Proactive decision making in supply chain procurement

ABSTRACT To procure products and materials in the context of modern, convoluted supply chains, companies need to consider a variety of available options regarding trading partners, products, materials and services, as well as deal with changing circumstances. Therefore, they seek for solutions that enable them to increase their efficiency, improve the effectiveness of collaboration with trading partners, deal with unexpected events and make proactive decisions. To address these issues, this paper focuses on the purchasing process and proposes an approach that enhances decision making, leading to proactive actions/recommendations to ensure cost-effectiveness. It supports selection of partners, monitors events pertaining to the purchasing process and enables proactive cost processing for potential supplier/shipper reconsideration, order cancellation or continuation. To enable proactive cost handling, we adopt and use the framework ‘detect – forecast – decide – act’. To support forecast and represent the causal relationship between events and supply chain actors, we use a Bayes Network. Finally, to verify the effectiveness of our proposed model, we develop a system and test it experimentally, through numerical simulation. Our results show that our proactive decision making method can lead to improved order efficiency, agility and cost management.