, performance history,
production facilities and capacity, training
aids, operational controls, reputation and
position in industry, financial position, atti-
tude, communication system, bidding proce-
dural compliance, management and organi-
zation, packaging capability, labor relation
record, geographical location,
- electronics manufacturing and electric utili-
ties industries,
- empirical.
Edwards (1967), "Supplier management evalua-
tion",
- management and organization,
- general industrial purchasing; 9 case sce-
narios presented,
- empirical.
Frazier, Spekman and O'Neal (1988), "Just-in-
time exchange relationships in industrial markets",
- quality, delivery, net price, technical capabil-
ity,
- management and organization,
- JIT,
- conceptual.
Gaballa (1974), "Minimum cost allocation of
tenders",
- net price, productoin facilities and capacity,
- two classes of items,
- mixed integer optimization models.
Goyal (1987), "Comment on: A generalized
quantity discount pricing model to increase sup-
plier's profits",
- net price,
- general industrial purchasing,
- EOQ.
Gregory (1986), "Source selection: A matrix
approach",
- quality, delivery, performance history, pro-
duction facilities and capacity, net price,
technical capability, bidding procedural
compliance, reputation and position in in-
dustry, management and organization, geo-
graphical location,
- general industrial purchasing,
- s o u r c i n g worksheet with linear weighting
model.
Hahn, Kim and Kim (1986), "Costs of compe-
tition: Implications for purchasing strategy",
- quality, delivery, production facilities and
capability, net price, technical capability,
geographical location,
- JIT,
- conceptual.
Hahn, Pinto and Bragg (1983), " 'Just-in-time'
production and purchasing",
- q u a l i t y , delivery, production facilities and
capacity, net price, geographical location,
- JIT,
- conceptual.
Hakansson and Wootz (1975), "Supplier selec-
tion in an international environment - An experi-
mental study",
- price, quality, geographical location, produc-
tion facilities and capacity,
- international industrial purchasing,
- empirical.
Hinkle, Robinson and Green (1969), "Vendor
evaluation using cluster analysis",
- quality, delivery, net price, technical capabil-
ity,
- general industrial purchasing,
- cluster analysis.
Ho and Carter (1988), "Using vendor capacity
planning in supplier evaluation",
- production facilities and capacity,
- MRP,
- conceptual.
Hwang, Moon and Shinn (1990), " A n E O Q
model with quantity discounts for both purchasing
price and freight cost",
- net price,
- general industrial purchasing,
- EOQ.
Jacobson and Aaker (1987), "The strategic role
of product quality",
- quality,
- general industrial purchasing,
- empirical.
Jackson (1983), "Just-in-time production: Im-
plications for logistics managers",
- quality, delivery, geographical location, atti-
tude,
- JIT,
- conceptual.
Jordan (1987), "Purchasing decisions regarding
future price increases: An empirical approach",
- net price,
- general industrial purchasing,
- EOQ.
Kingsman (1986), "Purchasing raw materials
with uncertain fluctuating prices",
- net price,
 C.A. Weber et al. // Vendor selection criteria and methods 7

