St. Petersburg University
Graduate School of Management
Master in Management Program
Technique improvement of supply chain creation: storage
service supplier selection
Master’s Thesis by the 2nd year student:
Tarabanov Pavel
Concentration – International Logistics &
Supply Chain Management
Research adviser:
Nikolay A. Zenkevich, Associate Professor
St. Petersburg
2016
ЗАЯВЛЕНИЕ О САМОСТОЯТЕЛЬНОМ ХАРАКТЕРЕ ВЫПОЛНЕНИЯ
ВЫПУСКНОЙ КВАЛИФИКАЦИОННОЙ РАБОТЫ
Я, Тарабанов Павел Андреевич, студент 2 курса магистратуры направления 080200 «Менеджмент», заявляю, что в моей̆ магистерской̆ диссертации на тему
«Совершенствование методики создания цепочки поставок: выбор поставщика складских
услуг», представленной̆ в ГАК для публичной̆ защиты, не содержится элементов плагиата.
Все прямые заимствования из печатных и электронных источников, а также из защищенных
ранее выпускных квалификационных работ, магистерских, кандидатских и докторских
диссертаций имеют соответствующие ссылки.
Я ознакомлена с действующим в Высшей̆ школе менеджмента СПбГУ регламентом
учебного процесса, согласно которому обнаружение плагиата (прямых заимствований из
других источников без соответствующих ссылок) является основанием для выставления за
магистерскую диссертацию оценки «неудовлетворительно».
_______________________________________________ (Подпись студента)
___26 Мая 2016__________________________________ (Дата)
STATEMENT ABOUT THE INDEPENDENT CHARACTER
OF THE MASTER THESIS
I, Pavel Tarabanov, second year master student, MIM program 080200 «Management», state that
my master thesis on the topic «Technique improvement of supply chain creation: storage service
supplier selection», which was presented for the public defence, does not contain any elements of
plagiarism.
All direct borrowings from printed and electronic sources, as well as from master theses, PhD and
doctorate theses which were defended earlier, have appropriate references.
I am familiar with the study process regulations at Graduate School of Management of SaintPetersburg State University, according to which finding of plagiarism (direct borrowings from
other sources without appropriate references) can be the reason for master thesis to be evaluated
as «unsatisfactory».
________________________________________________(Student’s signature)
___26 May_2016__________________________________ (Date)
2
Аннотация
Автор
Название магистерской диссертации
Факультет
Направление подготовки
Год
Научный руководитель
Описание цели, задач и основных
результатов
Ключевые слова
Павел Тарабанов
Совершенствование методики создания
цепочки поставок: выбор поставщика
складских услуг
Высшая Школа Менеджмента
Менеджмент
2016
Николай Анатольевич Зенкевич, к. ф.-м. н.
Основная цель: Совершенствование
методики выбора поставщика складских
услуг и её применение к кейс-компании
Основные задачи:
На основе обзора литературы
разработать руководства для создания
цепи поставок
Определить метод выбора элемента
цепочки поставок
Специфицировать метод и
усовершенствовать методику выбора
поставщика складских услуг
Реализовать методику выбора
поставщика складских услуг на примере
кейс-компании
Результаты:
Руководства по созданию цепи
поставок были сформулированы на
основе обзора литературы
Обосновано, что метод АПИС является
наиболее подходящим методом для
выбора элемента цепочки поставок
На основе АПИС метода была
разработана методика выбора
поставщика складских услуг
Разработанная методика применена на
выборе поставщика складских услуг
для Компании Saint-Gobain
Цепочка поставок, Элемент Цепочки
Поставок, АПИС Метод, Методика
Выбора Элемента, Поставщик Складских
Услуг, Экспертная Оценка, Принятие
Решений в Условиях Неопределенности.
3
Abstract
Master Student’s name
Pavel Tarabanov
Master Thesis Title
Faculty
Technique improvement of supply chain
creation: storage service supplier selection
Graduate School of Management
Main field of study
Master in Management
Year
2016
Academic Advisor’s name
Nikolay A. Zenkevich, Associate Professor
Description of the goal, tasks and main results Main goal: Technique improvement of
storage service supplier selection and its
application to case company
Research tasks:
On the base of literature review formulate
guidelines for the supply chain creation
Define the method for selecting the
element of the supply chain
Specify the method and improve
technique of storage service supplier
selection
Apply the technique to storage service
supplier selection for the case company
Research results:
Guidelines for the supply chain creation
were formulated on the base of literature
review
It was substantiated that APIS method is
the most suitable for the selecting element
of the supply chain
On the base of APIS method the
technique of storage service supplier
selection was created
The technique was applied to storage
service supplier selection for SaintGobain company.
Keywords
Supply Chain, Supply Chain Element, the
APIS Method, Technique of the Element
Selection, Storage Service Supplier, Expert
Evaluation, Decision-making Under
Uncertainty.
4
Table of Content
List of Figures and Tables ..........................................................................................................................6
Introduction .................................................................................................................................................7
Chapter 1. Supply Chain Creation ............................................................................................................9
1.1.
Supply Chain Definition and Classification ................................................................................9
1.2.
Guidelines for Supply Chain Creation .......................................................................................11
1.3.
Types of Supply Chain Creation Models ...................................................................................16
Chapter 2. Methods of Element’s Selection for Supply Chain..............................................................18
2.1
Elimination Method. ..................................................................................................................18
2.2
Optimization Methods. ..............................................................................................................19
2.3
Probabilistic Method. .................................................................................................................22
Chapter 3. APIS Technique Improvement for Storage Service Supplier’s Selection. ........................24
3.1
Storage Service Definition and Classification ...........................................................................24
3.2
Practice of Storage Service Supplier Selection ..........................................................................31
3.3
Research Methodology ..............................................................................................................35
3.4
APIS Technique Specification for the Storage Service Supplier Selection ...............................37
Chapter 4. Storage Service Supplier Selection for Saint-Gobain Company Case...............................44
4.1
Saint-Gobain Business and Construction Materials Industry ....................................................44
4.2
APIS Technique for Saint-Gobain Company Case ....................................................................46
Conclusions ................................................................................................................................................50
List of References ......................................................................................................................................53
Appendices .................................................................................................................................................59
Appendix 1. Importance of characteristics: questionnaire results ..........................................................59
Appendix 2. Warehouse A characteristics ..............................................................................................60
Appendix 3. Warehouse B characteristics ..............................................................................................61
Appendix 4. Warehouse C characteristics ..............................................................................................62
Appendix 5. Warehouse D characteristics ..............................................................................................63
Appendix 6. Warehouse SnP characteristics...........................................................................................64
Appendix 7. Warehouse YZGLP characteristics ....................................................................................65
Appendix 8. Warehouse SL characteristics ............................................................................................66
Appendix 9. Warehouse RSPT characteristics .......................................................................................67
Appendix 10. Questionnaire for criteria importance assessment ............................................................68
Appendix 11. Output information from APIS Technique for the Storage Service Supplier Selection...76
Appendix 12. Output information from APIS Technique for Saint-Gobain Company Case .................78
Appendix 13. Additional output information from APIS Technique for Saint-Gobain Company Case 80
Appendix 14. Additional output information from APIS Technique for the Storage Service Supplier
Selection..................................................................................................................................................83
5
List of Figures and Tables
Figure 1. 1 Types of channel relationships. ...................................................................................10
Figure 1. 2 Graphical representation of incoterms ........................................................................13
Figure 1. 3 Service providers for supply chain management ........................................................15
Figure 1. 4 Considered Supply Chain ............................................................................................17
Table 1. 1 Relationship strategies and recommendations..............................................................11
Table 2. 1 Characteristics Measurement Scale ..............................................................................20
Table 2. 2 Pairwise Comparison ....................................................................................................21
Table 2. 3 Classification of supplier selection decisions ...............................................................22
Figure 3. 1 Roles of Warehouses in Supply Chain Management ..................................................25
Figure 3. 2 Warehouse Usage for Reduction of Transportation Costs. Unification Process ........27
Figure 3. 3 Warehouse Usage for Reduction of Transportation Costs. Wholesale Split ..............28
Figure 3. 4 Visualization of Aggregated Preference Indices .........................................................40
Figure 3. 5 Characteristics of Storage Service Provider ................................................................43
Figure 3. 6 Characteristics of Storage Service Provider ................................................................60
Figure 3. 7 Characteristics of Storage Service Provider ................................................................61
Figure 3. 8 Characteristics of Storage Service Provider ................................................................62
Figure 3. 9 Characteristics of Storage Service Provider ................................................................63
Table 3. 1 Swiss Realty Group Warehouse Classification ............................................................29
Table 3. 2 Aggregated Preference Estimations .............................................................................39
Table 3. 3 Aggregated Preference Estimations .............................................................................39
Table 3. 4 Aggregated Preference Estimations .............................................................................40
Table 3. 5 Statistics of Alternatives Aggregated Preference Estimations .....................................41
Table 3. 6 Estimated Grades of Characteristics .............................................................................42
Figure 4. 1 Consumers of Construction Market ............................................................................45
Figure 4. 2 Visualization of Aggregated Preference Indices .........................................................47
Figure 4. 3 Characteristics of Storage Service Provider ................................................................64
Figure 4. 4 Characteristics of Storage Service Provider ................................................................65
Figure 4. 5 Characteristics of Storage Service Provider ................................................................66
Figure 4. 6 Characteristics of Storage Service Provider ................................................................67
Table 4. 1 Aggregated Preference Estimations .............................................................................46
Table 4. 2 Aggregated Preference Estimations .............................................................................47
Table 4. 3 Aggregated Preference Estimations .............................................................................47
Table 4. 4 Estimated Grades of Characteristics .............................................................................49
6
Introduction
The existing level of globalization and economic development can not be achieved without
a transport and logistics solutions in the last 10-20 years. During this time, enterprises have
switched from solving relatively simple transport problems to complex logistics solutions,
including lower operating costs, increase the speed and flexibility of supply, as well as measuring
and managing the associated risks. Companies, which are able to find optimal solutions, gain
significant competitive advantage and often gain a leading position in the industry. However,
creation of supply chain is not an easy task due to the large number of factors: lack of sufficient
experience, legal restrictions, conditions of logistics infrastructure and many others. Nowadays in
the process of supply chain creation companies should use certain frameworks and follow concrete
steps, to do it in the most appropriate way.
Such problem as technique improvement of supply chain creation is one of the most
important which companies are facing today because competent decisions in the field of supply
chain can reduce delivery times, production costs and increase competitiveness on the market. In
the literature nowadays exists several methods of selecting an element in supply chain, even
though nothing is written about storage service supplier selection, so a gap was identified
successfully.
The main goal of this research is technique improvement of storage service supplier
selection and its application to case company.
In order to achieve this goal, the following tasks should be performed:
On the base of literature review formulate guidelines for the supply chain creation
Define the method for selecting the element of the supply chain
Specify the method and improve technique of storage service supplier selection
Apply the technique to storage service supplier selection for the case company
The current master thesis has the following structure: introduction, four chapters, each
unfolding one of the objectives stated above, conclusions, references and appendices. In the first
chapter of this paper, theoretical perspective of the problem of supply chain formation is described,
with the main focus on supply chain classification, guidelines for creation of supply chain and
types of supply chain organization models. Chapter 2 devotes to the identification of methods for
selecting an element in supply chain, it describes three methods and more precisely it covers
mathematical optimization methods. Nevertheless, in second chapter is mentioned that no concrete
model exists in storage service supplier selection and consequently discovered models might be
adopted as a selection procedure, since warehouse is assumed to be an element in supply chain. In
the Chapter 3, detailed explanation of warehouses business feature is presented together with
7
existing realities of storage service selection processes. Part 3.3 describes the methodology of
particular work and further on in part 3.4 new method specification on storage service supplier
selection is presented. Finally, in Chapter 4 a practical implementation of new method of storage
service supplier selection is shown. As a case company Saint-Gobain enterprise was chosen,
company’s managers were involved in assessing characteristics and gaining final result of
selecting new warehouse instead of current one.
The following notation system was used for tables, figures and formulas. Every figure,
table or formula used in the current master thesis has a double-digit number, where the first number
matches to the according Chapter number and the second relates to the counting number of a
corresponding figure, table or formula within the chapter.
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Chapter 1. Supply Chain Creation
The main objective of this chapter is to provide the literature review dedicated to the supply
chain management, in particular to the supply chain creation methods.
1.1. Supply Chain Definition and Classification
Before the analysis of methods of the supply chain creation it is necessary to provide a
definition of Supply Chain Management (SCM). Various definitions of SCM have been offered in
several past years. The APICS Dictionary describes the supply chain as: the processes from the
initial raw materials to the ultimate consumption of the finished product linking across supplier
user companies and the functions within and outside a company that enable the value chain to
make products and provide services to the customer (Cox, 1995). Also Supply chain management
(SCM) is described as the management of a network of interconnected businesses involved in the
provision of product and service packages required by the end customers in a supply chain. SCM
span all movement and storage of raw materials, work-in-process, and finished goods from point
of origin to point of consumption (Harland, 1996). Quinn (1997) defines the supply chain as “all
of those activities associated with moving goods from the raw-materials stage through to the end
user. This includes sourcing and procurement, production scheduling, order processing, inventory
management, transportation, warehousing, and customer service. Importantly, it also embodies the
information systems so necessary to monitor all of those activities.” Summing up all definitions
mentioned above it could be concluded that Supply Chain Management indicates – particular
actions which are taking vital part of the value chain and gives additional value to the product.
Mainly these actions are: delivering, manufacturing, warehousing, orders management,
distribution and information systems, needed for managing this processes. Partners in the chain as
suppliers, carriers, third party companies, IT providers, organizations departments are linked by
supply chain management. All the managers of supply chain whether they are from one company
or not are working together to give competitive advantage to their supply chain. It is important to
mention that companies run their businesses in highly competitive environment and thus have to
make their supply chain efficient through the economic point of view.
