VINE

Knowledge elicitation and mapping in the design of a decision support system for
the evaluation of suppliers’ competencies
Lorella Cannavacciuolo Luca Iandoli Cristina Ponsiglione Giuseppe Zollo
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elicitation and mapping in the design of a decision support system for the evaluation of suppliers’
competencies", VINE, Vol. 45 Iss 4 pp. 530 - 550
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VINE
45,4
Knowledge elicitation and
mapping in the design of a
decision support system for the
530 evaluation of suppliers’
Received 31 January 2015
competencies
Downloaded by SP Jain Institute of Management and Research At 03:55 11 December 2015 (PT)

Revised 1 July 2015

24 August 2015
Accepted 1 September 2015
Lorella Cannavacciuolo, Luca Iandoli, Cristina Ponsiglione and
Giuseppe Zollo
Department of Industrial Engineering, University of Naples Federico II,
Naples, Italy

Abstract
Purpose – This paper aims to present a methodology for the mapping and evaluation of suppliers’
competencies and know-how. The authors operationalize the concept of organizational competence
and provide companies with a customized management tool to map suppliers’ critical competencies
for screening strategic from non-strategic suppliers and providing inputs for suppliers’
development.
Design/methodology/approach – Competencies assessment, carried out through a fuzzy
knowledge management system (VINCI), is performed through the aggregation of indicators
related to the control of critical resources, the degree of implementation of critical processes, the
competitive positioning and the financial situation of a supplier. Competencies description and
operationalization are based on the bottom-up elicitation of the subjective knowledge managers
actually use to assess suppliers’ capability. Such subjective knowledge is then validated and
formalized through a top-down approach based on strategic literature.
Findings – The authors tested VINCI on a sample of 38 suppliers of a large company. The results show
that the methodology provides its users with a highly customizable knowledge map and its associated
decision support tool that keeps into account the peculiar strategic needs of the company in the
management of an existing portfolio of suppliers.
Practical implications – VINCI outcomes can be used to perform benchmarking analyses, define
entry criteria and thresholds for suppliers’, identify improvement targets and service levels to be
considered in the definition of supply contracts, supporting the alignment of supplier’s management
with business strategy.
Originality/value – The most important original contribution of this work resides in the
operationalization and measurements of firms’ competencies based on the elicitation of subjective
knowledge that managers use in the actual assessment. A further distinctive feature of this paper
is that the method is applied to small and medium companies, whereas large part of the literature
on core or organizational competencies assessment is focused on large companies.
VINE
Vol. 45 No. 4, 2015 Keywords Decision support, Capability maturity model, Knowledge mapping and elicitation,
pp. 530-550
© Emerald Group Publishing Limited Multi-attribute fuzzy decision-making, Organizational competence
0305-5728
DOI 10.1108/VINE-01-2015-0011 Paper type Research paper
 1. Introduction Knowledge
Knowledge-based systems (KBS) have received considerable attention in the elicitation and
development of decision support systems and knowledge management tools in several
fields. A KBS is defined as a computer system designed to emulate human
mapping
problem-solving via a combination of a domain knowledge base and an inference engine
able to perform context, data-driven, heuristic as well as logic reasoning (Chau and
Albermani, 2002). 531
In this work, we present a KBS to assess and manage organizational competencies of
suppliers for manufacturers of large integrated systems, such as companies operating in
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the aerospace or railway industry. In particular, we propose a methodology for the