- commodity purchasing, - general industrial purchasing,

- l i n e a r and dynamic programming models - conceptual.
conceptually discussed. Mazurak, Rao and Scotton (1985), "Spread-
Kraljic (1983), "Purchasing must become sheet software applications in purchasing",
supply management", - quality, delivery, net price, financial posi-
- quality, delivery, production facilities and tion,
capacity, technical capability, - general industrial purchasing,
- general industrial purchasing, - spreadsheet vendor evaluation system using
- conceptual. linear weighting model.
LaForge (1985), " M R P lot sizing with multiple McFillen, Reck and Benton (1983), "An experi-
purchase discounts", ment in purchasing negotiations",
- net price, - price, quality, delivery, service,
- MRP, - general industrial purchasing,
- EOQ, POQ, LUC, PPA, IPPA models. - empirical.
Lamberson, Diederich and Wuori (1976), McGinnis and Hollon (1978), "Packaging:
"Quantitative vendor evaluation", Organization, objectives, and interactions",
- quality, delivery, performance history, pro- - packaging,
duction facilities and capacity, net price, - general industrial purchasing,
technical capability, financial position, - empirical.
management and organization, Monahan (1984), "A quantity discount pricing
- general industrial purchasing, model to increase vendor profits",
- d e c analysis worksheet with linear
i s i o n - net price,
weighting model. - general industrial purchasing,
Lamm and Vose (1988), "Seller pricing strate- - EOQ.
gies: A buyer's perspective", Monczka, Giunipero and Reck (1981), "Per-
- net price, ceived importance of supplier information",
- general industrial purchasing, - quality, delivery, performance history, pro-
- conceptual. duction facilities and capacity, net price,
Lee and Rosenblatt (1986), "A generalized financial position, reputation and position in
quantity discount pricing model to increase sup- industry, management and organization,
plier's profits", labor relations record, geographical location,
- net price, - rankings provided for 6 industry types,
- generalized industrial purchasing, - empirical.
- EOQ. Monczka and Trecha (1988), "Cost-based sup-
Levy and Cron (1985), "A decision support plier performance evaluation",
system for determining a quantitative discount - quality, delivery, net price, management and
pricing policy", organization,
- net price, - general industrial purchasing,
- generalized industrial purchasing, - develops service factor ratings and overall
- EOQ placed in a decision support system supplier performance index based on linear
framework. weighting model.
Manoochehri (1984), "Suppliers and the just- Moore and Fearon (1973), "Computer-assisted
in-time concept", decision making in purchasing",
- q u a l i t y , delivery, production facilities and - quality, delivery, net price,
capacity, net price, geographical location, - general industrial purchasing,
attitudes, - linear programming approach discussed as
- J I T , part of computer-assisted vendor evaluation.
- conceptual. Narasimhan (1983), " A n analytical approach to
Markowski and Markowski (1988), " A n alter- supplier selection",
native criterion for the quantity discount decision", - q u a l i t y , delivery, production facilities and
- net price, capacity, net price,
8 C.A. Weber et a L / Vendor selection criteria and methods
- general industrial purchasing,
- analytical hierarchical process.
Narasimhan and Stoynoff (1986), "Optimizing
aggregate procurement allocation decisions",
- production facilities and capacity, net price,
- general industrial purchasing,
- m i x e d integer optimization programming
model.
Newman (1988), "Insuring quality: Purchas-
ing's role",
- quality,
- Statistical Process Control,
- concept.
Newman (1988), "The buyer-supplier relation-
ship under just-in-time",
- quality, delivery, production facilities and
capacity, net price, technical capability,
packaging ability, geographical location,
- J I T ,
-conceptual.
Newman and Scodro (1988), "Price analysis for
negotiation",
- net price,
-general industrial purchasing,
- conceptual.
Pan (1989), "Allocation of order quantity
among suppliers",
- net price, quality, delivery,
- general industrial purchasing,
- single objective linear programming model.
Payne (1970), "Development of a supplier
evaluation technique utilizing financial informa-
tion",
- financial position,
-general industrial purchasing; 5 case scenar-
ios presented,
- empirical.
Roberts (1978), "A vendor delivery rating
model",
- delivery,
-general industrial purchasing,
- linear weighting model for delivery perfor-
mance.
Ronen and Trietsch (1988), "A decision sup-
port system for purchasing management of large
projects",
- delivery, net price,
- large projects,
- stochastic, stationary inventory model.
Rubin, Dilts and Barton (1983), "Economic
order quantities with quantity discounts",
- net price,
- generalized industrial purchasing,
- E O Q .
Sharma, Benton and Srivastave (1989), "Com-
petitive strategy and purchasing decisions",
- net price, quality, delivery,
- generalized industrial purchasing,
- non-linear goal programming model.
Sheth (1973), "A model of industrial buyer
behavior",
- quality, delivery, net price, production facili-
ties and capacity, service, reputation and
position in industry, reciprocal agreements,
technical capability, impression,
- general industrial purchasing,
- conceptual.
Shore (1981), "A micro-computer based pur-
chasing information system",
- quality, delivery, net price,
- general industrial purchasing,
- criteria reported as part of a micro-computer
based information system for purchasing.
Soukup (1987), "Supplier selection strategies",
- q u a l i t y , delivery, production facilities and
capacity, net price, technical capability,.
financial position, desire for business;
management and organization, attitude, geo-
graphical location,
- general industrial purchasifig,
- linear weighting model using probabilities.
Timmerman (1986), "An approach to vendor
performance evaluation",
- quality, delivery, performance history, net
price, technical capability.
- general industrial purchasing,
- linear weighting model.
Treleven (1987), "Single sourcing: A manage-
ment tool for the quality supplier",
- quality, delivery, production facilities and
capability, net price,
- J I T ,
- conceptual.
Turner (1988), "An independent system for the
evaluation of contract tenders",
- net price, production facilities and capacity,
- general industrial purchasing,
- mixed integer optimization model.
Wagner, Ettenson and Parrish (1989), "Vendor
selection among retail buyers: An analysis by
merchandise division",
- industrial purchasing factors: quality, service,
 C.A. Weber et al. / Vendor selection criteria and methods 9