For the purpose of the following research terms supply chain modelling and supply chain
creation will be closely related to each other. It can be claimed for that supply chain creation plays
a vital role at the start point of the businesses of every company.
There is a significance of supply chain modelling and creation and it lies in two aspects:
firstly, in order to manage the supply chain effectively, it should be properly created, secondly,
processes which are integrated and coordinated needed to be modelled (Vernadat, 1996).
9
According to the definition of supply chain of (Mentzer, 2001) “a set of three or more
entities (organizations or individuals) directly involved in the upstream and downstream flows of
products, services, finances, and/or information from a source to a customer” which is defined as
a most comprehensive and suitable for exact work, three levels of supply chain complexity could
be identified: direct supply chain, extended supply chain and ultimate supply chain, Fig. 1.1. A
company, customer and a supplier, which are involved in the upstream and downstream flows of
products, services, finances and information, form direct supply chain (Fig. 1 a. Direct Supply
Chain). Suppliers of the direct supplier, customers of the direct customer, all involved in the
upstream and downstream flows of products, services, finances and (or) information, form an
extended supply chain (Fig. 1b. Extended Supply Chain). Ultimate supply chain includes all the
organizations involved in all the upstream and downstream flows of products, services, finances
and information from the ultimate supplier to the ultimate customer (Fig. 1.1c Ultimate Supply
Chain).
Figure 1. 1 Types of channel relationships.
(Mentzer, 2001)
A supply chain is a complex inter-firm network with multi-participants and processes, and
every participant is an autonomous or semi-autonomous.
Also (Campbell, 2002) identified three types of relationship strategies between buyer and suppler.
Competitive- relations between both sides are independent and a competitive market forces
determine the price. Mainly enterprises follow competitive strategy, when goods are highly
standardized, when it is not the core product and also exists big variety of alternatives for
supplier to choose.
10
Cooperative-relations between both sides are independent as well. Competitive strategy of
relationships also means that companies cooperate to increase the profit. The cooperation
accompanied by positive transaction cost, usually in form of specific investments.
Companies invest in some area, for example, IT system, and thus reduce time of delivery
and so on. So in other words cooperative strategy require investments in the majority of
situations.
Command-relationships between both parties are dependent, one party has a stronger
position.
Buyer and supplier could implement strategies at the same time; all possible interactions are
shown in the Tabl. 1.1.
Table 1. 1 Relationship strategies and recommendations (Campbell, 2002)
Relationship strategies and recommendations
Strategy of
Strategy of
buyer
seller
Competitive
Competitive
Perfect market
Standardize requirements
Obtain lower costs
Competitive
Command
Sellers’s market
Exchange information with
Form a cartel
other buyers
Legitimize
Encourage competitors
Standardize the product
Put out trends
Competitive bidding
Command
Competitive
Match Title
Recommendation for
Recommendation for seller
buyer
Buyer’s market
Obtain lower costs or
differentiate
Cooperative
Cooperative
Domesticated
Adapt, cooperate, work
Customize, specialize,
market
together
differentiate, innovate
Cooperative
Command
Captive market
Learn from the supplier
Educate the buyer
Command
Cooperative
Subcontract
Educate the supplier
Learn from the buyer
market
1.2. Guidelines for Supply Chain Creation
A number of supply chain creation methods and management methodologies describes the
supply chain from different aspects, such as process, structure and decision mechanism, but none
of them gives the proper and complete answer to the question “How to create supply chain in right
way?” and what is more there is no unique methodology for supply chain creation which might
suit every situation (condition), nevertheless there is one idea that exists in each method, supply
chain creation absolutely depends on the particular condition where it is created. There are plenty
of them, for example: business model of the company, market where it operates, relationship
between customer and supplier and so on. Consequently, each supply chain is created under special
needs and followed by particular guidelines. In the next part of this chapter the existing guidelines
11
will be covered.
1.2.1 Incoterms. First of all, in the process of supply chain creation, manager has to
understand clearly who will be responsible for the goods at the concrete point of delivery. These
relationships are regulated by special rules, also called International Commercial Terms
(Incoterms) commercial terms published by the International Chamber of Commerce (ICC). They
are commonly used in the international commercial transactions or procurement processes. First
they were published in 1936, and currently 2014-year edition is used.
Main incoterms principles:
Distribution between seller and buyer of transport costs for delivery of goods, determine
which costs and for how long the seller and buyer bears.
The moment of transition from the seller to the buyer the risk of damage, loss or accidental
destruction of the goods.
The date of delivery of the goods. Determination of the actual transfer of the goods by the
seller to the buyer or his representative. For example, the transport company.
There are eleven incoterms, Fig. 1.2, seven of them are used for any kind of transport (International
Chamber of Commerce, 2010):
1. EXW – Ex Works - goods are taken by the buyer from the warehouse of the seller, payment
of export duties is obliged to the buyer.
2. FCA – Free Carrier- the goods are delivered to the transport company of the customer,
directly to the departure terminal which is specified in the contract, the seller shall pay
export duties.
3. CPT – Carriage Paid To- goods are delivered to the main carrier of the customer, the main
transportation to the terminal indicated in the contract is paid by the seller, the cost of
insurance pays the buyer, import customs clearance and delivery to the arrival terminal of
the main carrier provides the buyer.
4. CIP – Carriage and Insurance Paid- goods are delivered to the main carrier of the customer,
the main transportation to the terminal indicated in the contract is paid by the seller, the
cost of insurance pays the seller, import customs clearance and delivery to the arrival
terminal of the main carrier provides the buyer
5. DAT – Delivered at Terminal- delivery to the specified in the contract customs terminal,
export payments and transportation, including insurance paid by the seller
6. DAP – Delivered at Place- delivery to the destination specified in the agreement, import
duties and local taxes paid by the buyer
12
7. DDP – Delivered Duty Paid- the goods are delivered to the customer at the destination
specified in the contract, without customs duties and risks.
And 4 are used only for sea and inland waterway transport (International Chamber of Commerce,
2010):
1. FAS – Free Alongside Ship- the goods are delivered to the buyer's ship, the contract
indicates the port of loading, handling and loading burden.
2. FOB – Free on Board- goods are shipped at buyer's ship transhipment paid by the seller.
3. CFR – Cost and Freight- the goods are delivered to the specified in the contract buyer’s
destination port, the main transportation insurance, unloading and transhipment paid by the
buyer
4. CIF – Cost, Insurance & Freight- the goods are delivered to the specified in the contract
buyer’s destination port, the main transportation insurance is paid by seller, unloading and
transhipment paid by the buyer
Figure 1. 2 Graphical representation of incoterms
(Ghana Shipping Guide, 2014)
So for supply chain creation it is important to identify proper incoterm, taking into account
the way of transportation and who will be responsible for the goods at the exact moment and also
pay taxes, insurance and other additional fees.
1.2.2 Party logistics providers. Second important step for supply chain creation, which
manager has to take into consideration, is role of party logistics provider. Since each supply chain
is build around transportation and movement of the goods, it is important to understand the
definition of this term. Transportation is in general a physical movement of people and goods from
one place to another. Transport is one of the major activities within logistics, where a creation of
time and place utility is performed (Coyle, 1996). For choosing right logistics provider, manager
13
has to understand the nature of the goods, time limits for the transportation, final destination and
frequency of the transportation.
The level of different providers differs enormously – by the range of services and a
technological level. According to the adopted in the logistics classification today allocates 5 levels
of logistical service (PL- Party Logistics).
1PL provider - the first level. This provider is usually called the owner of the goods (e.g.
retailer). All operations of receipt and delivery of cargo perform a firm-owner of the cargo itself.
In view of globalization, outsourcing and off-shoring of production, the complexity of distribution
services, 1PL leaves in the past, shifting an increasing amount of work to providers who by
working with a number of shippers have discounts and provide a better service to customers.
2PL provider - a contracting company that provides transport services only on some
specific area of the supply chain. In fact, it's just a transport company, which hired the cargo owner,
and does not want to buy their own cars, railway wagons. In this case, if the 1PL is actively trying
to move away from their own “fleet”, the 2PL, at least in Russia, it is very relevant.
3PL provider – is a specialized company, which obtains the outsourcing of all or most of
the logistics operations. In general, third-party logistics (3PLs) providers introduce efficiency and
effectiveness into a company’s logistics operations, allowing shippers to control costs, and better
utilize their resources, while helping them provide higher customer services (Partridge, 2008). For
the first time this term was used in the early 1970s to describe intermodal marketing companies
(IMC) in contracts for cargo transportation. Prior to this, in such treaties featured only two parties
- shipper and carrier. When the IMC entered - mediators, who took the goods from the shipper and
the carrier - they became intermediaries, “third party” or 3PL contract. Nowadays it applies to any
company that provides logistics services to any size. Basically, it is a range of service, which
include transportation of goods, warehousing, cross docking, maintenance inventory management,
packaging, and freight forwarding. 3PL providers are freight forwarders, courier and other
companies offering contract logistics services and transportation. In other words, 3PL provider is
an independent economic entity that creates value for its client.
4PL provider - a contractor or a joint venture with the cargo owner, acts as an intermediary
between the producer and one or more of its partners. 4PL provider has a high degree of
involvement in the client's business processes; it acts as a single connecting link between the client
(for example, the manufacturer) and the various providers of logistics services, manages all the
processes of the customer supply chain, including courier, freight forwarding and warehousing
services. 4PL provider will manage the 3PL providers and those providing services to its clients.
Many 4PL providers offer even specialized software as a single interface for working with various
companies in the customer's supply chain. In a strategic role, the 4PL serves as the integrator that
14
brings together the needs of the client and the resources available through the 3PL providers, the
IT providers, and the elements of business process management.
5 PL provider - logistics outsourcing company, provides a full range of services through
the use of global information and technology space. A sort of “virtual” logistic partner in whose
hands all the information about the logistics capabilities of market participants and a high-tech ITproduct that allows you to build the most optimal supply chain. A typical example is Amazon.com.
In the Fig. 1.3 all five logistics service providers are shown in the hierarchical way. It could
be seen the tendency of increasing added value and key competences and decreasing resource
intensity.
Figure 1. 3 Service providers for supply chain management
(Kozlak, 2009)
1.2.3 Lean and agile supply chains. The final step which manager has to considerate is
identification of supply chain strategy. Regarding definition of Hugo, Badenhorst-Weiss and Van
Biljon of supply chain strategy, particular definition is invented. Supply chain strategy is a part of
overall strategy, it does not go aside from company’s strategy of marketing and the product
segmentation strategy, has to meet customers needs and take into account competitors supply chain
strategy.
In supply chain management exists two generic strategies, they are called “Lean” and
“Agile”, but also exists a combination of this two terms called “Legile”.
Lean is a supply chain term defined as the enhancement of value by the elimination of
waste’ (Womack & Jones, 2009). Summarizing authors opinion exact definition is created: Lean
supply chain strategy - the concept of supply chain management, which is based on TPS (Toyota
15
Production System), the theory of lean production with the main aim of continuous improvement
through the elimination of any action which is not bringing value-added product. In other words,
it is based on cost reduction.
Lean supply chain includes seven basic principles:
1. Make all looses equal to zero
2. Make the process of acquiring the goods understandable to all members of the
supply chain
3. Assess the possibility of reducing order cycle
4. To achieve uniformity of the materials flow and information flow
5. Increase the speed of turnover and reduce the range of products
6. To make work of all participants in the supply chain coordinated
7. Focus on the total costs in the supply chain
Many firms have implemented this strategy and reached success and advantages over
competitors, but this strategy is low human integrated and also characterized like repetitive
manufacturing.
Agility is a comprehensive response to the business challenges of profiting from rapidly
changing, continually fragmenting global markets for high-quality, high-performance, customerconfigured goods and services (Iskanius, 2009). Agile supply chain strategy is more adaptive to
different demand fluctuations, it can react quickly on changes in customers needs. As El-Tawy &
Gallea, (2011) said agility main objectives are based on business practice, competition, strategic
response, building defences against competitors and innovation. Agile strategy is essential while
company is operating a lot with individual customer orders, because using this strategy customer
would be satisfied faster.
Leagile supply chain strategy is a combination of agile and lean strategies.
This system can be defined as ‘a system in which the advantages of leanness and agility
are combined (Krishnamurthy & Yauch, 2009). In this strategy “Lean” minimizes costs, reduce
operations and makes work of all participants coordinated whereas “Agility” responds to
complexity that might be brought by unexpected changes. Achieving this strategy is complicated
process since the real focus of supply chain is to achieve proper combination of two supply chain
strategies.
1.3. Types of Supply Chain Creation Models
In general, well-done supply chain creation could be one of the major key success factors
for the whole supply chain or particular company in it. Basically, in supply chain management
16
creation some problems appear which might be solved using centralized and decentralized creation
models. These two models are basics in forming supply chain of any company in any sector.
Centralized creation model: in organizations with centralized supply chain, a corporatelevel department provides all decisions and has control over purchasing throughout the
organization. Also centralized organizations have an ability to influence process and technology
decisions, leverage corporate spend and drive standard sourcing, and that lead to economy of scale,
that improve operational efficiency. Centralized model suits enterprises with very similar business
units where most of the requirements are common across business units (Chang, 2000).
In decentralized model, business units and sites are empowered with autonomy and control
over supply, process, and technology decisions. In this structure appears lack of bureaucracy
because it improves satisfaction at the site- and business-unit level. Such model suits multiple
function enterprises that work independently with a high autonomy degree (Chen, 2005).
Plenty of supply chains could be created depending on the structure, purpose, industry and
goods, consequently all of them have different peculiarities. In the current work supply chain of
the following structure would be described, Fig. 1.4.
