Dynamic supplier selection strategy towards negotiation process in beef industry using K-means clustering

Abstract

Dynamic supplier selection strategy is the actual condition to get the best supplier and selecting supplier based on company condition, in conditions of uncertain demand for beef. The key criteria when choosing suppliers include the Term of Payment, price and quality factor; these criteria are used by the company during the negotiation process. The purpose of this research is to get the most appropriate and profitable supplier, then obtain proof that K-means clustering can be used as a strategy to simplify the negotiation process in supplier selection. The method used for clustering is K-means. From the analysis, the company gets the right cluster supplier to facilitate the process of selecting suppliers and negotiate the price and time offered. The clustering process using K-means shows which supplier is the most profitable with characteristics that are almost the same as the specified centroid. Dynamic demand changes can be solved by changing the number of clusters to make it easier for companies and still earn profitable suppliers. Companies can negotiate with suppliers in clusters; thus, the suppliers can meet the standards given by the company. Further research is suggested to do clustering with more variety of attributes such as lead time of delivery, service, and capital owned by suppliers.