delivery, net price, geographic location, rep- reciprocal arrangements, performance his-
utation and position in industry, tory, technical capability, communication
-retail purchasing factors: reputation and system,
position in industry, service, delivery, qual- - general industrial purchasing,

ity, markup, fashionability, country of origin, - generalized linear weighting model.

selling history, Table 2 presents a list of the journals in which
- study concerned with retail purchasing in these articles appeared. As one might expect, the
women's clothing, acessories and home majority of them (45%) appeared in the Journal of
products markets, Purchasing and Materials Management. Given the
- empirical. complexity and economic importance of vendor
Wieters (1976), "Influences on the design and selection decisions, it is somewhat surprising how
use of vendor performance rating systems", few articles have appeared in operations research/
- production facilities and capacity, technical management science oriented journals. This issue
capability, financial position, reputation and is discussed in more detail in Sections 5 and 6.
position in industry, management and
organization, operational controls, repair
service, geographical location, 3. Review of criteria
- 6 specific industries,
- empirical. The criteria included in each article are pre-
Wind and Robinson (1968), " T h e determinants sented in Table 3. Again, the 23 criteria presented
of vendor selection: The evaluation function ap- in Dickson (1966) were used. It is interesting to
proach", note that 47 of the 74 articles or 64% discussed
- quality, delivery, net price, reputation and more than one criteria and that in one article,
position in industry, geographical location, Dempsey (1978), 18 criteria are discussed. This
demonstrates the inherently multi-objective nature
Table 2
of many vendor selection decisions. Also, 42 of the
Journal outlets of the annotated bibliography
74 articles or 57% have appeared since 1985. This
Journal Number (%) appears to reflect a growing interest in the vendor
of articles
selection process in the last 5 years.
Journal of Purchasing and Materials Table 4 lists the number of articles in which
Management 33 45
each criterion was addressed as well as the rank
Journal of Purchasing a 5 6
Management Science 5 6 and rating of the criteria in the Dickson study. To
Decision Sciences 4 5 the extent that publication in the literature reflects
Production and Inventory Management 3 4 interest in, and importance of, the various criteria,
Computers and Operations Research 3 4 some observations may be made from this table.
Journal of Business Logistics 3 4
For example, Table 4 indicates that net price,
International Journal of Production
Research 3 delivery and quality were discussed in 80, 59 and
Journal of Marketing 3 54% of the articles respectively. These three criteria
Journal of Marketing Research 2 were rated as having 'extreme' or 'considerable'
Journal of Operational Research Society 1 importance by Dickson. Production facilities and
European Journal of Operational
capability, geographical location, and technical ca-
Research 1
Journal of Retailing 1 pability were discussed in 31, 22 and 20% of the
Industrial Marketing Management 1 articles respectively. Production facilities and ca-
Journal of Operations Management 1 pability, and technical capability were categorized
Interfaces 1 as having 'considerable importance' by Dickson
Harvard Business Review 1
while geographical location was considered to have
Operations Research 1
Decision Sciences Institute Conf. Proc. 1 only 'average importance' in Dickson's ranking.
International Journal of Production Warranties and claim policies was deemed to have
Management 1 'considerable importance' in the Dickson study;
Operational Research Quarterly 1 •however, it was not specifically discussed in any of
a Includes Dickson's article. the articles included in this review. Certainly, this
Table 3
Vendor selection criteria