Supplier of raw
materials
Supplier of raw
materials
Supplier of raw
materials
Warehouse of
producer
Plant
Transport
company
Warehouse of
final goods
Delivery
company
Supplier of raw
materials
Figure 1. 4 Considered Supply Chain
(Author, 2016)
In the current supply chain producer of final goods has plenty suppliers of raw materials,
since it produces different kind of products. All raw materials are stored in the warehouse of
supplier, which is situated near by plant. Next element of the supply chain is a transport company,
which is responsible for moving final goods to the warehouse, situated in a chosen region. Further
step is unloading and storage service that is covered by company who owns warehouse. And
finally, a delivery company is obliged to transport goods to the customer or to the store where
everything could be sold.
17
Chapter 2. Methods of Element’s Selection for Supply Chain
The following section starts with brief literature review of methods used for selecting an
element in supply chain. What is important to mention, nowadays in literature does not exist a
concrete well structured and detailed method of storage service supplier selection. There are only
methods which describes how to select warehouse location. Deciding the location of warehouse is
a highly critical task as it is accompanied by important investments, characterized by a high degree
of irreversibility, and determines the prerequisites for processes such as transportation, handling
and warehousing for several years (Goetschalckx & Fleischmann, 2010). In warehouse selection,
traditionally, the aim is to identify the best location(s) with respect to cost and performance
considerations (Terouhid, Ries & Fard, 2012). Classic distribution location decisions are often
based on quantitative models such as mathematical programming (Harris, Mumford & Naim,
2009; Ramudhin, 2008). Nowadays there is a huge number of precise mathematical models which
can provide solutions in choosing criteria’s and thus calculate the best location of the warehouse.
In current work, location of warehouse would probably be one of the criteria, which has to be
mentioned and assessed in the method of warehouse selection.
Current overview would be based on the methods of the selection of an element in supply
chain. As a primer source of information, various databases were used, where articles were
selected from ABS journals. So concerning to literature review three basic and well-known
principal categories of supplier selection were identified.
2.1 Elimination Method.
This method of supplier selection in supply chain is rather simple then the others and is
very fast to apply. On each step of elimination process, manager eliminates from the list of
suppliers, that one which does not satisfy selection rule (existed characteristics). With a
“conjuctive” rule (Crow, 1980), that supplier which mark with a respect to criteria is lower than
the minimal required is eliminated. Finally, the suppliers which satisfies minimum level of criteria
goes to the final round and manager is choosing the one, which on his personal opinion suits the
best. Also exists, “lexicographic” rule (Wright, 1975), where the most significant criteria to the
manager’s opinion is chosen, and all the suppliers are measured by exact criteria. If one round is
not enough the procedure repeats, but according to the choice of the second important
characteristic (Benyoucef, 2003).
18
2.2 Optimization Methods.
Exact method is based on the mathematical modelling procedures, which are increasing
day to day, the purpose is to optimize an objective function, which can be presented by a single
criterion of number of criteria. In a single case there is one criterion which retains the cost as the
most significant. If that criterion is cost, then all costs are computed, the winner is the supplier
which have is the lowest price (Timmerman, 1986).
Multi-criteria optimization is more difficult to apply and model as well. There are different
mathematical models which helps to solve the problem of choosing the best supplier. There is no
particular need to explain in details all existing modelling programs so the followed logic would
be described further. In a multi-criteria situation each criterion is provided with a weight. That
weights shows how important is the criterion. Weights are usually provided by programing
software of by experts. Finally, the the supplier which has the best mark compared to the total of
the weight criteria wins.
AHP (Analytical Hierarchic Process) approach is the basic and crucial in optimization
methods (Saaty, 1980), the weight of each criterion is determined by a binary comparison method.
Each supplier’s mark is calculated by comparing suppliers with respect to each criterion. Detailed
explanation of current method is provided.
Analytical Hierarchic Process - mathematical tool systemic approach to complex decisionmaking problems. AHP does not prescribe to the decision maker (DM), any “right” decisions and
allows him to interactively find such an option (alternative), which is well in line with his
understanding of the nature of the problem and the requirements for its decision. Analysis of the
problem of decision-making in the AHP begins with the construction of a hierarchical structure,
which includes the goal, criteria, alternatives, and other factors considered influencing the choice.
Every element of the hierarchy can represent different aspects of the problem, and in the account
can be taken tangible and intangible factors, measured by quantitative parameters and qualitative
characteristics, objective data and subjective expert assessments. The next step in the analysis is
to define the priorities that represent the relative importance or preference elements of hierarchical
structure, using paired comparisons procedure. Stretch priorities allow reasonably compare diverse
factors, which is a distinctive feature of the AHP. At the final stage of the analysis the synthesis
of (linear convolution) is carried out on a hierarchy of priorities. As a result, the priorities of
alternatives are calculated relative to the main goal. The best alternative is considered to be the
maximum priority value.
To drive AHP approach managerial judgments have to be used, which are done in pairwise comparison of items on an exact level with respect to the impact on the other level. Pair-wise
19
shows the importance of one item among another. There are plenty of scales which might be used
for quantifying managerial judgments, example is given on the Tabl. 2.1.
Table 2. 1 Characteristics Measurement Scale (Ahmetov, 2001)
The range of the
relative
Factors
importance
1
Equal importance
3
Moderate superiority of one over the other
5
A significant or strong superiority
7
Very strong superiority
9
Perfection
2,4,6,8
The intermediate solution between two adjacent judgments
Inverse the value While comparing one activity to another to get one of the above
of the following numbers (e.g., 3), the comparison of the second type of activity with
numbers
the first obtain reciprocal (e.g., 1/3)
The choice of the scale determined by the following requirements:
The scale should enable to capture the difference in the feelings of the people, when
they carry out the comparison, to distinguish between shades of feelings as much as
possible, that people have.
The examiner should be assured in all the gradations of their judgments at the same
time.
As T. Saaty noted current scale is most appropriate to use and its minor modification is
better than all other scales. It could be added that the current method of paired comparisons and
this scale is extremely well adapted to the peculiarities of human information processing.
In current modification, as in the classic version of the method of paired comparisons, compares
the studied factors together. Moreover, in this method, the factors are compared in pairs with
respect to their effects (“weight”, or “intensity”) for a total for their characterization. Suppose that
a particular problem is necessary to determine the composition of an object. And let A1, A2, ... ,
An, are the main factors determining the composition of an object. Any element in the pairwise
comparison matrix above aij is a positive number, which shows at how many time weight of an
object Ai is bigger than Aj. Then, to determine the structure of the object is filled with a matrix of
pairwise comparisons, Tabl. 2.2.
20
Table 2. 2 Pairwise Comparison (Ahmetov, 2001)
A1
A2
…
An
A1
1
a12
…
a1n
A2
a21
1
…
a2n
…
…
…
…
…
An
an1
an2
…
1
Meanwhile, exists a flexible interactive decision support system (DSS) APIS (APIS –
Aggregated Preference Indices System) which is a software for decision-making under uncertainty
(Hovanov, 1998). DSS APIS is a universal flexible effective tool for multi-criteria decisionmaking under uncertainty with the use of nonnumeric, inexact, and incomplete information.
The structure of Aggregated Preference Indices method (which is realized in DSS APIS)
is a special case of general structure of Aggregated Indices Method and consists in four successive
steps (stages). Such sequence of operations (steps) for constructing of general estimations of
alternatives’ preference is named APIS Project. The steps of a APIS Project are special cases of
above-stated general case, and may be interpreted in a analogous manner: (0) alternatives,
attributes, and attributes values fixation; (1) monotone single preference indices construction; (2)
additive aggregative function selection; (3) weight-coefficients estimation by uncertain
information. The final step of getting of output data of an APIS Project may be marked out: (4)
Calculation of aggregated preference estimations for alternatives (Hovanov, 2005) .
The main advantage of DSS APIS over another well known decision support systems just
consists in its ability to take into account different types of uncertain information on weightcoefficients. Namely, APIS works with the next types of uncertain information (Hovanov, 2005).
Non-numeric information on weights
Non-exact information on weights
NNN-information on weights (non-numeric, non-exact (inexact), and non- complete
(incomplete) information)
indirect uncertain information on weight-coefficients
Non-numeric information on aggregated preference estimations
Non-exact information on aggregated preference estimations
NNN-information on aggregated preference estimations – (non-numeric, non-exact
(inexact), and non- complete (incomplete) information)
There are many different variants to exploit the potentialities of DSS APIS, but the next three
21
typical applications modes may be recommended as use-proven tools for simple decision of
complex practical problems in multilateral decision-making under uncertainty.
Synthesis of aggregated preference estimations
Analysis of aggregated preference estimations
Joint analysis and synthesis of aggregated preference indices
2.3 Probabilistic Method.
Decision in supplier selection problem usually is handled in a relatively routine fashion,
because of a probability of customer’s making an error, however there is a high probability that
relatively inappropriate supplier will be selected, thus it will directly affect customer. Also there
is a high probability that selected supplier is appropriate for the original purchase order, but not
for the modified contract.
With respect to the method called “Payoff Matrix” (Soukup, 1987) a certain number of
future scenarios could be defined. All scenarios consist of marked suppliers with a respect to the
criteria. Then an overall mark of each supplier is computed, and for example a supplier with a
stable mark is chosen, according to the various scenarios Tabl. 2.3.
According to (Soukup, 1987) there are three categories of supplier selection decisions:
All suppliers are similar under all foreseeable circumstances, with small differences in
performance, decision is handled routinely.
All supplier differs significantly; one supplier is superior under all conditions.
Supplier under one circumstances will not be the best under another circumstances. So all
suppliers differ significantly.
Table 2. 3 Classification of supplier selection decisions (Soukup,1987)
Condition
Suppliers are similar
under all conditions
Suppliers
differ
significantly,
one
supplier
superior
under all conditions
Suppliers
differ
significantly,
best
supplier depends on
future conditions.
Probability of error Consequences of error
Decision mode
High
Very small
Routine
Low
High
Routine
High
Unknown: may be very
high
Complex: requires
thorough analysis
22
To sum up, there are three methods of a supplier selections and each of them have their
advantages and disadvantages. Since warehouse is a supplier of storage service in supply chain, in
current work it would be assumed that existing selection methods might be applied. Nevertheless,
storage service supplier selection is extremely tight and complicated procedure, with a lot of
different characteristics and steps included. Thereby Aggregated Preference Indices System
(APIS) method seems to be most appropriate for storage service supplier selection, as it can
provide accurate information with a high level of uncertainty.
23
Chapter 3. APIS Technique Improvement for Storage Service
Supplier’s Selection.
3.1 Storage Service Definition and Classification
Warehouse is one of the most important element of logistics system, although not every
company management spend a lot of effort on the its selection. In current work, both terms storage
service supplier and warehouse assumed to have the similar meaning. At all stages of product flow,
starting from the primary source of raw materials and ending with the end user, there is an objective
need for a specially equipped areas for holding stocks. This explains the presence of a large number
of various types of warehouses. The movement of products through the warehouse increases the
cost of goods, due to the associated costs.
In practice, the warehouse can be an open area, where such feedstock as coal, ore or
vegetables stored in piles and also some modern facilities to ensure the necessary conditions for
storage, for example, frozen foods.
Experts use several different terms for warehouses, often called them as distribution centres
and logistics centres. Distribution centre - is a place of finished products storage on the way to the
end consumers, while logistics centres store a wide range of products and may be at different place
in the supply chain. Warehouse - is any place where the materials are stored, prepared for
consumption and supply during the passage through the supply chain. Warehouse should be
considered as an integrated component of the supply chain, because its characteristics directly
affect the efficiency of the transport and distribution activities, determine inventory management
and others. The main purpose of the warehouse - the concentration of stocks, their storage and
business continuity and rhythmic execution of customer orders. But in addition to storage, many
organizations are using storage as a convenient place to perform other types of work.
Warehouse aims:
Goods secure storage in the required conditions and with minimal damage
Ensuring a high level of customer service
Minimizing costs and high quality of operations
Effective control of the movement of materials
Rapid implementation of warehouse operations
The ability to store the entire range of necessary materials
3.1.1 Role of warehouses in Supply Chains. Warehouses plays vital role in the supply
chain, consequently they have different roles and types of usage Fig. 3.1. Raw material and
24
component warehouses. Often that kind of warehouses holds raw materials and situated close to
production plant. Work in process warehouse. Holds partly assembled products or goods at various
points along production line. Finished goods warehouse. Hold inventory used to balance and
buffer the variation between production schedules and demand. For this purpose, the warehouse
is usually located near the point of manufacture and is often characterized by the flow of full pallets
in and out. A warehouse serving only this function may have demands ranging from monthly to
quarterly replenishment of stock to the next level of distribution. Distribution warehouses and
distribution centres. Consolidate and accumulate goods from different points of producer, or
various firms to combine transfer to common customers. Regularly such warehouse locates central
to the production plant and customer. Warehouse is responding to week or month orders.
Fulfilment warehouse and fulfilment centres. Receive, pick and transfer small orders for individual
customers. Local warehouses. Distributed in a film in order to shorten transportation distances to
permit rapid response to customer demand. Often one piece is picked and at the same day is
transferred to the customer.
Figure 3. 1 Roles of Warehouses in Supply Chain Management
(McGraw Hill, 2002)
Warehouses are characterized by:
1. By size, from small rooms to giant warehouses covering an area of hundreds of thousands
of square meters.
25
2. By a height of storage: some cargo is stored not above human growth, other requires special
devices that can lift and precisely put the goods in a cell at a height of 24 m and more.
3. Design: placed in separate rooms (closed), have only the roof or the roof and one, two or
three walls (semi-closed). Some loads are stored even outdoors in designated areas in the
so-called open warehouses.
4. By necessity: create and maintain a special mode, for example, temperature, humidity.
5. By the number of users: the warehouse is intended for storage of the goods of one enterprise
(individual use), and collective use.
6. According to the degree of mechanization of warehouse operations: non-motorized,
mechanized, complex-mechanized and automated.
7. According to the possibility of delivery and export cargo via rail or water transport: nearstation or port warehouses (located on the territory of the railway station, or port), a railroad
(with decal railway line for supplying and cleaning cars) and in-depth. In order to deliver
the cargo to the in-depth station, you must use the road or other mode of transportation.
