The Contract Expert System: A Proposal for Long-Term Supplier Evaluation, Selection and Performance Monitoring

Abstract — With a major financial crisis troubling the world, managers nowadays are under a lot of pressure to reduce the costs of their day-to-day operational processes. One important business process is purchasing and nowadays, proper selection of suppliers is the primary focus of these purchasing organizations in which the ultimate goal is to select the best supplier with the lowest price, highest quality and on-time delivery. Furthermore, in terms of the philosophy of JIT, long-term partnerships between the buyer and the supplier are preferred. The aim of this study is to systematize the supplier selection process for long-term purchasing with the use of a computer-based expert system that mimics the purchasing decisions of a purchasing professional. The proposed expert system is called Contract Expert System or CES, which is composed of four functional modules: Configuration, Supplier Evaluation, Supplier Selection and Supplier Performance Monitoring. Preliminary validation of the CES was done by comparing the thought process of CES with that of and purchasing managers from two companies that were studied, and results show that the purchasing processes of the two companies are similar to the CES methodology. Further validation of CES will be done by comparing the results of purchasing decisions made by CES and the actual decisions made by purchasing managers.