Article Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Ansari and Modarress 1986 X X X X X
Ansari and Modarress 1988 X X X X X X
Anthony and Buffa 1987 X X
Banerjee 1986 X X
Banerjee 1986 X
Bender et al. 1985 X X X X
Benton 1983 X
Benton 1985 X
Benton 1985 X
Benton and Krajewski 1990 X X X .q
Benton and Whybark 1982 X
Bernard 1989 X X X X
Bragg and Hahn 1982 X X
Browning et al. 1983 X X X X
Buffa and Jackson 1983 X X X X
Burton 1988 X X X X X X X X x
Cardozo and Cagley 1972 X X X X X
Chapman 1989 X X X
Chapman and Carter 1990 X X
Chakravarty and Martin 1988 X
Cooper 1977 X
Croell 1980 X X
Dada and Srikanth 1987 X
Dempsey 1978 X X X X X X X X X X X X X X X X X x t~
Edwards 1967 X
I:L
Frazier et al. 1988 X X X X X
Gaballa 1974 X X
Goyal 1987 X q~
L~
Gregory 1986 X X X X X x
Hahn et al. 1986 X X X X X x
Hahn et al. 1983 X X X X
Hakansson and Wootz 1975 X X X
Hinkle et al. 1969 X X X X
Ho and Carter 1988 X
Hwang et al. 1990 X
Jacobson and Aaker 1987 X
Jackson 1983 X X x x
Jordan 1987 X
Kingsman 1986 X
Kraljic 1983 X X X
LaForge 1985 X
Table 3 (continued)
Vendor selection criteria

Article Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Lamberson et al. 1976 X X X X X X X X
Lamm and Vose 1988 X
Lee and Rosenblatt 1986 X
Levy et al. 1985 X
Manoochehri 1984 X X X X X
.q
Markowski and Markowski 1988 X
Mazurak et al. 1985 X X X X
McFillen et al. 1983 X X X X
McGinnis and Hollon 1978 X
Monahan 1984 X t~
Monczka et al. 1981 X X X X X X X X X X
Moore and Fearon 1973 X X
Narasimhan 1983 X X X X
Narasimhan and Stoynoff 1986 X X
Newman 1988 X
Newman 1988 X X X X X X X
Newman and Scodro 1988
Pan 1989 X X X
Payne 1970 X
t~
Roberts 1973 X
Ronen and Trietsch 1988 X X
Rubin et al. 1983 X
Sharma et al. 1990 X X X
Sheth 1973 X X X X X X X X X
Shore 1981 X X X
Soukup 1987 X X X X X X X X X X
Timmerman 1986 X X X X X
Turner 1988 X X
Treleven 1987 X X X X
Wagner et al. 1989 X X X X X X
Wieters 1976 X X X X X X X X
Wind and Robinson 1968 X X X X X X X X X
12 C.A. Weber et al. / Vendor selection criteria and methods

does not imply that warranties and claim policies
no longer have any importance in vendor selec-
tion. Rather, it is more likely that this criterion
has been included as a component of other criteria
or that this criterion is discussed in publications
not considered in this study (e.g., legal publica-
tions).
Table 5 lists the criteria by year of publication
of the articles. This table indicates the existence of
some possible trends. Table 5 indicates that net
price, delivery, and quality have received the
greatest amount of attention in the last five years,
appearing respectively in 86, 53 and 51% of the
articles published in that time frame. As Table 4
indicates, these three criteria were discussed more
than any other criteria since 1969.
On the other hand, several criteria have re-
ceived little attention in the last five years. During
the last five years no citations could be found for
warranties and claim policies, communication sys-
tem, impression, labor relations record, amount of
past business, and reciprocal agreements; only one
citation was found for bidding procedural compli-
ance, desire for business, operating controls,
packaging ability, training aids; and only two
citations were found for performance history,
financial position, and reputation and position in
industry.
Table 5 also indicates that production facilities
and capacity, geographical location, financial
position, and management and organization gen-
erated an intermediate amount of attention in the
past five years appearing respectively in 26, 16, 16
and 9% of the citations during that time frame.
The recent attention to geographical location is
especially interesting with 7 of 14 citations appear-
ing since 1985 and 10 of 14 citations appearing
since 1980.
4. Impact of JIT on criteria
As stated earlier, strategic management deci-
sions may affect the criteria used in making subse-
quent operational decisions. A review of JIT
criteria for vendor selection appears appropriate

