A vendor selection framework for the process automation industry

• Main Author: Lee, Hui Juan
• Other Authors: -
• Format: Thesis-Master by Coursework
• Language: English
• Published: Nanyang Technological University 2023
• Subjects: Business::Operations management::Supply chain management; Engineering::Industrial engineering
• Online Access: https://hdl.handle.net/10356/168061
• Institution: Nanyang Technological University

The process automation industry has been facing challenges related to the high cost of materials and material-related activities, which make up a significant 50% to 60% of the total project costs. The cost overruns within the process automation sector of the larger construction industry have become a substantial concern. Of particular concern are the oil and gas projects. To address this issue, improved project planning and management strategies are needed. These strategies should include project risk assessment and mitigation planning, accurate cost estimates, effective vendor selection and procurement processes. All these strategies can collectively help improve project outcomes. Effective management of the construction supply chain, including the selection of vendors, can help reduce costs, improve delivery lead time, and lower inventory levels. The objective of this dissertation is to assess the impact of vendor selection on project performance in the process automation sector. While a buyer organisation can benefit from vendor involvement in projects, it can also face challenges. Vendors being a critical part of their materials and services supply chain, organisations must carefully evaluate their vendor selection processes for effectiveness. However, these processes are often not regularly evaluated to determine their ongoing relevance and effectiveness. This study adopts a case study approach to investigate the challenges encountered by a procurement team in a leading process automation company. The study aims to develop a tailored framework for qualifying and selecting vendors in a process automation company. Despite being a technology leader in its product offerings and driving positive outcomes through organisational changes over the years, the aforementioned process automation company’s procurement processes remain outdated. This complacency has led to the lack of a defined framework for assessing vendor capabilities, which impedes their contribution to successful project outcomes. The goal of this research is to propose a vendor selection framework with a specific focus on the process automation industry. A new vendor selection framework has been developed using data from literature review, interviews, customer satisfaction surveys, and annual vendor evaluations. The proposed framework includes a multi-criteria vendor selection scorecard, and two process flowcharts: one for vendor selection and another for onboarding new vendors. These contributions come together to create a comprehensive vendor selection framework for a process automation company. Keywords: process industry, vendor selection, construction project, process plant and vendor selection, process automation