8. According to the latitude range of the stored goods: specialized warehouses, mixed or
variable.
All in all, according to CAN Logistics, three main types of warehouses exist. Public
Warehousing: Space is leased month-to-month for a fixed fee per square foot. The advantage of
public warehousing is that there are no long-term commitments. The disadvantage is that this
option is often the most expensive per square foot. Contract Warehousing: Space is leased for a
fixed term, usually six months or longer. The cost per square foot is generally better than for public
warehousing, and the space often comes with features such as racking, forklifts, dedicated docks
and 24-hour security. Private Warehousing: Space is owned and managed by the business. The
main advantage to owning the space is the potential for total control of all aspects of the operation,
including leasing out unused space. The biggest downside to private warehousing is the capital
needed to acquire the space and the cash flow to manage it.
3.1.2 The main functions of a warehouse. Conversion of the products from producer to
the products specialized to the consumer, in accordance with demand. Some producer’s products
are needed to be shaped, packed and etc. The required range of stock contributes to the efficient
implementation of customer orders and the implementation of more frequent deliveries and to the
extent that you want to the client. Warehousing and storage allows to align the timing difference
between the output of production and consumption and makes it possible to carry out continuous
production and supply on the basis of created inventory. Transformation of products. Any storage
processes, at least three kinds of products: input, output and internal. In stock there is the
26
dismantling of some consignments or cargo units and other formation, unpacking of goods,
formation of new cargo units, their packaging and bagging. Reduce the cost of transportation.
Many consumers bought from the stores of the party “less than wagon” or “less than the trailer”,
which greatly increases the costs associated with the delivery of such goods. In order to reduce
transport costs warehouse can perform unitization, i.e. association of small shipments to multiple
customers to a full vehicle load. Another form of association is the case when the customer needed
the product from different suppliers (Fig. 3.2). The opposite operation - split wholesale - also
allows you to reduce cargo transportation costs from one source to multiple customers in a specific
territory (Fig. 3.3). Provision of services. An obvious aspect of this feature is to provide customers
a variety of services, providing the company a high level of customer service, for example:
Preparation of goods for sale (packaging products, container filling, unpacking,
etc.)
Test instrumentation and operation of the equipment, installation
Giving the product presentation, pre-processing (e.g., wood);
Execution of works related to the reduction of commercial risk
Finishing products to the desired condition, labelling, packaging, preparing
products for retailers, so that they can immediately put it on sale
Forwarding services
Figure 3. 2 Warehouse Usage for Reduction of Transportation Costs. Unification Process
(Lankina, 2006)
27
Figure 3. 3 Warehouse Usage for Reduction of Transportation Costs. Wholesale Split
(Lankina, 2006)
3.1.3 Warehouses classification. Warehouses may vary in size, design, degree of
mechanization of warehouse operations for warehousing mind on a functional purpose. Warehouse
may be a link in the chain of movement of products of industrial purpose (raw material stocks,
finished goods, specialized stores, etc.), or be in the area of movement of consumer goods
(warehouses). The most popular is the classification based on the technical parameters of the areas
of infrastructure development, including utilities. Now there are 4 types of warehouses named by
classes «A», «B», «C», «D». Nowadays exists two classifications of warehouses made by Knight
Frank (presented in Tabl. 3.1) and Swiss Realty Group.
Knight Frank - one of the leading companies in the field of real estate consulting.
Headquartered in London, it has more than 370 offices around the world, including Europe, Asia,
America, Russia, Africa, Middle East, etc.
Swiss Realty Group - Swedish investment company engaged in marketing, evaluation,
construction and reconstruction of real estate services in the field of architectural design and
comprehensive market research, advice on rental and sale of office, retail, warehouse, industrial
real estate, land, residential and suburban real estate
28
Table 3. 1 Knight Frank Classification (Knight Frank Official Web-Page)
Classification
Characteristics
A+ A B+ B C D
New one floor warehouse building constructed from light metal panels preferably a rectangular shape
+ +
and the distance between the spans not less than 24 meters.
Single storey warehouse building, preferably rectangular newly built or reconstructed
+ +
Capital Industrial building or insulated hangar
+
Basements, unheated production facilities or hangars
+
A smooth concrete floor with anti-dust coating, with a load of not less than 5 tons / sq. .
+ + +
The high of ceilings is not less than 13 meters, allowing to install multilevel racking (6-7 tiers).
+
The high of ceilings is not less than 10 meters
+
The high of ceilings is not less than 8 meters
+
The high of ceilings is not less than 6 meters
+
The high of ceilings is not less than 4 meters
+ +
Climate control inside the warehouse
+ + +
Central heating
+ +
Availability of a fire alarm system and automatic fire extinguishing system.
+ + + + + *
Availability of of the ventilation system.
+ + + + * *
Availability of security alarm system and CCTV system.
+ + +
* *
Autonomous electric substation and heating module.
+ + +
* *
Availability of a sufficient number of dock shelters with dock Levels (not less than 1 per 500 square
+ + + +
meters).
Availability of parking for huge vehicles
+ + + +
Availability for manoeuvring for huge vehicles
+ + + +
Presence of the office space at the warehouse
+ + + +
Availability of ancillary facilities (toilets, showers, auxiliary facilities, lockers for the staff).
+ + + +
Availability of accounting systems and personnel access control
+ + + +
Fenced and guarded illuminated landscaped area 24/7
+ + + +
Located close to the highway
+ + * *
Professional and experienced management team
+ * * *
Railway connection to the warehouse
* * * *
29
Swiss Realty Group Classification
The first “A” class consists of buildings designed as a storage. It is very important that the
equipment, decoration, proximity automobile road network, redevelopment under any kind of
load, high speed operations with cargoes and reliability of storage must comply with the principles
of modern warehouse logistics. Next classification is carried out in the absence of any parameters
that correspond to the class “A”.
In the second class “A” consists of 20-30 summer reconstructed buildings or premises.
They are similar to the “A” class premises characteristics, but differ in their location.
Class “B +” consist of buildings constructed in the 90s, but did not have a few parameters
which own the class “A”. Due to the fact that, chaotic growth of investments appears in the
construction of warehouses, such facilities are presented in the Russian market in large quantities.
Class “B” consist of buildings constructed in the 70-80's. Such buildings usually require
some repair works and financial investment. It may be necessary to install a modern security alarm,
replace or repair the floors and more.
Fifth class - a class “C”. It includes areas that are not planned and are not used as
warehouses. These include taxi parking stations, vehicle maintenance stations and similar
manufacturing facilities. These buildings require substantial upgrading, technically and in the
construction plans.
Class Six – “C”. These include old buildings built in 30-60 years. This may be the former
premises of grocery distribution centres and vegetable storage. Such buildings do not meet current
operating requirements.
Class “D” are not intended for use in storage order and space. Such buildings from an
economic point of view are easier to demolish than to repair.
Classes “A”, “A+” and “B+” in both classifications are relevant for the current work, since
only that kind of warehouses provide proper service and have standards which are required for the
majority of big and successful productive companies with a well organized supply chain.
30
3.2 Practice of Storage Service Supplier Selection
Mainly there are four general steps in choosing warehouse (Kenneth, 1997).
Learning of the source of supply
Evaluating alternatives
Final selection process
Monitoring decision results
That steps are basic and more detailed information about operations is provided further in
the work. Searching for a third party warehouse and the overall process of contract warehouse
selection is pretty difficult process, where all details are important and everything should be
considered. The provider company should be experienced in the industry of warehouse logistics,
and also should specialize only on that business, and not an add to their main business, for example
shipping. Exactly that kind of provider would help customer to build sustainable and effective
supply chain. Making a bad choice in selecting warehouse provider could badly affect company
supply chain.
Purpose Identification. First of all, top-management of a company and logistic warehouse
manager have to understand whether it is reasonable to rent a third party warehouse. They are
analyzing decision from economic, strategic and social points of view. In some situation it could
be more efficient to transport goods from the nearest warehouse, instead of renting a new one. So
prediction of demand is analyzed as well.
Information Gathering. Once company has decided to rent a contract warehouse and not
to build their own, company is collecting information about potential providers on the market and
creates a scope of work they would like to be performed by warehouse provider. Also company is
getting information answering certain list of questions, it helps them to understand further needs
and details:
What are risks of spoilage, breakage, or theft?
How is the product packaged?
How is the product received?
What are the planned shipping and receiving volumes, fluctuation peaks and
valleys?
How will orders be transmitted to the warehouse?
What is the average order size, average lines per order, units per line?
Are any specialized receiving or shipping services required?
Approximate costs
31
How often will the warehouse receive shipments?
How often will the goods stored be accessed?
Does the business require specialized services such as ultraclean storage, cold
storage, a communications system, the ability to generate documentation?
How long will goods be housed?
Will goods enter once and remain for an extended period (storage), or will there
be many shipments received and sent from the warehouse?
Is this need temporary or permanent?
Does the warehouse need to be close to a transportation corridor such as a rail
line or a port? Or does it make more sense to have a warehouse located near a
primary customer or the company office?
As fuel costs continue to rise, the location of warehousing is not just a matter of
convenience, but is strategic to the profitability of the enterprise
Narrow the Field. Finding a third party warehouse provider takes lot of time. Usually
companies are using “Request for Information query process” (standard business process which
aim is to collect written information about the capabilities of various suppliers) and thus narrow
the field to three or five candidates. Company is looking for experienced providers, which are
handling similar products, it does not have to be exactly similar goods but at least from the same
industry. Infrequently companies are sheering their personal opinion and experience of their
warehouse logistics provider, in other words advertising it. That kinds of recommendations plays
huge role on this market. It is often in Europe, that companies are using consulting service, to solve
problem of selecting third party provider.
Develop a Request for Proposal (RFP). As soon as company clarify steps above they are
creating RFP document, where they clearly describe the scope of work and requirements for both
physical volumes and service. That requirements are driving final decision. Next stage is sending
RFP to the providers, usually it takes from two to four weeks to receive a respond. That process
might be done by direct contact or through the tenders.
Evaluate Responses. Final step is evaluation of potential warehouse providers. Team
responsible for selection process is reviewing the written proposals received from suppliers, then
ideally should hear their oral presentation about warehouse and finally visit appropriate provider.
Important point in this step is that primary level of quality is privileged on the price. Team is
paying a lot of attention to the information system interfaces of warehouse provider. While
evaluating critical importance has several factors:
coverage (national, regional or local)
inventory management and control
32
order acceptance and processing
pick and pack operations
order fulfillment
assembly/packaging/value-added activities
in voicing, credit and collection
presort capabilities
returns handling
manifesting
operational management structure
organization and strategic direction
financial stability
All regular steps of warehouse selection process in details were described above, further
in the work would be covered Russian practices of warehouse selection, to realize what are the
difference.
3.2.1 Russian market practices of selecting warehouses. In the current passage would
be described the existing ways of warehouse selection process in the field of construction
materials, in Russia. All information for that part was covered by personal interview of a logistics
managers in leading Russian companies.
First of all, company get a clear understanding that there is a particular need for a new
warehouse. It could happen because of several reasons: expansion to the new regions, running out
of agreement with current warehouse, spoiled relationships with current provider, current provider
has a bad service (as determined by the results of the visits, audits, inventories of number of
complaints from customers, carriers, employees from related departments) and claims to the exact
storeroom (failure to comply with terms of the contract, the problems with the construction of
legitimacy, lack of space, geographical disadvantages, in accordance with business requirements),
force majeure (flood, caught fire, theft). According to the all details which are needed all process
is organized in 8 steps (Ivanov, 2006).
1. Collection of initial data on goods needed to be transported, the storage volume,
operating performance and standards.
2. Make logistical calculation for the needs of storage capacity, zoning, shelving and
equipment needed.
3. Prepare and send out “technical requirement” (TR) for the selection of a warehouses
for rent.
33
4. Visit potential warehouse to check everything. (What is important that warehouse is
not only inside equipment and storage place, but also outside area, which customer
is probably paying attention on.)
5. Count on each option needs of shelving, technology and materials for handling
equipment.
6. Calculate rent budget expecting specific and absolute rent figures.
7. Select the option on the basis of integrating logistics and economics indicators.
8. Sign a contract of renting a warehouse on a certain amount of time.
Following paragraph is clarifying term “technical requirement” (TR), it is a special
document for choosing warehouse which is based on the basis of current needs and volumes, taking
into account possible changes in business needs and market requirements, production planning,
sales and a product of a storage. Usually TR includes concreate area in square meters, required
floor, internal temperature, central heating, appropriate liquidity, height of ceiling (not less
than…), light, all security conditions, license of firefighters, parking, adopted for trucks, size of a
gate and so on.
In the above paragraphs all steps of choosing warehouse were described in details, but
nothing was mentioned about the service on the warehouse itself. To get deeper into the problem,
an in depth interview with general warehouse logistic manager of company Saint-Gobain was
conducted.
During the interview were discovered that, service operations in the warehouse are
incredibly important and it is long procedure to agree on it with warehouse service provider. Since
suitability of technical requirements of warehouse is not affecting the supply chain so intense as it
could make the service provided. Advanced providers could make client’s supply chain stronger
and more competitive on the market, whereas low quality service would gain additional costs to
the client. It happens very often because of the time delays of loading and unloading trucks, not
efficient location of the goods in the storage place and extremely long service because workers are
not able to find and transport goods rapidly. To solve this problem customer should create an
additional contract, specified on the exact situation and specification. Particular contract should
standardize all the conditions of service provided on the warehouse. It would include fees,
penalties and other responsibilities for both sides, customer and warehouse service provider. In
current work it is supposed that warehouse and storage service provider is the same company.
Existing problem is supposed to be solved in the following parts.