Table 4
Criteria discussed in annotated bibliography

Dickson's study Criteria N u m b e r of (%)

articles
Rank Rating a
6 1 Net price 61 80
2 1 Delivery 44 58
1 1A Quality 40 53
5 1 Production facilities and capacity 23 30
20 2 Geographic location 16 21
7 1 Technical capability 15 20
13 2 Management and organization 10 13
11 2 Reputation and position in industry 8 11
8 1 Financial position 7 9
3 1 Performance history 7 9
15 2 Repair service 7 9
16 2 Attitude 6 8
18 2 Packaging ability 3 4
14 2 Operational controls 3 4
22 2 Training aids 2 3
9 2 Bidding procedural compliance 2 3
19 2 Labor relations record 2 3
10 2 Communication system 2 3
23 3 Reciprocal arrangements 2 3
17 2 Impression 2 3
12 2 Desire for business 1 1
21 2 A m o u n t of past business 1 1
4 1 Warranties and claims 0 0
a Ratings: 1A = Extreme importance. 2 = Average importance.
1 = Considerable importance. 3 = Slight importance.
Table 5
Vendor selection criteria by year

Year Vendorselection criteria

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

1990 2 2 1 1 ~x
1989 5 5 1 4 1 1 2
1988 6 6 4 11 3 2 1 I 2 2 1
1987 3 3 2 6 1 1 1 1 1
1986 4 5 2 3 9 3 1 1 1 3
1985 2 2 1 6 1
1984 1 1 2 1 1
1983 6 7 1 4 7 2 1 1 1
1982 1
1981 2 2 1 1 2 1 1 1 1 1
1980 1 1 1
1979
1978 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1
e~
1977 1 2,
e,,
1976 1 1 1 2 1 2 2 1 2 1 1 t.,,