assessment of competencies based on the elicitation of the subjective knowledge that
managers use in suppliers’ assessment.
Although several theories based on core competencies or strategic capabilities have
made the concept influential (see the broad literature inspired to the resource-based view
of the firm; Priem and Butler, 2001; Wernerfelt, 2006), less attention has been given to
operationalization of key concepts such as critical resources, organizational
competencies (Prahalad and Hamel, 1990) or dynamic capabilities (Teece et al., 1997).
The emphasis on the theoretical aspects has made the capability concept somewhat
obscure and has left practitioners without efficient and usable methods to identify and
measure capabilities that are specific and salient enough for their business practice. In
this work, we argue that a possible way to operationalize organizational competencies
and, at the same time, to make these constructs more relevant and actionable for
companies is a knowledge-based approach through which competencies models are
built from the bottom-up, i.e. starting from the subjective knowledge and theory in use
(Argyris and Schon, 1978) that managers and practitioners have developed, learned and
selected through daily practice and experience; the questions we intend to answer in this
paper are as follows:
Q1. How to elicit subjective knowledge that managers employ to describe
organizational competencies of a supplier?
Q2. How to map, validate and formalize this knowledge to define objective ways to
describe and evaluate firms’ competencies?
To make our case more relevant for practitioners, we report an application of our
approach to suppliers’ screening. We focus on suppliers screening for the following
reasons. First, supplier selection is a task that is or should be strongly influenced by the
buyer company’s strategy; as such, screening practices and tools reflect industry- and
company-specific strategic and operational needs that can hardly be captured by the
standardized, general-purpose competencies assessment methods that are dominant in
the strategic literature. Second, the use of a portfolio of existing suppliers provided us
with a more controlled empirical setting in which it was easier to control for some key
variables (e.g. the buyer company strategy, the specific industry) as well as to get access
to abundant information and data regarding the companies to be assessed.
We finally matched the subjective knowledge elicited on the field against the existing
management tools and theories. By following a strategic portfolio approach (Gelderman
and Weele, 2002), we combined the evaluation of financial reliability and competitive
positioning with the assessment of suppliers’ competitiveness based on non-financial
indicators related to suppliers’ organizational competencies (Grant, 2010; Lado et al.,
 VINE 1992), including product innovation, unique know-how, processes and project
45,4 management, as well as ability to provide seamless integration with critical
organizational processes of the buyer company. Finally, we built a fuzzy
knowledge-based information system to keep to model linguistic variables and
linguistic aggregation (Zadeh, 1975; Yager, 1992).
This paper intends to offer several contributions. First, unlike most works on
532 suppliers’ selection that are over-focused on methodological aspects, our method also
offers support for more strategic tasks such as the identification of strategic suppliers,
the classification in different strategic categories and suppliers development. Second,
the paper provides an assessment methodology based on the combination of subjective
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and normative knowledge. In Section 2, we show that this is a distinctive feature of our
work in the wider literature on suppliers’ selection and evaluation. Third, this work
focuses on the issue of how capabilities can be described and assessed in a reliable and
cost-efficient way and suggests a knowledge-based assessment method that keeps into
account the specific strategic and operational needs of the buyer company. A further
distinctive feature of this paper is the application of the capabilities framework to small
and medium companies, whereas large part of the work on core or organizational
competencies has been applied to large companies.
Finally, we offer empirical evidence about the usability and validity of the proposed
approach by reporting the results of a field evaluation carried out in collaboration with
an international company that designs and assembles railway transportation systems.
The buyer company is a leading system integrator sitting at the top of a hierarchical
supply chain in which heterogeneous suppliers are positioned at different layers in
function of their strategic importance (Lane and Boehm, 2008; Esposito and Raffa, 1994).

2. Decisions support systems for suppliers’ evaluation: a review

2.1 The evaluation of suppliers’ performances
Suppliers evaluation is a complex, multi-attribute and multi-person decision process
because of the need to identify and satisfy several conflicting criteria and stakeholders
as well as to manage the trade-off between long-term, strategic objectives and
short-term, tactical outcomes (Araz and Ozkarahan, 2007). Consequently, the
development of reliable and effective methodologies is crucial to support effective
supply chain management (Ha and Krishnan, 2008) and to strengthen the
buyer–supplier performance and buyer competitive advantage (Li et al., 2012).
The literature on the development of structured and quantitative decision support
aids for suppliers’ selection is very rich and heterogeneous (Chen, 2011). In this stream of
work, the design of decision platforms for suppliers’ selection is often framed as an
optimization problem (Wang and Yang, 2009) to be solved through the general steps
that are typical in the development of KBS (De Boer et al., 2001):
(1) Problem definition
(2) Formulation of criteria
(3) Qualification
(4) Choice.