34
3.3 Research Methodology
Current research is designed to achieve several tasks:
to identify relevant characteristics in the process of storage service supplier selection
according to in-depth interview
to assess the importance of different characteristics in the process of storage service
supplier selection according to expert opinion
to identify most important characteristics in the process of storage service provider
selection
to create a method for storage service provider selection
3.3.1 Research design and sample profile. A mixed-model research was used in this
work, which combines quantitative and qualitative data collection techniques and analysis
procedures as well as combining quantitative and qualitative approaches at other phases of the
research. (Saunders, 2009). On the first stage of research and data collection, an in-depth
interviews were conducted with the logistics managers of various companies to identify which
characteristics are relevant for the process of store service supplier selection. Interview covered
narrow group of logistics managers which were found appropriate for current research. On the
second stage, an expert estimation survey was conducted to analyze the importance of factors, in
the process of selecting storage service provider. Questionnaire was send directly to the logistics
managers of different companies of constructing materials industry. The sample included
warehouse logistics managers, who are responsible for choosing warehouses in their enterprises,
the main purpose of survey was to get understanding of the importance of the chosen factors. The
survey lasted for three weeks, during which 12 responses were collected, which is enough for an
expert estimation. Questionnaire was done in English and Russian languages, so foreign
respondents were offered with English version. The questionnaire consisted of nine comparisonbase questions and twenty-seven characteristics. All characteristics were combined by 4 major
groups. The respondents were supposed to express their opinion about comparative importance of
each characteristic using a 5-point Likert scale. 5 points means that the characteristic plays a vital
role in decision making; 3 points means that the characteristics affects the decision making; 1point means that characteristic has no evident role in decision making.
After collecting information from the sample of my interviews, an excel table with the
importance of characteristics were constructed, Appendix 1. On the next stage three representative
warehouses were chosen and assessed with the quantitate information (price characteristic) and
qualitative information (experience on the market) using the scale from 1 to 7 because it provides
more detailed information, where 1 point- means that quality is non acceptable; 3 points- means
35
that quality is low; 5 points- means that quality is good; 7 points- means that level of quality can
be assessed as excellent, Tabl. 3.6. On the final step all collected information was used in the
special decision supporting system called Aggregated Preference Indices System (APIS), which is
used for multi-criteria estimation and decision making under uncertainty. Exact tool was used first
of all because it can measure accurately weights of all criteria used and secondly it can calculate
consolidated indicator with qualitative and quantitative characteristics.
3.3.2 APIS description. APIS is based on a method of aggregates (SMEs), the essence of
which is to “convolution” many evaluations of a complex object into a single assessment, which
is a composite indicator that synthesizes the individual indicators which characterize the quality
(efficiency, reliability, safety, profitability, utility, preference etc.) of all multiparameter objects;
complex technical systems; variants of administrative, organizational and investment decisions;
consumer goods and services; financial and economic projects; individual experts opinions and
so on.
A simplified scheme of the construction of a composite indicator of the object can be
represented as a sequence of the following steps. A certain vector x (x1 ,...,xm ) of baseline
characteristics is formed, each of which is necessary, and all of them together - sufficient for a
complete, comprehensive evaluation of a certain quality of the objects (Hovanov, 2005).
1. A certain vector q
be a function qi
(q1 ,..., q m ) of individual indicators is formed ,which seems to
q(xi ;i) , i
1,...,m of corresponding initial characteristics of the
object under study and evaluate, using m various criteria.
2. The form synthesizing function is selected Q(q) , associated with a vector of
individual indicators q (q1 ,...,q m ) aggregated estimation (combined figure)
Q
Q(q) , which characterizes the object under study at all.
3. The value of the parameter vector is defined w (w1 ,...,wm ) , interpreted as the
weights indicators (“weight”), which defines the degree of influence of individual
indicators q1 ,...,q m on the summary evaluation Q .
Thus, assuming that the researcher has made a selection of baseline characteristics
evaluated object, the method described in the consolidated indicators (SMEs) should pay attention
on the following three stages of formation of the composite index:
1) forming a vector selected indicators q
2) the selection of the synthesis function Q
(q1 ,...,q m ) ;
Q(q)
Q(q; w) ;
3) determination of the weight vector w (w1 ,...,wm ) .
36
The choice of weighting coefficients is the most responsible and difficult stage of
construction of the composite indicator because, usually, the researcher does not know the exact
numerical values of the weights. In such situations, APIS allows to work with non-numerical,
inexact and incomplete weight information.
It should be noted that non-numeric (ordinal) and imprecise (interval) weight information
and summary metrics can be, incomplete, not all the weights or all aggregates are included in the
non-trivial equality and inequality, components of the system, showing the information available
to the researcher (Hovanov, 2005).
The systems implemented with the help of APIS, calculating estimates wi (I ) and their
accuracy si (I ) and reliability p (i, j; I ) of the pairwise dominance are displayed by the so-called
APIS-chart for weighting factors.
For the formation of a specific decision-making process under uncertainty in the APIS user uses
the following types of “input” information:
information about the values x i( j ) , i
1,..., m , j
1,..., k , m baseline characteristics of xi
for the k objects described thus vectors baseline characteristics x ( j )
( x1( j ) ,..., x m( j ) ) , j
information about the choice of increasing and decreasing functions qi
1,..., k
qi ( xi ) and their
parameters ( MIN i , MAX i , Pi ) to generate values for x i( j ) baseline characteristics x1 ,..., xm ,
values q i( j ) , i
1,..., m , j
1,..., k and individual indicators q1 ,..., qm for all objects;
non-numeric (ordinal), inaccurate (interval) and incomplete weight information and
summary metrics.
After the insertion of all the above information APIS is calculating “output” information of the
following types:
Information about values wi (I ) of the weights about their accuracy si (I ) , i
reliability p (i, j; I ) , i, j
1,..., m .
Information of values Q j (I ) of aggregates, their accuracy S j (I ) , j
P( j, l; I ) , j, l
1,..., m and
1,..., k and reliability
1,..., k .
The main advantage of DSS APIS over another well known decision support systems just consists
in its ability to take into account different types of uncertain information on weight-coefficients.
3.4 APIS Technique Specification for the Storage Service Supplier Selection
There is no need in detailed explanation of all steps of warehouse selection, since the main
difference are at the most important, so all preparation steps and data collection steps as well as
final step of contract signing will not be mentioned. Consequently, all focus will be based only at
37
three main steps, which are: Elimination by Technical Requirement, Elimination by Service
Contract and APIS method selection.
As a first important step of elimination, company has to create a Technical Requirement,
based on the goods needed to be stored and send it to the potential storage service providers. Also
it could be done through the tender procedure, since it is more clear and reliable process. As a
result of Technical Requirement elimination, several companies will leave the sample of potential
providers.
On the second stage company has a smaller sample of potential storage service suppliers
and second elimination procedure has to be applied. Elimination by Service Contract is vital for
the identification of most appropriate supplier, since company has to be confident that level of
storage service provider would not be weak and consequently affect the final customer. Contract
has to consist of all requirements which company is expecting to receive from storage service
supplier, also penalties has to be mentioned if service is done in a wrong way.
Finally, when the potential candidates are selected, last round of selection has to be applied.
It consists of APIS software implementation, and measurement of the warehouse characteristics.
A detailed description of the method is presented further.
First of all, company has to identify characteristics which are taken into consideration in
decision-making process of warehouse selection, they are highly dependent on the industry where
company operates. In particular work characteristics were chosen from in-depth interview with
logistics managers. All respondents were from companies which operates in construction materials
industry, thus all selected characteristics are primary adoptable to the construction sector
companies. In the further step, selected characteristics has to be weighted, APIS software can
calculate them, but only with respect to their measures and importance. So, primary company
managers have to rank characteristics by importance, in current work the importance of
characteristics were received with the help of questionnaire, where managers of logistic company
were measuring them. That information would help APIS to calculate aggregated indicator more
accurately. Secondary, company managers have to assess all selected characteristics of candidates
left, qualitative are assessed by 1 to 7 scale and quantitative are measured by their nature, mainly
price per quantity. In particular work, three representative warehouses were chosen, and assessed
by the author. Finally, company managers will receive one aggregated indicator for each storage
service provider and according to it would make a decision. What is more company managers can
choose service provider according to the group of characteristics, APIS is providing this
information as well. In concrete work, there are four groups of characteristics and four groups of
sub-characteristics, which could be seen at Fig. 3.5.
38
For clarification of the APIS software implementation a concrete example is provided,
(Appendix 2, Fig. 3.6,); (Appendix 3, Fig. 3.7,); (Appendix 4, Fig. 3.8,); (Appendix 5, Fig. 3.9)
Four warehouses were chosen and assessed by author, Tabl. 3.6. First of all, four groups of
sub-characteristics were estimated by APIS software and exact aggregated preference indices were
created, Tabl. 3.2.
Table 3. 2 Aggregated Preference Estimations (Appendix 14)
Price of services
Safety
Accessibility
Experience
Warehouse A
0.741
0.540
0.820
0.169
Warehouse B
0.364
0.680
0.284
0.831
Warehouse C
0.609
0.296
0.750
0.388
Warehouse D
0.255
0.281
0.575
0.419
It can be noticed that Warehouse A is leading in terms of service and accessibility, whether
Warehouse B is better in by Safety and Experience characteristics.
As a next step, remaining characteristics of each group were estimated by APIS software,
information for assessment were taken from Tabl. 3.2 and Tabl. 3.6, and certain aggregated
preference indices of each group were created, Tabl. 3.3.
Table 3. 3 Aggregated Preference Estimations (Appendix 14)
Financial
Internal
External
Customer-orientated
Characteristics
Characteristics
Characteristics
Approach
Warehouse A
0.571
0.586
0.775
0.327
Warehouse B
0.127
0.894
0.113
0.824
Warehouse C
0.778
0.091
0.899
0.269
Warehouse D
0.636
0.225
0.477
0.648
From the table above it can be identified that Warehouse B has advantages in internal
characteristics and customer-orientated approach, although Warehouse C is a leader by Financial
Characteristics and External Characteristics. To sum up, there is no clear solution which
warehouse has to be chosen, that’s why the final round of APIS estimation was conducted. Where
all warehouses are compared to each other with their indicators and importance of characteristics,
results are shown in Tabl. 3.4.
39
Table 3. 4 Aggregated Preference Estimations (Appendix 11)
Aggregated Indicator
Rank
Warehouse A
0.665
2
Warehouse B
0.259
4
Warehouse C
0.741
1
Warehouse D
0.592
3
On the APIS-diagram we can see short and long intercepts of a straight line; an abscissa of
a midpoint of a short interval shows an average estimation of a correspondent object, while the
interval’s length is equal to the doubled standard deviation of the constructed aggregated
preference index; an abscissa of a long interval’s right end shows the reliability for dominance
relation between neighbouring aggregated estimations. Finally, Aggregated Preference Indices
System, shows that Warehouse C has to be chosen as a most preferable storage service supplier.
Fig. 3.4.
Figure 3. 4 Visualization of Aggregated Preference Indices
(Appendix 11)
Tabl. 3.4 shows that Warehouse C has the highest aggregated preference index which
equals to 0.741, on the second place is Warehouse A with indicator 0.665, which is relatively close
Warehouse C. Due to information on Fig. 3.4, Warehouse C has wide standard deviation (0,1046),
in comparison with Warehouse A (0,0338), Tabl. 3.5.
40
Table 3.5 Statistics of Alternatives Aggregated Preference Estimations (Appendix 11)
In conclusion, it can be stated that, in respect with standard deviation and aggregated
preference index, Warehouse С still has to be selected, because standard deviation of Warehouse
A is covered by deviation of Warehouse A, consequently both warehouses have the same risk.
41
Table 3. 6 Estimated Grades of Characteristics (Author, 2016)
Financial Characteristics
Price of rented area
Financial warranty of warehouse
Price of services:
Storage price
Loading/Unloading price
Screening of defective items
Internal Characteristics
Warehouse service machines
Area and Height of storehouse
Warehouse IT system
Safety:
Access control system
Security level
Firefighting level
CCTV
External Characteristics
Warehouse location
Accessibility:
Ease of access to the warehouse
Distance to the nearest highways
Distance from the nearest
airports, train stations, ports
Parking for trucks and other huge
vehicles
Customer-oriented approach
Warehouse potential
Responsiveness to the client’s
requirements
Client's reviews
Experience:
With the same type of product
Experience on the market
Provider 1
1 m sq. 430
Rur
3
Provider 2
1 m sq. 550
Rur
6
Provider 3
1 m sq. 350
Rur
7
Provider 4
1 m sq. 290
Rur
3
9.90 Rur per
Pal/place per
day
110 Rur per
Pal
5 Rur per
product
13 Rur
Pal/place per
day
75 Rur per
Pal
6 Rur per
product
11 Rur
Pal/place per
day
90 Rur per
Pal
4 Rur per
product
12 Rur
Pal/place per
day
120 Rur per
Pal
5 Rur per
product
3
6
5
5
7
2
4
3
7
7
4
4
3
3
5
7
7
7
5
6
5
4
5
5
3
5
6
4
3
5
7
4
7
6
7
4
7
6
4
7
7
5
7
5
7
3
5
4
3
2
7
2
5
6
4
6
6
2
7
2
5
3
3
7
2
5
6
4
42
Warehouse
Internal
characteristics
Financial characteristics
Price of rented area
Financial warranty
of warehouse
Price for services
Storage price
Screening of defective items
Warehouse service
machines
External Characteristics
Accessibility
Area and height of
storehouse
Warehouse IT systems
Distance from the
nearest airports, train
stations, ports
Warehouse
potential
Experience
Responsiveness
to the client’s
requirements
Client’s reviews
Safety
Loading/Unloading
price
Access control system
Security level
Distance to the
nearest highways
Warehouse location
Customer-oriented approach
Firefighting level
Ease of access
to the
warehouse
With the same type of
products
Experience on
the market
Parking for trucks and
other huge vehicles
CCTV
Figure 3. 5 Characteristics of Storage Service Provider
(Author, 2016)
43
Chapter 4. Storage Service Supplier Selection for Saint-Gobain
Company Case
4.1 Saint-Gobain Business and Construction Materials Industry
The case and subject of current research is Saint-Gobain company, the world leader in the
habitat and construction markets, designs, manufactures and distributes building and highperformance materials, providing innovative solutions to the challenges of growth, energy
efficiency and environmental protection. Saint-Gobain exists on the international market for more
than 350 years.