1975 1 1 1
1974 1 1
1973 2 2 2 1 1 1 1
1972
1971 1 1 1
1970 1
1969 1 1 1 1
1968 1 1 1 1 1 1 1
1967
14 C.A. Weber et al. / Vendor selection criteria and methods
in light of the recent movement of many firms
toward this manufacturing philosophy. Of the 74
articles reviewed, 13 looked specifically at JIT. All
13 articles recognized that vendor selection under
JIT is a multi-objective task. Table 6 lists the
criteria addressed in these articles. Quality and
delivery were discussed in all 13 of the articles.
This is consistent with the Dickson study which
listed these criteria as the two most important
criteria for vendor selection. Production facilities
and capabilities was also recognized in the articles
as an important JIT criterion. In the Dickson
study, this criterion ranked fifth. Net price was
discussed in eight of the articles. Most authors
however chose to handle net price as one compo-
nent of 'total vendor cost' rather than as a sep-
arate component. In the Dickson report, net price
ranked sixth.
Geographical location is another important
criterion for vendors in JIT systems. This is not
surprising given the emphasis on local suppliers in
JIT systems. This is in marked contrast to the
Dickson report where geographical location ranked
twentieth in importance. Other criteria that were
mentioned for consideration in the JIT vendor
selection process are technical capability, attitude,
management and organization, operational con-
trois, service and packaging.
5. Quantitative approaches to vendor selection
In the third subentry of each annotation are
listed any quantitative approaches to vendor selec-
Table 6
JIT Criteria for vendor selection
Dickson's study Criteria
Rank Rating a
1 1A Quality
2 1 Delivery
6 1 Net price
20 2 Geographical location
5 1 Production facilities and capacity
7 1 Technical capability
16 2 Attitude
13 2 Management and organization
18 2 Packaging
14 2 Operational controls
15 2 Repair service
a Ratings: 1A = Extreme importance. 2 = Average importance.
1 = Considerable importance. 3 = Slight importance.
tion,that were presented in the article. These ap-
proaches may be grouped into three general cate-
gories:
(1) linear weighting models,
(2) mathematical programming models, and
(3) statistical/probabilistic approaches.
By far, the most utilized approach has been
linear weighting models. Linear weighting models
place a weight on each criteria (typically subjec-
tively determined) and provide a total score for
each vendor by summing up the vendor' s perfor-
mance on the criteria multiplied by these weights.
Wind and Robinson (1968) endorsed using a
weighted linear model of multiple criteria for
vendor selection. Other authors have followed
suite, including Lamberson (1976) and Mazurak
(1985). Timmerman (1986) and Gregory (1986)
have linked this approach to a matrix representa-
tion of data. Cooper (1977) and Roberts (1978)
used linear weighting models to evaluate vendors
on delivery performance. Narasimhan (1983) em-
ployed the analytical hierarchical process to gener-
ate weights for such models. Most recently,
Monczka (1988) developed multiple criteria vendor
service factor ratings and an overall supplier per-
formance index using linear weighting models.
Given the inherent importance and complexity
of vendor selection, it is somewhat surprising that
only ten articles have proposed the use of
mathematical programming techniques for vendor
selection and order quantity decisions. The pro-
posed techniques are linear programming, mixed
integer programming, and goal programming.
Number of (%)
articles
13 100
13 100
8 62
7 54
7 54
4 31
4 31
2 15
2 15
1 7
1 7
 C.A. Weber et al. / Vendor selection criteria and methods
Our literature review indicates that Moore and
Fearon (1973) was the first of four articles to
discuss the possible use of linear programming
models for vendor selection. While the article did
not provide an actual mathematical formulation,
the objective of the conceptual model was to opti-
mize the mix of vendor awards based on price,
with constraints relating to the amount of business
that any vendor could be awarded. Anthony and
Buffa (1977) formulated a linear programming
model to minimize total purchasing and storage
costs in the scheduling of vendor deliveries. This
model included budget, demand satisfaction and
storage capacity constraints. Kingsman (1988)
proposed, but did not formulate, the use of linear
programming for commodity buying situations.
Most recently, Pan (1989) formulated a linear
programming model to minimize total purchase
price. This model included constraints on quality,
lead time and service.
Four of the articles proposed the use of mixed
integer optimization models for vendor selection.
Gaballa (1974) formulated mixed integer optimi-
zation models to determine vendors and order
quantities for two classes of items ordered by the
Australian Post Office. The objective in these
models was to minimize total purchase costs where
price and value discounts were present. Bender et
al. (1985) described, but did not formulate, a
mixed integer optimization model to minimize the
sum of purchasing, transportation and inventory
costs over multiple time periods. The model is
constrained by vendor capacity and policy con-
straints. Narasimhan and Stoynoff (1986) for-
mulated a mixed integer optimization model to
determine vendors and order quantities for multi-
ple production plants. The objective in this model
is to minimize the sum of total costs associated
with transportation and inefficient utilization of
vendor capacities. Constraints in the model ad-
dress demand satisfaction, contract requirements
and vendor capacities. Turner (1988) discussed a
mixed integer optimization model used by British
Coal for vendor selection. The objective in this
model is to minimize total contract cost. Con-
straints in this model address demand satisfaction,
vendor capacities, minimum and maximum order
quantities, and geographic region purchasing con-
straints.
Two articles structured the vendor selection
problem in terms of multi-objective mathematical
15
programming techniques. Buffa and Jackson
