Cluster-based supplier segmentation: a sustainable data-driven approach

Abstract

Purpose – Supplier segmentation provides companies with suitable policies to control each segment, thereby saving time and resources. Sustainability has become a mandatory requirement in competitive business environments. This study aims to develop a clustering-based approach to sustainable supplier segmentation. Design/methodology/approach – The characteristics of the suppliers and the aspects of the purchased items were considered simultaneously. The weights of the sub-criteria were determined using the best-worst method. Then, the K-means clustering algorithm was applied to all company suppliers based on four criteria. The proposed model is applied to a real case study to test the performance of the proposed approach. Findings – The results prove that supplier segmentation is more efficient when using clustering algorithms, and the best criteria are selected for sustainable supplier segmentation and managing supplier relationships. Originality/value – This study integrates sustainability considerations into the supplier segmentation problem using a hybrid approach. The proposed sustainable supplier segmentation is a practical tool that eliminates complexity and presents the possibility of convenient execution. The proposed method helps business owners to elevate their sustainable insights.

Keywords

• Supplier management
• Clustering
• Sustainability
• Purchasing portfolio matrix
• Supplier potential matrix