Since there are lack or researches about storage service supplier selection worldwide and
none in the industry of construction materials the case of Saint-Gobain was selected. Secondly,
Saint-Gobain was chosen because of international perspective, company is presented in 66
countries. All in all, Company owns important roles in the sector of constructing materials, has 7
plants in Moscow and other regions and is continuously expanding to the Russian market.
The company “Saint-Gobain” was founded in 1665 in France by order of Louis XIV as a
royal mirror manufactory. “Saint-Gobain” - a world leader in the manufacture and sale of
construction products. Nowadays Company headquarter is in Paris, France. President and CEO is
Pierre-André de Chalendar. Turnover of “Saint-Gobain” by the results in 2014 exceeded 52 billion
euros. This concern owns 1,400 companies, and currently around two hundred thousand
employees work for Saint-Gobain worldwide. (Saint-Gobain Company website, 2016).
There are three angels of Saint-Gobain Businesses:
1. Innovative Materials. Comprising the Flat Glass and High-Performance Materials
Activities, the Innovative Materials Sector offers a unique portfolio of materials
and processes for the habitat and industrial markets.
2. Construction products. The Construction Products Sector offers interior and
exterior products to enhance the comfort of buildings and homes, including plaster,
acoustic and thermal insulation, wall facings, roofing and pipe systems.
3. Building distribution. The Building Distribution Sector brings to the Group a
thorough understanding of customers’ needs, whether they are building
professionals, private project owners or large companies. It serves the new building,
renovation and home improvement markets.
In Russia Saint-Gobain has several offices, they are located in Saint-Petersburg, Moscow,
Nizhniy Novgorod, Kazan, Samara, Ekaterinburg, Rostov on Don and Novosibirsk. Company has
7 own warehouse located near the plants. Also company has 4 outsourced warehouses located in,
44
Novosibirsk, Egorievsk and Saint-Petersburg. Saint-Gobain representation in Russia is located in
Business Center PREO 8, 19th floor, 8 Preobrazhenskaya ploschad, Moscow, 107061, Russia. The
key clients of the Company are from (D.I.Y) “Do It Yourself” industry, especially stores several
stores: Lerya Merlen, Petrovich, OBI and etc.
In the Russian market of construction materials operates huge number of participants, thus
a variety of products is enormous, consequently in such circumstances a high competition exists.
On the Fig. 4.1, three consumer groups of construction service market are shown, the biggest part
takes construction companies which have 60%, then repair companies and private consumers with
15% and 25% respectively. Saint-Gobain is operating with each of the group, the major part in
private consumers’ sector is Do It Yourself (D.I.Y.) shops, which need it be supplied more rapidly
in comparison with other groups of consumers.
construction companies
15%
25%
repair service companies
60%
private consumers
Figure 4. 1 Market Share of Construction Market
(KIT estimation, 2015)
4.1.1 Existing problem in the particular industry. Warehouse - a key part of the
business. This is one of the most important component of the business process for any production
company, regardless of whether it uses its own warehouse, whether it leases or uses the services
of specialized operators. It is obvious that without effective warehouse management business
activity is doomed to failure. Meanwhile, warehouse is a key element in company’s supply chain,
which provides major part in sustainability of supply chain in general. Construction materials
industry can not operate without well designed warehouse, thus warehouse selection process is
critically important decision making process, which should be assessed from all perspectives and
takes into consideration all the parameters and characteristics, which will continue to contribute
to the effective storage of goods. On the regular basis companies are selecting warehouse,
assessing as a primary importance only price characteristics, consequently falling into trap of
cheap storehouse but non efficient services. This behaviour, quite often, have major impact on the
supply chain and influence customer service. As an example, would be taken construction material
45
industry and exactly the situation of loading truck, when warehouse service company is late to
serve truck with goods, then truck is late to deliver goods for distributor, finally company has
additional costs, that exists but could be easily reduced by creating more detailed contract, which
includes penalties and also it means that company made a wrong choice of storage service
provider. However, there is a practical solution which is presented in part 4.3 how to choose
storage service provider in an accurate way, lower the risk of fail and avoid spending extra money.
4.2 APIS Technique for Saint-Gobain Company Case
All information which would be provided in the part 4.3 is confidential, thus storage service
providers names would be changed from the original to the non-existing one.
Saint-Gobain company is not satisfied with its current storage service provider, “Provider
X”, because of several reasons. Company currently is thinking to change warehouse and is
searching for a new one. At the moment, potential candidates have passed through Technical
Requirement stage of selection and Elimination by Service Contract, so for the final stage have
left only four potential suppliers. Information by four potential suppliers is presented in the Tabl.
4.2. All scores were provided by logistics manager of Saint-Gobain company. Further APIS
software implementation is shown, (Appendix 6, Fig. 4.3); (Appendix 7, Fig. 4.4,); (Appendix 8,
Fig. 4.5); (Appendix 9, Fig. 4.6).
First of all, four groups of sub-characteristics were estimated by APIS software and exact
aggregated preference indices were created, Tabl. 4.1.
Table 4. 1 Aggregated Preference Estimations (Appendix 13)
Price of services
Safety
Accessibility
Experience
SnP
0.723
0.320
0.216
0.517
YZGLP
0.218
0.929
0.432
0.258
SL
0.868
0.320
0.682
0.955
RSPT
0.732
0.500
0.824
0.225
It can be noticed that provider SL is leading in terms of service and experience, whether
provider YZGLP is better in by Safety and provider RSPT is leading in accessibility characteristic.
As a next step, remaining characteristics of each group were estimated by APIS software,
information for assessment were taken from Tabl. 4.1 and Tabl. 4.4, and certain aggregated
preference indices of each group were created, Tabl. 4.2.
46
Table 4. 2 Aggregated Preference Estimations (Appendix 13)
Financial
Internal
External
Customer-oriented
Characteristics
Characteristics
Characteristics
Approach
SnP
0.549
0.046
0.225
0.527
YZGLP
0.086
0.988
0.275
0.707
SL
0.762
0.036
0.744
0.450
RSPT
0.899
0.372
0.925
0.550
From the table above it can be identified that provider YZGLP has advantages in internal
characteristics and customer-oriented approach, although provider RSPT is a leader by Financial
Characteristics and External Characteristics. To sum up, there is no clear solution which provider
has to be chosen, that’s why the final round of APIS estimation was conducted. Where all providers
are compared to each other with their indicators and importance of characteristics, results are
shown in Tabl. 4.3.
Table 4. 3 Aggregated Preference Estimations (Appendix 12)
Aggregated Indicator
Rank
SnP
0.330
3
YZGLP
0.273
4
SL
0.599
2
RSPT
0.835
1
Figure 4. 2 Visualization of Aggregated Preference Indices
(Appendix 12)
On the APIS-diagram we can see short and long intercepts of a straight line; an abscissa of
a midpoint of a short interval shows an average estimation of a correspondent object, while the
interval’s length is equal to the doubled standard deviation of the constructed aggregated
47
preference index; an abscissa of a long interval’s right end shows the reliability for dominance
relation between neighbouring aggregated estimations. Finally, in respect with standard deviation
and aggregated preference index, provider RSPT has to selected, Fig. 4.2.
48
Table 4. 4 Estimated Grades of Characteristics (Author, 2016)
Financial Characteristics
Price of rented area
Financial warranty of warehouse
Price of services:
Storage price (1,51-1,88m)
Loading/Unloading price (height
less than 1,85; weight less than
1000 kg)
Screening of defective items
Internal Characteristics
Warehouse service machines
Area and Height of storehouse
Warehouse IT system
Safety:
Access control system
Security level
Firefighting level
CCTV
External Characteristics
Warehouse location
Accessibility:
Ease of access to the warehouse
Distance to the nearest highways
Distance from the nearest
airports, train stations, ports
Parking for trucks and other huge
vehicles
Customer-oriented approach
Warehouse potential
Responsiveness to the client’s
requirements
Client's reviews
Experience:
With the same type of product
Experience on the market
SnP
1 m sq. 400
rur
5
YZGLP
1 m sq. 510
rur
3
SL
1 m sq. 350
rur
5
RSPT
1 m sq. 300
rur
4
9.60 rur per
Pal/place per
day
12.80 rur
Pal/place per
day
9.83 rur
Pal/place per
day
10.60 rur
Pal/place per
day
90 rur per Pal
79.90 rur
per Pal
70.83 rur per
Pal
74.59 rur per
Pal
4.80 rur per
product
5 rur per
product
6 rur per
product
5 rur per
product
5
5
3
7
7
5
4
5
6
5
6
5
4
6
6
4
4
5
7
7
4
6
6
4
3
2
7
6
6
3
5
5
3
5
5
4
4
7
5
7
7
4
3
3
5
7
5
5
2
4
5
2
6
7
4
7
4
3
5
2
1
6
1
5
5
7
6
4
49
Conclusions
This is the final section of the master thesis, which formulates the main conclusions and
results, provides an overview of current work, shows managerial implications and scientific
relevance of the topic, states limitations and in conclusion describes future research.
The goal set for the present master thesis was technique improvement of storage service
supplier selection and its application to case company. This goal was successfully achieved by
introducing APIS technique of selecting elements in supply chains and current method was tested
on Saint-Gobain, construction leader company. Results of the thesis can be summarized as
follows:
1. Guidelines for the supply chain creation were formulated on the base of literature
review. (Incoterms, Party Logistics Providers, Lean vs. Agile Supply Chains)
2. It was substantiated that APIS method is the most suitable for the selecting element
of the supply chain. (As it can provide accurate information with a high level of
uncertainty
3. On the base of APIS method the technique of storage service supplier selection was
created. Company managers in storage service supplier selection process should
follow six steps, which are:
Purpose identification
Information gathering
Narrow the field
Elimination by technical requirement
Elimination by service contract
APIS method implementation
4. The technique was applied to storage service supplier selection for Saint-Gobain
company.
After listing results of the work, there is a need in short summary how mentioned
achievements can be used in business and what is the theoretical contribution of completed thesis,
therefore following paragraph would be related to the two important questions, which are
mentioned above.
Following (listed above) steps managers lower the risk of choosing an inappropriate
storage service supplier and in addition can assess all factors in decision making with an
appropriate to the criteria importance. It is important to mention, that current work is extremely
significant from the theoretical and practical points of view. From the management theory side,
50
particular work will fill the gap of non existence framework of storage service provider selection,
and the technique of supply chain creation will be improved as well. From the business and
practical side, logistics managers of different companies by using new method of storage service
provider could achieve several benefits:
Avoid paying to broker (consultancy) companies for warehouse selection service
Take into consideration not only price but also other factors which might have
different weights according to the industry
Minimize expenses which are correlated with the weak service in the warehouse
Nevertheless, in current master thesis under close consideration was taken problem of
storage service supplier selection, in the title of the work it is stated “technique improvement of
supply chain creation”. Thus it is important to say that APIS technique can be used for the selection
of any element in supply chain and to make it right exact steps have to be followed:
Identification of the element
Identification of characteristics which are taken into consideration in decisionmaking process of the element selection
Measurement the importance of selected characteristic
Assessment of selected characteristics
APIS software implementation
Nevertheless, some limitations to current thesis have to be adopted, since they are primarily
related to the applicability of the developed technique in various conditions. First of all, such
limitation as equality of terms warehouse and storage service provider has to be introduced, even
though in real business it used to happen that mentioned terms are presented by different
companies not connected with each other. So in current work, the ideal situation when warehouse
company owner is also a service provider is assumed to be. It was decided by the author since it
makes all the steps of storage service provider selection more standardized and appropriate to
adopt. Secondly, current method was developed for selecting only an outsourced
warehouse(element), since company is following absolutely different steps in constructing its own.
What is more, in current work, in details were explained warehouses of construction industry, but
APIS technique can be easily used with other various industries.
As a future research, it would be interesting to study the affordability of new storage service
supplier selection technique, on the example of other various industries, as construction material
industry is highly standardized in the conditions needed for goods and fluctuations of the
requirements are really low. Hence, such industry as pharmacy, chemicals or natural products
pretend to be extremely interesting in the application of new method. Another direction of the
51
research, could be a practical analysis of results of modified model after a certain period of time.
It would show the direct impact on the company and consequently could be measured.
