Decision-Making Analysis: Sainsbury's Supplier Selection

This report provides a comprehensive analysis of analytical thinking and decision-making, emphasizing its significance in business contexts. It begins by defining decision-making and its importance, followed by an exploration of decision analysis and its practical applications. The report then identifies a decision problem faced by Sainsbury's, a major UK supermarket chain, specifically concerning the selection of raw material suppliers. It applies the SMART technique to address this problem, outlining the steps involved and evaluating the technique's strengths and limitations in this scenario. The report highlights the importance of effective decision-making for achieving organizational objectives and provides insights into the challenges and complexities associated with the process. It also includes examples of decision analysis tools and their applications in various business settings.

Analytical
thinking and
decision-making

Table of Contents
INTRODUCTION...........................................................................................................................1
1. The importance of decision making and the application of decision analysis .......................1
2. Recognition of decisions problem that is faced by the company Sainsbury's during work..4
3. Applying SMART technique on the decision problem...........................................................5
4.Strength and limitation of SMART technique regarding decision problem of supplier for
raw material...............................................................................................................................11
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................12

INTRODUCTION
The ability to solve problems quickly and effectively is been given by the analytical
thinking and it is also a critical component of visual thinking. The methodical step by step
approach to thinking is being involved in it that help to break down complex problems into
single and manageable parts (Olausson and Nyhlén, 2017). In the option of a content or a
course of action among various possible choices decision-making can help. The last choice is
been made on all decision-making process. Based on the values, preferences and beliefs of the
decision-making the process of decision-making identify and choose the alternatives. In order to
achieve the objectives of organization decision- making is essential as it aid the organization to
make usage of resources in efficient way.
This report will conduct a critical review on the value of decision-making. In the
organization the decision-problem that is being taking place will also be identified in this report.
Further more this report will presented the illustration of the problem that is being there in the
work due to not making appropriate decisions. Sainsburry is the UK's second-largest
supermarket chain. In order to make decisions in the selection of suppliers of raw material the
problem is faced by this company. To the problems that is faced by the company the SMART
technique will be applied. This report will also present the advantages and disadvantage of
SMART technique.
1. The importance of decision making and the application of decision analysis
As per Parry Cohen and Bhattacharya, (2016), decision -making can be defined as the
process of choosing the course of activity from a possible approachable options in order to come
at a conclusion for a specific problem. At one point there is s need to make decision in all
organization. In the best interests of the company the decision need to be made. When the
decisions are made then the person should weigh both the positive and negative point of each
option that is available and also all the alternatives need to be considered by the decision-maker.
According to Janssen, van der Voort and Wahyudi, (2017), in order to achieve success in
the operations of organization activities the decision-making is essential .By decision-making
the various activities such as planning, organization, directing and controlling etc are been
determined. In very organization by the top level management only the strategic decision such
as planning, organization , controlling and directing are been made. The middle level
management makes tactical decision. These decision are based on work division, fixation of
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authority and responsibility. The operational level management makes the regular operating
decisions in the organization. In this the decisions are made regrading the preparation of
schedule for daily activities, work division, delegation of authority etc. As per Stern, (2016), the
needs the decision-making is been performance across all the departments in the organization. In
the organization performance the decision -making process provides uniformity and smoothness.
To make decision in any organization the managers of an enterprise are responsible. In
management the decision-making plays and essential role. The most essential component of a
manager's activities is decision-making. In the planning process it plays the most important role.
On many matters the decision is been taken by the manager such as the goals that will be pursued
by their organization, the use of resources etc. The managers have to decide what to do to correct
the deviation when plans go wrong or out of track. In a series of decision-making situation the
whole planning process involved the managers constantly.
Every part of the organization is been covered in decision-making process and also the
functions of management is determined. With the effective use of decision-making the various
issues that is been faced by the organization can be solved. On the contrary not as stated by
Hohnisch,Pittnauer and Pfingsten, (2016) , in order to make effective decisions a lot of time is
been wasted in it. In order to make an individual decision all the benefits and drawbacks of each
alternatives need to be considered by the manager that may take a tome to reach a conclusion.