Most works on suppliers selection focus on (3) and (4), limitedly on (2) and rarely on (1).
Our work intends to contribute mainly to (a) assuming that a useful knowledge base for
 the problem definition is given by the subjective knowledge that managers use in the Knowledge
actual evaluation of their suppliers base. Preferred methodological approaches to elicitation and
support qualification and choice in suppliers selection range from multi-attribute
models based on various techniques such as the analytic hierarchy process (Bruno et al.
mapping
2012; Sen et al., 2010) and its analytic network process variant (Gencer and Gurpinar,
2007), linear programming (Hong et al., 2005; Ng, 2008), fuzzy set theory (Sarkar and
Mohapatra, 2006) and more sophisticated computational techniques including genetic 533
algorithms (Ding et al., 2005), or to hybrid approaches combining more than one method
(Wu, 2009; Lin, 2012).
Ho et al. (2010) provide an in-depth review and analysis of a large set of multi-criteria
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decision-making approaches applied to suppliers’ selection. The conclusion of their

work is that multi-criteria approaches should be preferred to cost-based analysis and
that one common limitation is that multi-criteria methods tend to not take into adequate
consideration the impact of business objectives and requirements of company
stakeholders on the evaluating criteria. They also identify additional critical issues
including the difficulty of implementing methods requiring subjective evaluations, use
of time-consuming decision techniques and difficulty for users to distinguish between
inputs and outputs in the evaluation.

2.2 From suppliers’ performance to competencies

Although the most popular evaluation criteria for suppliers’ selection models fall in
three main categories: quality, delivery and price/cost (Ho et al., 2010), suppliers’
performance review systems also include qualitative criteria, typically related to
organizational structure, processes and other organizational capabilities. In Sarkar and
Mohapatra (2006), a detailed literature review of criteria related to suppliers’
performance and capabilities is presented. Performance is defined as the demonstrated
ability of a supplier to meet a buyer’s short-term requirements in terms of cost, quality
and service; instead, capability is defined as the supplier’ potential that can be leveraged
to the buyer’s advantage in the long term. Suggested performance criteria include price,
product reliability, delivery speed and technical support. Capabilities-related criteria
refer to quality management, financial stability, management systems, R&D activities
and technical capacity. Based on a comprehensive review of the literature, Lin and Chen
(2004) identify 183 factors related to capabilities, classified in eight areas:
(1) Finance
(2) Human resources
(3) Industry characteristics and positioning
(4) Knowledge/technology acquiring and management
(5) Marketing
(6) Organizational competitiveness
(7) Product development, production and logistics management
(8) Relationship building and coordination.

The assessment of suppliers based on capabilities is affected by measurement issues

because capabilities are complex, multi-faceted and contextual constructs that cannot be
easily reduced to few indicators. To escape measurability issues, many studies suggest
 VINE self-evaluation (as in Talluri and Narasimhan, 2004), typically implemented through a
45,4 self-assessment questionnaire.
The measurement problems due to the qualitative nature of some of the relevant
information needed to assess capabilities can be bypassed using other indirect
approaches. One solution can be to express ratings through relative comparison among
“similar” entities, e.g. through analytic hierarchy process or data envelopment analysis
534 (Ha and Krishnan, 2008). The problem with all indirect approaches is that, by design,
they can provide only relative measures; besides, they skip entirely the issue of
describing and operationalizing capabilities, thus providing little support for strategy
articulation and implementation to both the buyer and the suppliers. Alternatively,
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ratings can be obtained through the involvement of experts belonging to the buyer firm
(Ha and Krishnan, 2008; Punniyamoorthy et al., 2011). Internal methods, however, suffer
from transparency issues because companies are not usually available to disclose this
information; besides, evaluations can be based on very idiosyncratic knowledge or
history that make it hard to check for its validity, let alone to adapt the same method to
other organizations.
All of the above approaches suffer from shortcomings that we attribute to an
overfocus on measurability. As measures must be objective by definition, the main
challenge is how to define objective evaluation criteria that can be translated in metrics.
We argue that without a deep analysis of the subjective knowledge and theories in use
that managers actually employ to identify what a good supplier is for a specific buyer
and for a peculiar purchasing situation, the risk is to build precise but irrelevant metrics
that do not really capture what the buyer company needs to perform the assessment. In
other words, we claim that the priority for the buyer is not the development of more
accurate metrics but a better understanding of what must be evaluated and why.
Unfortunately, although there is an abundance of methods for the former, companies are
often left without a structured method for the construction of the evaluation model.