52
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Appendices
Appendix 1. Importance of characteristics: questionnaire results
59
Appendix 2. Warehouse A characteristics
0.586 Internal
characteristics
0.571
Financial characteristics
Price of rented area
430 rur
Financial warranty
of warehouse
3
Price for services
0.741
Storage price
9.90 rur
Screening of defective items
5 rur
0.665 Warehouse А
Warehouse service
machines
3
0.775 External
Characteristics
Warehouse IT systems
5
Distance to the
nearest highways
6
0.540 Safety
Loading/Unloading price
110 rur
Access control system
3
Security level
3
3
0.820
Accessibility
Area and height of
storehouse
6
Firefighting level
5
Ease of access
to the
warehouse
7
Warehouse location
3
Distance from the
nearest airports, train
stations, ports
7
Parking for trucks and
other huge vehicles
7
0.327 Customer-oriented
approach
Warehouse
potential
3
0.169 Experience
With the same type of
products
5
Responsiveness
to the client’s
requirements
5
Client’s reviews
6
Experience on
the market
3
CCTV
7
Figure 3. 6 Characteristics of Storage Service Provider
(Author,2016)
60
Appendix 3. Warehouse B characteristics
0.894 Internal
characteristics
0.127
Financial characteristics
Price of rented area
550 rur
Financial warranty
of warehouse
6
Price for services
0.364
Storage price
13 rur
Screening of defective items
6 rur
0.259 Warehouse B
Warehouse service
machines
5
0.113 External
Characteristics
0.284
Accessibility
Area and height of
storehouse
7
Warehouse IT systems
2
Distance to the
nearest highways
4
0.680 Safety
Loading/Unloading
price
75 rur
Access control system
7
Security level
7
Firefighting level
5
Ease of access
to the
warehouse
7
Warehouse location
5
Distance from the
nearest airports, train
stations, ports
5
Parking for trucks and
other huge vehicles
3
0.824 Customer-oriented
approach
Warehouse
potential
2
0.831 Experience
With the same type of
products
3
Responsiveness
to the client’s
requirements
6
Client’s reviews
2
Experience on
the market
7
CCTV
6
Figure 3. 7 Characteristics of Storage Service Provider
(Author,2016)
61
Appendix 4. Warehouse C characteristics
0.778
Financial characteristics
Price of rented area
350 rur
0.091 Internal
characteristics
Financial warranty
of warehouse
7
Price for services
0.609
Storage price
11 rur
Screening of defective items
4 rur
0.741 Warehouse C
Warehouse service
machines
4
0.899 External
Characteristics
0.750
Accessibility
Area and height of
storehouse
3
Warehouse IT systems
7
Distance to the
nearest highways
6
0.296 Safety
Loading/Unloading price
90 rur
Access control system
5
Security level
4
Firefighting level
5
Ease of access
to the
warehouse
7
Warehouse location
7
Distance from the
nearest airports, train
stations, ports
7
Parking for trucks and
other huge vehicles
5
0.269 Customer-oriented
approach
Warehouse
potential
7
0.388 Experience
With the same type of
products
2
Responsiveness to
the client’s
requirements
4
Client’s reviews
7
Experience on
the market
5
CCTV
5
Figure 3. 8 Characteristics of Storage Service Provider
(Author,2016)
62
0.592 Warehouse D
Appendix 5. Warehouse D characteristics
0.636
Financial characteristics
Price of rented area
290 rur
0.225 Internal
characteristics
Financial warranty
of warehouse
3
Price for services
0.255
Storage price
12 rur
Screening of defective items
5 rur
Warehouse service
machines
7
0.477 External
Characteristics
0.575
Accessibility
Area and height of
storehouse
4
Warehouse IT systems
4
Distance to the
nearest highways
7
0.281 Safety
Loading/Unloading price
120 rur
Access control system
3
Security level
5
Firefighting level
6
Ease of access
to the
warehouse
4
Warehouse location
4
Distance from the
nearest airports, train
stations, ports
5
Parking for trucks and
other huge vehicles
4
0.648 Customer-oriented
approach
Warehouse
potential
2
0.419 Experience
With the same type of
products
6
Responsiveness to
the client’s
requirements
6
Client’s reviews
2
Experience on
the market
4
CCTV
4
Figure 3. 9 Characteristics of Storage Service Provider
(Author,2016)
63
Appendix 6. Warehouse SnP characteristics
0.549 Financial
characteristics
Price of rented
area
400 rur
0.046 Internal
characteristics
Warehouse
service machines
5
Financial warranty
of warehouse
5
0.723 Price for
services
Storage price
9.60 rur
Screening of defective items
4.80 rur
0.330 SnP
Area and height
of storehouse
5
Warehouse IT systems
3
0.320 Safety
Loading/Unloading
price
90 rur
Access control system
4
Security level
6
0.225 External
Characteristics
Firefighting level
6
0.216
Accessibility
Distance to the
nearest
highways
5
Ease of access
to the
warehouse
3
Warehouse
location
6
Distance from the
nearest airports,
train stations,
ports
7
Parking for trucks and
other huge vehicles
5
0.527 Customer-oriented
approach
Warehouse
potential
2
0.517
Experience
With the same type
of products
1
Responsiveness
to the client’s
requirements
6
Client’s reviews
4
Experience
on the market
6
CCTV
4
Figure 4. 3 Characteristics of Storage Service Provider
(Author, 2016)
64
Appendix 7. Warehouse YZGLP characteristics
0.273 YZGLP
0.086 Financial
characteristics
Price of rented
area
510 rur
0.988 Internal
characteristics
Warehouse
service machines
7
Financial warranty
of warehouse
3
0.218 Price for
services
Storage price
12.80 rur
Screening of defective items
5 rur
Area and height
of storehouse
7
Warehouse IT systems
5
0.929 Safety
Loading/Unloading
price
79.90 rur
Access control system
4
Security level
5
0.275 External
Characteristics
Firefighting level
7
0.432
Accessibility
Distance to the
nearest
highways
4
Ease of access
to the
warehouse
5
Warehouse location
3
Distance from the
nearest airports,
train stations,
ports
4
Parking for trucks and
other huge vehicles
7
0.707 Customer-oriented
approach
Warehouse
potential
4
0.258
Experience
With the same type
of products
1
Responsiveness
to the client’s
requirements
7
Client’s reviews
3
Experience
on the market
5
CCTV
7
Figure 4. 4 Characteristics of Storage Service Provider
(Author, 2016)
65
Appendix 8. Warehouse SL characteristics
0.599 SL
0.762 Financial
characteristics
Price of rented
area
350 rur
0.036 Internal
characteristics
Warehouse
service machines
4
Financial warranty
of warehouse
5
0.868 Price for
services
Storage price
9.83 rur
Screening of defective items
6 rur
Area and height
of storehouse
5
Warehouse IT systems
6
0.320 Safety
Loading/Unloading
price
70.83 rur
Access control system
4
Security level
6
0.744 External
Characteristics
Firefighting level
6
0.682
Accessibility
Distance to the
nearest
highways
7
Ease of access
to the
warehouse
4
Warehouse location
5
Distance from the
nearest airports,
train stations,
ports
3
Parking for trucks and
other huge vehicles
5
0.450 Customer-oriented
approach
Warehouse
potential
5
0.955
Experience
With the same type
of products
5
Responsiveness
to the client’s
requirements
4
Client’s reviews
5
Experience
on the market
7
CCTV
4
Figure 4. 5 Characteristics of Storage Service Provider
(Author, 2016)
66
Appendix 9. Warehouse RSPT characteristics
0.835 RSPT
0.899 Financial
characteristics
Price of rented
area
300 rur
0.372 Internal
characteristics
Warehouse
service machines
5
Financial warranty
of warehouse
4
0.732 Price for
services
Storage price
10.60 rur
Screening of defective items
5 rur
Area and height
of storehouse
6
Warehouse IT systems
5
0.500 Safety
Loading/Unloading
price
74.59 rur
Access control system
3
Security level
2
0.925 External
Characteristics
Firefighting level
7
0.824
Accessibility
Distance to the
nearest
highways
7
Ease of access
to the
warehouse
5
Warehouse location
5
Distance from the
nearest airports,
train stations,
ports
3
Parking for trucks and
other huge vehicles
5
0.550 Customer-oriented
approach
Warehouse
potential
2
0.225
Experience
With the same type
of products
6
Responsiveness
to the client’s
requirements
7
Client’s reviews
2
Experience
on the market
4
CCTV
6
Figure 4. 6 Characteristics of Storage Service Provider
(Author, 2016)
67
Appendix 10. Questionnaire for
criteria importance assessment
Questionnaire for warehouse logistics managers.
Dear respondent!
This survey is conducted as part of dissertation project carried out by the Graduate School of
Management.
The data will be processed by the organizer of the study to develop the method of choice of
supplier and warehouse storage services.
The organizer of the study ensures complete confidentiality of the information, the results of the
survey will be used only in aggregated form.
The organizer of the study asks you to read instructions carefully and follow them,
otherwise your answer can not be accepted for processing because of incorrect or
incomplete filling.
Initially, you will see a diagram with the supplier service selection criteria.
68
Warehouse
Internal
characteristics
Financial characteristics
Price of rented area
Financial warranty
of warehouse
Price for services
Storage price
Screening of defective items
Warehouse service
machines
Area and height of
storehouse
Warehouse IT systems
Loading/Unloading
price
Access control system
Security level
External Characteristics
Accessibility
Distance to the
nearest highways
Warehouse location
Distance from the
nearest airports, train
stations, ports
Customer-oriented approach
Warehouse
potential
Experience
Responsiveness
to the client’s
requirements
Client’s reviews
Safety
Firefighting level
Ease of access
to the
warehouse
With the same type of
products
Experience on
the market
Parking for trucks and
other huge vehicles
CCTV
69
Answer, please, following questions:
Each Warehouse is presented by a certain number of characteristics:
Financial Characteristics
Internal Characteristics
External Characteristics
Customer-orientated approach
1. Spread 100 points between four characteristics above according to their importance.
Warehouse А
Financial
Characteristics
Internal
Characteristics
External
Characteristics
Group of Characteristics
Financial Characteristics
Internal Characteristics
External Characteristics
Customer-oriented approach
Customer-oriented
approach
Scores
70
2. Please rate by a 5-point scale the degree of influence of each of the Financial
Characteristics on the warehouse selection.
Warehouse A
Financial Characteristics
Price of rented area
Financial warranty of
warehouse
Price for services
Loading/Unloading Price
Storage Price
Screening of defective items
Financial Characteristics
1
2
3
4
5
Price of rented area
Financial warranty of warehouse
Price for services
Further, please, rate by 5-point scale the degree of importance of the element represented by the
characteristics Price for services
Price for Service
1
2
3
4
5
Storage Price
Screening of Defective Items
Loading/Unloading Price
71
3. Please rate by a 5-point scale the degree of influence of each of the Internal
Characteristics on the warehouse selection
Warehouse A
Internal Characteristics
Area and height of
storehouse
Warehouse service
machines
Warehouse IT systems
Safety
Firefighting level
Access control system
Security level
CCTV
Internal Characteristics
1
2
Warehouse service machines
Warehouse IT system
Safety
Area and height of storage
3
4
5
Further, please, rate by 5-point scale the degree of importance of the element represented by the
characteristics Safety
Safety
1
2
3
4
5
Access control system
Security level
CCTV
Firefighting system
72
4. Please rate by a 5-point scale the degree of influence of each of the External
Characteristics on the warehouse selection
Warehouse A
External Characteristics
Accessibility
Warehouse location
Parking for trucks and other huge
vehicles
Distance to the
nearest highways
Ease of access to the
warehouse
Distance from the nearest airports, train
stations, ports
External Characteristics
1
2
3
4
5
Accessibility
Warehouse location
Further, please, rate by 5-point scale the degree of importance of the element represented by the
characteristics Accessibility
Accessibility
1
2
3
4
5
Distance to the nearest highways
Ease of access to the warehouse
Parking for trucks and other huge
vehicles
Distance from the nearest airports, train
stations, ports
73
5. Please rate by a 5-point scale the degree of influence of each of the Client-oriented
approach on the warehouse selection.
Warehouse A
Client-oriented approach
Warehouse
potential
Responsiveness
to the client’s
requirements
Client’s reviews
Experience
With the same type
of products
Experience
on the
market
Client-oriented approach
1
2
3
4
5
Warehouse potential
Experience
Client's reviews
Responsiveness to the client’s
requirements
Further, please, rate by 5-point scale the degree of importance of the element represented by the
characteristics Experience
Experience
1
2
3
4
5
With the same type of products
Experience on the market
74
All your answers are very important for the research.
Contact information:
Pavel Tarabanov
mob: +7-921-792-83-44
e-mail: pavel-tarabanov@mail.ru
Would you be so kind to provide your contact information, in case of necessity to
write to you for further details?
o Age
15-20
o
o
o
o
21-26
27-35
36-50
50-65
More than 65
Occupation ____________________________________
Name. _____________________________
Mob. phone: _____________________________
e-mail: ________________________
Thank you!