From many people the advice need to be taken in order to develop a decision. In various
meetings and other discussions that is been taking place in the organization a lot of time is also
been considered as opinion of each member need to be considered to make decisions. This may
develop delayed decisions or no decision as the opinion of each member in a meeting can differ
form one another. However as stated by Lechler and Salas, (2017), the limited analysis can be
produced by the manager if the experience is not there in researching then all the merits and
demerits of each alternatives will not be considered by the manager. With correct decisions the
growth and opportunities can be provided .On the other hand as per Lovan, Murray and Shaffer,
(2017) due to wrong decision the loss and instability can be produced.
Decision analysis
The essential decision that are been confronted by the organization can be addressed by
using the approach of decision analysis. In this the larger problems are been divided into smaller
problems. The better understand about the problem can be given by decision-analysis when there
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any disagreement making decision-makers. As decision-making allow different stakeholder to
get involve in the process of decision so a commitment to course of action will be there. In order
to guide decision-maker to make effective decision it will provide insight knowledge and
encourage creativity.
Some examples of decision analysis tools
The decision analysis is used in variety of applications. Within the decision-making due
to complexity associated with decision making it can be used to only address the problem.
Some examples where the decision analysis tools can be applied are as follows-:
At Du pont improved strategic decision-making
In order to develop and analyse the strategies the Du Pont chemical company has used
influence diagrams and risk analysis (Mitchell, Weaver and Carlson, 2016). This analysis have
helped the company to consider the consequence on the value of the business of uncertainty. The
uncertainties such as rival strategies, market size and share etc are been considered. It is also
been reported by the manager hat by providing common language for information sharing and
debate it has enhanced team building .The implementation of this strategy that was made by
the company is successful.
In the international Chernobyl project structuring decision problems
At the request of the Soviet authorities four years after the accident at the Chernobyl
nuclear power plant the international project was undertaken. In order to analyse the
countermeasures the decision analysis was used. For an instance the decision analysis was used
to relocate some population .From a wide variety of backgrounds the use of SMART enable
groups of pole such as minsters to m can eet to structure of decision problem. The key issues that
was associated with the strategies in this clarified and elucidate by them. By taking into
consideration the all the issues it was possible to analyse the strategies by using decision
analysis.
At a large international pharmaceutical company selecting research projects
In order to create a value for their company the managers in this company were not able
to reach to an agreement on the selection of one research and development project out of three
large research and development projects. By great understanding the research and development
projects in the pharmaceutical industry are characterized. To the original purpose of the project
sometimes the future opportunities have no relation (Lovan, Murray and Shaffer, 2017. ). From
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a particular molecule the new and unexpected molecules are been developed that is been
screened. The value to the projects is been added by such opportunities. In order to develop
transparent representations of the options the decision tress were used. Until the new information
that is available the trees enabled managers to assess where the decisions need to be delayed. By
this the informed decision we re made by the company.
2. Recognition of decisions problem that is faced by the company Sainsbury's during work
In order to select the components of supplier from abroad the decision problem is been
faced by the company Sainsbury's. In the UK it is a well-known company but in order to fulfill
the four objectives of the company the issues is been faced by the manufacturer.
The four objectives that need t be fulfilled by while selecting the appropriate supplier of raw
material for the company are as follows-:
 The price of annual purchase of the component need to be reduced
 The average time for delivery should be less
 The defective component in each delivery should minimized
 The best after sales from the supplier need to be reviewed should minimized
 The best after sales from the supplier need to be reviewed
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Beyond the process the company is required to examine the suppliers. Regarding the
selection of appropriate suppliers the information is not enough so the problem is been faced by
the company. The suppliers will be selected by the company that will be fulfilling all the
objectives that is been set by them. The cost of the supplier need to be less, in less time they
should deliver the any product or raw material and quality also should be good (Lechler and
Salas, 2017.).
3. Applying SMART technique on the decision problem
In the decision problem there are many objectives in it . In between these objective the
making of trade offs is been neglected by the unaided decision-makers. A good performance on
several objectives are not permitted to make up for poor execution else where so the attractive
options will be avoided. For example in order to select the supplier for this company the provider
might be disapproved due to high cost even though the delivery time that is been taken by him is
less. These issues originate when there is too much to manage concurrently. The decision-maker
need to have a better understanding of the problem.
The specific options that is been selected by decision-maker need to be explained by
them. In the year 1977 the simple multi-attribute rating technique (SMART) was introduced by
Edward. The issues that is been faced by the company Sainsbury's in order to choose the best
supplier for their raw material in abroad can be solved by using this quartermaster technique is
been used very much in order to solve the supplying of raw material issues due to its relative
simplicity and transparency. This technique will help the company to make effective decision
about selection of suppliers (Janssen, van der Voort and Wahyudi, 2017).