(1983) formulated the problem as a goal program.
Goals in the model addressed quality, price, and
delivery criteria. Sharma et al. (1989) also for-
mulated the problem as a goal program. Goals in
the model addressed price, quality, lead time, de-
mand and budget considerations. Given the
multi-objective nature of the vendor selection
problem, it appears this is a fruitful area for the
development of additional multi-objective model-
ing approaches.
The third category, statistical approaches, in-
cludes three articles. Hinkle et al. (1969) used
cluster analysis to generate vendor ratings. Ronen
and Trietsch (1988) developed a stochastic EOQ
model as part of a decision support system for
purchasing of items for large projects. Soukup
(1987) modified the linear weighting method by
using probabilities for the criterion weights.
6. Summary and conclusions
The multi-objective nature of vendor selection
has been well documented since Dickson (1966)
ranked the importance placed on 23 criteria by
purchasing agents and managers. In this article,
we have reviewed 74 articles which address vendor
selection criteria in manufacturing and retail en-
vironments. Twenty-two of the 23 criteria ranked
by Dickson were addressed in at least one of the
articles. Forty-seven of the articles discussed more
than one criteria.
Clearly, strategic management decisions effect
the relative importance that the various criteria
have in the vendor selection process. A recent
trend in manufacturing strategy is the implemen-
tation of the Just-In-Time (JIT) philosophy. Thir-
teen of the articles reviewed were specifically re-
lated to JIT manufacturing. All thirteen articles
addressed the criteria of quality and delivery, eight
of them mentioned net price, and six mentioned
production facilities and capacity. These criteria
ranked 1, 2, 5, and 6 in importance in the Dickson
study. It is interesting to note, however, that geo-
graphical location was addressed in seven of these
articles, yet this criteria ranked twentieth on the
Dickson list. Increased concern over the geo-
graphical location of vendors is clearly one major
change brought about by the implementation of
16 C.A. Weber et al. / Vendor selection criteria and methods
JIT strategies. Also, Dickson's third and fourth
ranked criteria, performance history and warran-
ties and claims policies, were not discussed in any
of the JIT oriented articles. These changes in
criteria importance brought about by JIT indicate
that the impact of strategic management decisions
on the vendor selection process appears to be a
fruitful area for future research.
Given the complexity and economic impor-
tance of vendor selection, it is somewhat surpris-
ing how little attention has been paid in the litera-
ture to the application of quantitative methods to
vendor selection. In light of the multi-objective
nature of this problem, it would appear that the
application of multi-objective programming tech-
niques is another fruitful area of research in the
vendor selection process. Such techniques would
allow purchasers to systematically examine the
tradeoffs among the various criteria when select-
ing specific vendors. Such analysis would enable
purchasers to select the vendors who best satisfy
the requirements necessary to implement manage-
ment strategy.
Finally, the analysis of strategic decision-mak-
ing in vendor selection is another important area
for future research. Once solely considered an
operational function within companies, many
companies are now examining the purchasing
function with a strategic orientation (Adamson,
1980; Sharma, 1989; Browning et al., 1983;
Farmer, 1978; Spekman, 1981; Spekman and Hill,
1980). Decisions such as length of contracts, num-
ber of vendors employed and location of vendors
should be analyzed in light of their strategic impli-
cations. Given the inherent multi-objective nature
of vendor selection decisions and the financial
importance of such decisions in highly competitive
environments, it appears that multi-objective pro-
gramming techniques could prove extremely use-
ful in such strategic planning.
Appendix
Factors used in Dickson's study 1
(1) The net price (including discounts and freight
charges) offered by each vendor.
i See D i c k s o n (1966).
(2) The ability of each vendor to meet quality
specifications consistently.
(3) The repair service likely to be given by each
vendor.
(4) The ability of each vendor to meet specified
delivery schedules.
(5) The geographic location of each vendor.
(6) The financial position and credit rating of
each vendor.
(7) The production facilities and capacity of each
vendor.
(8) The amount of past business that has been
done with each vendor.
(9) The technical capability (including research
and development facilities) of each vendor.
(10) The management and organization of each
vendor.
(11) The future purchases each vendor will make
from your firm.
(12) The communication system (with information
on progress data of orders) of each vendor.
(13) The operational controls (including reporting,
quality control, and inventory control sys-
tems) of each vendor.
(14) The position in the industry (including prod-
uct leadership and reputation) of each vendor.
(15) The labor relations record of each vendor.
(16) The attitude of each vendor toward your
organization.
(17) The desire for your business shown by each
vendor.
(18) The warranties and claims policies of each
vendor.
(19) The ability of each vendor to meet your
packaging requirements for his product.
(20) The impression made by each vendor in per-
sonal contacts with you.
(21) The availability of training aids and educa-
tional courses in the use of the product of
each vendor.
(22) Compliance or liklihood of compliance with
your procedures (both bidding and operating)
by each vendor.
(23) The performance history of each vendor.
Acknowledgement
The authors wish to express their gratitude to
the National Association of Purchasing Managers
 C.A. Weber et aL / Vendor selection criteria and methods
for partially funding this research under its Doc-
toral Grant program.
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