75
Appendix 11. Output information from APIS Technique for the Storage
Service Supplier Selection
Weight-coefficients estimations visualization
Statistics of admissible weight-coefficients values
Weight of index
Min
Max
Mean
StDev
Rank
w(Financial Characteristics)
0,3000 0,9000 0,5441 0,1671
1
w(Internal Characteristics)
0,0500 0,3000 0,1971 0,0696
2
w(External Characteristics)
0,0500 0,3000 0,1971 0,0696
2
w(Customer-oriented approach) 0,0000 0,2000 0,0618 0,0607
3
Weight-coefficients dominance reliability
PW(r,s)
w(Financial
Characteristics)
w(Internal
Characteristics)
w(External
Characteristics)
w(Customerorientated
approach)
w(Financial
Characteristics)
0,0000
1,0000
1,0000
1,0000
w(Internal
Characteristics)
0,0000
0,0000
0,0000
1,0000
w(External
Characteristics)
0,0000
0,0000
0,0000
1,0000
w(Customer-oriented
approach)
0,0000
0,0000
0,0000
0,0000
Weight-coefficients covariance
WCOV(r,s)
w(Financial
Characteristics)
w(Internal
Characteristics)
w(External
Characteristics)
w(Customerorientated
approach)
w(Financial
Characteristics)
0,0279
-0,0109
-0,0109
-0,0061
w(Internal
Characteristics)
-0,0109
0,0048
0,0048
0,0012
w(External
Characteristics)
-0,0109
0,0048
0,0048
0,0012
w(Customer-oriented
approach)
-0,0061
0,0012
0,0012
0,0037
76
Weight-coefficients correlation
WCORR(r,s)
w(Financial
Characteristics)
w(Internal
Characteristics)
w(External
Characteristics)
w(Customer-oriented
approach)
w(Financial
Characteristics)
1,0000
-0,9374
-0,9374
-0,6022
w(Internal
Characteristics)
-0,9374
1,0000
1,0000
0,2866
w(External
Characteristics)
-0,9374
1,0000
1,0000
0,2866
w(Customer-oriented
approach)
-0,6022
0,2866
0,2866
1,0000
Aggregated preference indices visualization
Statistics of alternatives aggregated preference estimations
Aggregated index of alternative
Min
Max
Mean
StDev
Rank
Q(Warehouse A)
0,5902 0,7104 0,6650 0,0338
2
Q(Warehouse B)
0,0500 0,4500 0,2588 0,1046
4
Q(Warehouse C)
0,5500 0,9500 0,7412 0,1046
1
Q(Warehouse D)
0,4968 0,7352 0,5917 0,0670
3
Aggregated preference indices dominance reliability
PQ(i,j)
Q(Warehouse A)
Q(Warehouse B)
Q(Warehouse C)
Q(Warehouse D)
Q(Warehouse A)
0,0000
1,0000
0,2353
0,8824
Q(Warehouse B)
0,0000
0,0000
0,0000
0,0000
Q(Warehouse C)
0,7647
1,0000
0,0000
1,0000
Q(Warehouse D)
0,1176
1,0000
0,0000
0,0000
Aggregated preference indices covariance
QCOV(i,j)
Q(Warehouse A)
Q(Warehouse B)
Q(Warehouse C)
Q(Warehouse D)
Q(Warehouse A)
0,0011
-0,0023
0,0023
0,0004
Q(Warehouse B)
-0,0023
0,0110
-0,0110
-0,0061
Q(Warehouse C)
0,0023
-0,0110
0,0110
0,0061
Q(Warehouse D)
0,0004
-0,0061
0,0061
0,0045
77
Aggregated preference indices correlation
QCORR(i,j)
Q(Warehouse A)
Q(Warehouse B)
Q(Warehouse C)
Q(Warehouse D)
Q(Warehouse A)
1,0000
-0,6382
0,6382
0,1878
Q(Warehouse B)
-0,6382
1,0000
-1,0000
-0,8760
Q(Warehouse C)
0,6382
-1,0000
1,0000
0,8760
Q(Warehouse D)
0,1878
-0,8760
0,8760
1,0000
Appendix 12. Output information from APIS Technique for Saint-Gobain
Company Case
Weight-coefficients estimations visualization
Statistics of admissible weight-coefficients values
Weight of index
Min
Max
Mean
StDev
Rank
w(Financial Characteristics)
0,3000 0,9000 0,5441 0,1671
1
w(Internal Characteristics)
0,0500 0,3000 0,1971 0,0696
2
w(External Characteristics)
0,0500 0,3000 0,1971 0,0696
2
w(Customer-oriented Approach) 0,0000 0,2000 0,0618 0,0607
3
Weight-coefficients dominance reliability
PW(r,s)
w(Financial
Characteristics)
w(Internal
Characteristics)
w(External
Characteristics)
w(Customerorientated
Approach)
w(Financial
Characteristics)
0,0000
1,0000
1,0000
1,0000
w(Internal
Characteristics)
0,0000
0,0000
0,0000
1,0000
w(External
Characteristics)
0,0000
0,0000
0,0000
1,0000
w(Customer-oriented
Approach)
0,0000
0,0000
0,0000
0,0000
78
Weight-coefficients covariance
WCOV(r,s)
w(Financial
Characteristics)
w(Internal
Characteristics)
w(External
Characteristics)
w(Customerorientated
Approach)
w(Financial
Characteristics)
0,0279
-0,0109
-0,0109
-0,0061
w(Internal
Characteristics)
-0,0109
0,0048
0,0048
0,0012
w(External
Characteristics)
-0,0109
0,0048
0,0048
0,0012
w(Customer-oriented
Approach)
-0,0061
0,0012
0,0012
0,0037
Weight-coefficients correlation
WCORR(r,s)
w(Financial
Characteristics)
w(Internal
Characteristics)
w(External
Characteristics)
w(Customerorientated
Approach)
w(Financial
Characteristics)
1,0000
-0,9374
-0,9374
-0,6022
w(Internal
Characteristics)
-0,9374
1,0000
1,0000
0,2866
w(External
Characteristics)
-0,9374
1,0000
1,0000
0,2866
w(Customer-oriented
Approach)
-0,6022
0,2866
0,2866
1,0000
Aggregated preference indices visualization
Statistics of alternatives aggregated preference estimations
Aggregated index of alternative
Min
Max
Mean
StDev
Rank
Q(SnP)
0,2175 0,5131 0,3304 0,0847
3
Q(YZGLP)
0,0536 0,4679 0,2729 0,1088
4
Q(SL)
0,4348 0,7854 0,5985 0,0923
2
Q(RSPT)
0,7161 0,9676 0,8348 0,0660
1
79
Aggregated preference indices dominance reliability
PQ(i,j)
Q(SnP)
Q(YZGLP)
Q(SL)
Q(RSPT)
Q(SnP)
0,0000
0,5882 0,0000
0,0000
Q(YZGLP)
0,4118
0,0000 0,0588
0,0000
Q(SL)
1,0000
0,9412 0,0000
0,0000
Q(RSPT)
1,0000
1,0000 1,0000
0,0000
Aggregated preference indices covariance
QCOV(i,j)
Q(SnP)
Q(YZGLP)
Q(SnP)
Q(YZGLP)
Q(SL)
Q(RSPT)
0,0072
-0,0086
0,0073
0,0052
0,0118 -0,0100
-0,0072
-0,0086
Q(SL)
0,0073
-0,0100
0,0085
0,0061
Q(RSPT)
0,0052
-0,0072
0,0061
0,0044
Aggregated preference indices correlation
QCORR(i,j)
Q(SnP)
Q(YZGLP)
Q(SnP)
Q(YZGLP)
Q(SL)
Q(RSPT)
1,0000
-0,9296
0,9341
0,9281
1,0000 -0,9999
-1,0000
-0,9296
Q(SL)
0,9341
-0,9999
1,0000
0,9999
Q(RSPT)
0,9281
-1,0000
0,9999
1,0000
Appendix 13. Additional output information from APIS Technique for SaintGobain Company Case
Financial Characteristics. Aggregated preference indices visualization
Financial Characteristics. Statistics of alternatives aggregated preference estimations
Aggregated index of alternative
Min
Max
Mean
StDev
Rank
Q(SnP)
0,4688 0,6377 0,5488 0,0429 3
Q(YZGLP)
0,0000 0,2500 0,0864 0,0762 4
Q(SL)
0,6429 0,8690 0,7621 0,0582 2
Q(RSPT)
0,8018 0,9895 0,8988 0,0473 1
80
Internal Characterisctics. Aggregated preference indices visualization
Internal Characterisctics. Statistics of alternatives aggregated preference estimations
Aggregated index of alternative
Min
Max
Mean
StDev
Rank
Q(SnP)
0,0167 0,0833 0,0465 0,0200 3
Q(YZGLP)
0,9500 1,0000 0,9879 0,0145 1
Q(SL)
0,0000 0,1500 0,0362 0,0434 4
Q(RSPT)
0,3179 0,4201 0,3723 0,0227 2
External Characterisctics. Aggregated preference indices visualization
External Characterisctics. Statistics of alternatives aggregated preference estimations
Aggregated index of alternative
Min
Max
Mean
StDev
Rank
Q(SnP)
0,0000 0,4500 0,2250 0,1436 4
Q(YZGLP)
0,1954 0,3553 0,2753 0,0510 3
Q(SL)
0,7215 0,7664 0,7440 0,0143 2
Q(RSPT)
0,8500 1,0000 0,9250 0,0479 1
Customer-orieted Approach. Aggregated preference indices visualization
Customer-orieted Approach. Statistics of alternatives aggregated preference estimations
Aggregated index of alternative
Min
Max
Mean
StDev
Rank
Q(SnP)
0,3667 0,6667 0,5267 0,0712 3
Q(YZGLP)
0,5500 1,0000 0,7068 0,1198 1
Q(SL)
0,0000 0,9000 0,4500 0,2121 4
Q(RSPT)
0,1000 1,0000 0,5500 0,2121 2
81
Service. Aggregated preference indices visualization
Service. Statistics of alternatives aggregated preference estimations
Aggregated index of alternative
Min
Max
Mean
StDev
Rank
Q(SnP)
0,5500 0,9500 0,7227 0,1023 3
Q(YZGLP)
0,0263 0,3927 0,2181 0,0912 4
Q(SL)
0,7177 0,9605 0,8679 0,0696 1
Q(RSPT)
0,6933 0,7647 0,7324 0,0179 2
Safety. Aggregated preference indices visualization
Safety. Statistics of alternatives aggregated preference estimations
Aggregated index of alternative
Min
Max
Mean
StDev
Rank
Q(SnP)
0,1000 0,4500 0,3202 0,0848 3
Q(YZGLP)
0,8875 0,9750 0,9290 0,0188 1
Q(SL)
0,1000 0,4500 0,3202 0,0848 3
Q(RSPT)
0,3833 0,6167 0,4996 0,0535 2
Accessibility. Aggregated preference indices visualization
82
Accessibility. Statistics of alternatives aggregated preference estimations
Aggregated index of alternative
Min
Max
Mean
StDev
Rank
Q(SnP)
0,1333 0,2833 0,2163 0,0399 4
Q(YZGLP)
0,1500 0,6000 0,4324 0,1048 3
Q(SL)
0,5000 0,9000 0,6824 0,0973 2
Q(RSPT)
0,6500 0,9500 0,8245 0,0874 1
Experience. Aggregated preference indices visualization
Experience. Statistics of alternatives aggregated preference estimations
Aggregated index of alternative
Min
Max
Mean
StDev
Rank
Q(SnP)
0,3667 0,6667 0,5167 0,0957 2
Q(YZGLP)
0,1833 0,3333 0,2583 0,0479 3
Q(SL)
0,9100 1,0000 0,9550 0,0287 1
Q(RSPT)
0,0000 0,4500 0,2250 0,1436 4
Appendix 14. Additional output information from APIS Technique for the
Storage Service Supplier Selection
Financial Characteristics. Aggregated preference indices visualization
Financial Characteristics. Statistics of alternatives aggregated preference estimations
Aggregated index of alternative
Min
Max
Mean
StDev
Rank
Q(Warehouse A)
0,4885 0,7038 0,5710 0,0590 3
Q(Warehouse B)
0,0112 0,2660 0,1270 0,0657 4
Q(Warehouse C)
0,7509 0,8147 0,7778 0,0172 1
Q(Warehouse D)
0,4000 0,9500 0,6364 0,1394 2
83
Internal Characterisctics. Aggregated preference indices visualization
Internal Characterisctics. Statistics of alternatives aggregated preference estimations
Aggregated index of alternative
Min
Max
Mean
StDev
Rank
Q(Warehouse A)
0,5122 0,6621 0,5855 0,0397 2
Q(Warehouse B)
0,7500 0,9750 0,8941 0,0621 1
Q(Warehouse C)
0,0313 0,2150 0,0913 0,0486 4
Q(Warehouse D)
0,0750 0,3650 0,2248 0,0733 3
External Characterisctics. Aggregated preference indices visualization
External Characterisctics. Statistics of alternatives aggregated preference estimations
Aggregated index of alternative
Min
Max
Mean
StDev
Rank
Q(Warehouse A)
0,5500 1,0000 0,7750 0,1436 2
Q(Warehouse B)
0,0000 0,2250 0,1125 0,0718 4
Q(Warehouse C)
0,8694 0,9282 0,8988 0,0188 1
Q(Warehouse D)
0,4111 0,5429 0,4770 0,0421 3
Customer-orieted Approach. Aggregated preference indices visualization
84
Customer-orieted Approach. Statistics of alternatives aggregated preference estimations
Aggregated index of alternative
Min
Max
Mean
StDev
Rank
Q(Warehouse A)
0,2500 0,4350 0,3270 0,0440 3
Q(Warehouse B)
0,6500 0,9500 0,8245 0,0874 1
Q(Warehouse C)
0,0831 0,4492 0,2695 0,0924 4
Q(Warehouse D)
0,4633 0,8878 0,6477 0,1017 2
Service. Aggregated preference indices visualization
Service. Statistics of alternatives aggregated preference estimations
Aggregated index of alternative
Min
Max
Mean
StDev
Rank
Q(Warehouse A)
0,6028 0,9611 0,7412 0,0949 1
Q(Warehouse B)
0,0500 0,6000 0,3636 0,1394 3
Q(Warehouse C )
0,5000 0,6667 0,6091 0,0508 2
Q(Warehouse D)
0,1833 0,3167 0,2553 0,0339 4
Safety. Aggregated preference indices visualization
Safety. Statistics of alternatives aggregated preference estimations
Aggregated index of alternative
Min
Max
Mean
StDev
Rank
Q(Warehouse A)
0,3500 0,8500 0,5404 0,1188 2
Q(Warehouse B)
0,6000 0,7833 0,6805 0,0409 1
Q(Warehouse C)
0,2208 0,3083 0,2692 0,0202 4
Q(Warehouse D)
0,1000 0,4250 0,2814 0,0748 3
85
Accessibility. Aggregated preference indices visualization
Accessibility. Statistics of alternatives aggregated preference estimations
Aggregated index of alternative
Min
Max
Mean
StDev
Rank
Q(Warehouse A)
0,7167 0,8833 0,8199 0,0396 1
Q(Warehouse B)
0,1000 0,4500 0,2840 0,0752 4
Q(Warehouse C)
0,6917 0,8083 0,7502 0,0268 2
Q(Warehouse D)
0,4000 0,8625 0,5753 0,1082 3
Experience. Aggregated preference indices visualization
Experience. Statistics of alternatives aggregated preference estimations
Aggregated index of alternative
Min
Max
Mean
StDev
Rank
Q(Warehouse A)
0,0000 0,3375 0,1688 0,1077 4
Q(Warehouse B)
0,6625 1,0000 0,8313 0,1077 1
Q(Warehouse C)
0,2750 0,5000 0,3875 0,0718 3
Q(Warehouse D)
0,2500 0,5875 0,4187 0,1077 2
86
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