By the SMART all the complexities of the decisions and in better understanding may not
be achieved. But the essential aspect of the problem and its relation to each other will be
demonstrated by technique. The stages of SMART technique are as follows-:
Decision-maker identification – The person who will be making decisions is recognized in this
step. The owner of the company or manager or group of people who is given the right to take
decisions will be making decision in this company.
The other course of action is been discovered- By the decision-maker of the company
Sainsbury's the other alternative course of action that is available is been found. On the context
and purpose of decision it is dependent mainly.
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Identification of attributes that are relevant to the decision problem – The decision-maker will
recognize all the techniques that are in context with this decision problem. For the decision-
maker it is a type of data gathering methods. The results of possible outcomes will also be
recognized in this.
The values for each attributes is then assigned- The value is assigned to the each attribute that is
being indemnified by the decision-maker . In order to measure the performance of the
alternatives n those attributes a value is been assigned. It is important to reduce the dimension of
value. In this the criteria that is not so important can be avoided .In case the weight for the
chosen critical is less then it is not included.
The attribute weight is determined – When the decisions that are been made by one person in
that this step is fairly straightforwards. The ranking of decision task is not so complex in
comparison with development of weightiness order (Hohnisch,Pittnauer and Pfingsten, 2016) .
To each alternatives that are available the average weight is applied- By using this the measure
of performance can be provided. The most essential dimension is assigned as 100.
The decision is made – In order to monitor the robustness of the decision that is made the
sensitive analysis is been used.
The SMART technique ca be used by the company in order to achieve the four objectives
that is been set up. And also in order to support the decision that is taken by the company in the
selection of supplier this technique can also be used. In the research that is don about the
company the information about this model was developed (The Simple Multi Attribute Rating
Technique (SMART), 2017). In context of the supply chain or purchasing process model the
interview was also conducted with managers of this company. In the four steps that model that is
shown below is divided-:
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Illustration 1: SMART technique steps
(Source:Decision support model for selecting and
evaluating suppliers in the construction industry, 2017)
 The suppliers who will take part in this process of selection are defined
 The definition of criteria set is given
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 Evaluation of selected supplier SMART application
Defining suppliers
There are no decision-making procedures that can be used to classify materials. On the
model on materialism by decision-makers the selection of five supplier location was done. For
all the material the model is applicable. By location the supplier are been presented. They are as
follows-: “C” stands for supplier, “KK” stands for supplier number and “A” stands for material
and “BB” stands for martial number.
Materials
Suppliers Description Supplier's code
San Men Clothing C01. San, C02. San, C03. San,
C04.San, C05. San
John Ethical Clothing C23. John , C24.
John ,
C25. John
Mike Women Clothing C09. Mike , C10. Mike ,C11.
Mike
Rickey Party clothes C35. Rickey ,C36.
Rickey ,C37. Rickey
Richard Formal wear C56.Richard,C57.Richard,C58.R
ichard
Definition of criteria
The criteria will be defined during this step. The antecedent drawn up list is provided to
the decision maker by the analyst once the first meeting that took place in the office (Chen,
Moskowitz and Shue, 2016.). The decision-makers the criteria that will be considered will be
defined. The criteria that is provided by the analyst need to be take care . Some of the criteria
that is provided by decision-makers are as follows-:
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ID Criteria Description
A1 Quality Management System If some practice is been made by the supplier in QMS
then it need to be examined by the company Sainburry.
During this analysis the quality, policy, records of
quality etc are been checked.
A2 Unit Price This depends mainly on the price of the substantial
A3 Lead Time The time in between making an order and receiving a
receipt for that order is been provided .
A4 Situation level This present the order that is sent back due to fault in the
material or in the time of delivery delay is been detected.
A5 Price reduction plans Towards the project enhancement that are already
deployed or will be implemented the contribution is
being evaluated.. Ton the cost of the material this may
have an impact..As a result of this ,by the suppliers a
reduction in cost is been offered.
A6 Cost of transport It deals with the price which is invested in material
transportation
A7 Request for assistance answered The sum of requests for help which are sent to supplier
and the amount of request answered effectively it can
be measured .
A8 Flexibility in time In consideration with delivery time a change need to be
made in the company
A9 Quantity Flexibility In consideration with amount of items a change need to
be made in the company
Scales for Analysing the above mentioned criteria
ID Scale for analysis
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A1 The overall regular operating process,the accessible preventing actions and
training events .
A2 In GBP form the material is measured.
A3 In order to deliver the product the number of day that is required
A4 This can be analysed by rejection percentage
A5 in percentage for the project the analysis of reduction cost need to be done
A6 The GBP need to be examined
A7 In the form of percentage the request for assistance that is answered need to
be analysed
A8 The company need to do the changes in the delivery time that is been discussed by
the supplier. The evaluation of this criteria can be done by the data that is gather from 5 months.
A9 The evaluation of this criteria can be done by the data that is gather from 5 months.
Application of the method
In order to make decision that is based on these above ranking to these attributes the ranking is
been given (Calabretta, Gemser and Wijnberg, 2017). To obtain relative importance the
ranking is given to them .The attribute will be considered as the most essential attribute if the
ranking that is been given is 1.The attribute that is been given the top most ranking will be
considered as important by the company.
The criteria of ranking
Criteria Important ranking
QMS 1
Unit price 2
Price reduction plans 3
Cost of transport 4
Rejection Level 5
Lead time 6
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Time Flexibility 7
Request for assistance answered 8
Flexibility of quantity 9
The normalization value for San
Analysis of criteria
D1 D2 D3 D4 D5 D6 D7 D8 D9
Multiple
attribute value
Alternativ
es
W1=0.
3124
W2=0.
2088
W3=0.
1193
W4=0.
1200
W5=0.
0800
W6=0.
0885
W7=0.
0343
W8=0.
0343
W9=0.
0130
San 1 1 0 1 1 0.550 0.450 0.654 0 0.7356
John 0.440 0 1 0 0 0.768 1 0 0.787 0.6132
Mike 0.66 0.346 0.668 0.888 0.800 0 0 0.850 1 0.6442
Rickey 0.712 0.915 0.915 0.500 0.854 0.887 0.670 0.8 0.821 0.6011
Richard 0.546 0.776 0.783 0.456 0.855 0 0.669 1 0.065 0.7545
Rankings in context of suppliers of San material
Ranking of suppliers Multi-attribute value
1st Richard 0.7545
2nd San 0.7356
3rd Mike 0.6442
4th John 0.6132
5th Rickey 0.6011
In order to make the normalized value the ROC weights are been used. For the supplier
that is Richard and San the multi attribute value is very close. In order to make decision in
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between two suppliers that is San and Richard the cost of transport can be used. The final
ranking can be achieved by increase in 10% per km in transportation cost (Burns, 2016). As the
best multi attribute value the decision-maker of this company will select Richard. Due to
increase in 10 % cost of transport the result difference in between San and Richard have
increased.
4.Strength and limitation of SMART technique regarding decision problem of supplier for raw
material
Strength of SMART technique
Without practice it is applicable easily – In comparison with other techniques such as
Even Swaps SMART techniques is much easier to use (Bolman and Deal, 2017). The technique
of eves swaps is complex than SMART when the person is not in practice of applying it. The
number of mistakes and errors are not more when using this SMART technique.
The more amount of information can be achieved from output process – Without mistakes if the
decision-maker apply this technique then more information will be provided. For an instance in
order to select the supplier for the company all the information that is been given about the
supplier was accurate and correct.
In SMART a list of all options and their connected scores are been provided .This is been
given in order to recognize the option that is near to second one.
Drawbacks of using SMART techniques
 A lot of time is been wasted on assigning the scores for each attributes. On a scale of 0-
100 the score need to be assigned to the attributes
 The concept of swing weights in this technique is difficult. It is complex to gain
appropriate knowledge about the swing weights (Beach and Lipshit, 2017).
 It is not so close to description of unaided choice as the alternative set preserved within a
set of choice. However, some consistency is been there on the even swaps with the results
of physical studies of unaided choice.
CONCLUSION
Thus summing up the above report it can be concluded that the process of decision-
making is used in very organization in order to make effective decision. By considering the
opinion of all the member the decisions are been taken. The decision tress can be sued in the
organization in order to make decision. The company Sainsbury is facing issue in the selection of
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supplier in the abroad. The SMART technique is been sued by this company in order to fulfil the
objectives that is time of delivery ned to b less that is been set .The attributes such time,cost and
quality is been considered of each of the supplier that is available. The best supplier for the
company will be Richard.
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