2.3 The proposed approach

Based on the review of the literature presented above, we argue that:
• The literature on suppliers’ selection tends to neglect the connection between
performance assessment and strategic supply chain management, and the
proliferation of methods could be the symptom of a weak theorization about
what should be evaluated and why. As a result, many suppliers’ selection
models either use under-specified concepts or just cumulate a long list of
indicators based on common sense or practice. Consequently, it is frequent to
observe in many works an evident misalignment between the sophistication of
the computational “package” and the oversimplification of the underlying
knowledge model.
• Performance review systems and strategic evaluation models also keep into
account more high-level criteria, e.g. based on capabilities, and try to support
integration between suppliers’ evaluation and the buyer company’s strategy;
however, these approaches face a number of measurement issues due to the
multi-faceted and sometime ambiguous definition of what has to be meant by
capability. Self-assessment or other indirect methods are adopted to bypass
these measurement issues, but their reliability is limited because of the
 potential biases contained in self- or indirect evaluations and the lack of Knowledge
transparency. Finally, while improving on systems based solely on indicators elicitation and
checklist because of their focus on critical processes, also performance review mapping
systems may suffer from on a weak knowledge model.

The decision support system that we present in this work offers tools and functionalities
to assess suppliers’ capabilities and manage suppliers’ portfolio based on competencies 535
model that are built in a bottom-up fashion, i.e. starting from the elicitation and mapping
of knowledge that is routinely used in suppliers’ selection and evaluation by a given
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buyer company. Before moving to the detailed description of the tool implementation,
we anticipate some of its distinctive features to the light of the literature review
presented above:
• Organizational competencies are elicited directly by independent analysts and
through the involvement of managers both form the buyer and the supplier
companies through the bottom-up identification of competencies descriptors and
assessment scales based on objective and qualitative indicators, inspired to the
maturity concept as defined in the capability maturity model (CMM; www.sei.
cmu.edu/cmmi). While the description of the competencies still remains
subjective, our method provides several ways to both structure and systematize
such subjectivity and to support evaluators in the formulation of an informed
judgment in the assessment phase.
• The competencies models are validated on the base of the well-known concept of
organizational competencies (Prahalad and Hamel, 1990) and assuming
complementariness between the competence-based view and the models of
strategic analysis based on competitive position (Spanos and Lioukas, 2001). The
evaluation model explicitly considers indicators related to the competitive
position of suppliers that are generally lacking in other performance review
systems. By linking bottom-up suppliers’ competencies model more tightly to
theoretical concepts and models developed in the strategic management
literature, the subjective knowledge is reframed in terms of robust and
well-known theoretical frameworks and tools.
• The evaluation model includes qualitative and quantitative measures. Qualitative
judgments are modeled through fuzzy representation, and a fuzzy aggregation
algorithm is used to combine qualitative and quantitative measures. Although the
use of fuzzy logic in multi-criteria decision-making is certainly not new, we apply
some original mechanisms to facilitate both the expression of judgment and its
mathematical representation, including a new type of visual scale and a method to
code experts’ judgment into fuzzy sets.
• We couple competencies assessment with competitive financial evaluation and
consider these dimensions as orthogonal in the short term for spotting
misalignments between a supplier’s competitive potential and its financial
position.
• The development of a decision support system for portfolio management and
suppliers’ evaluation is a further distinctive characteristic of this work compared
to other papers that present only evaluation methodologies.
 VINE 3. Methodological approach
45,4 The evaluation of suppliers is based on the evaluation of the financial reliability of firms
and on the assessment of their organizational competencies. The two evaluations are
combined in a portfolio matrix (Figure 1).
The need to consider the financial situation of the supplier emerged clearly during the
filed analysis. As a matter of fact, it makes no sense to engage into the assessment of any
536 type of operational or strategic indicators if a supplier is not financially healthy,
especially in an industry in which stocks and real assets condition in a significant way
the financial future of a company. The financial assessment was based on the analysis
of companies’ financial statements of three years (2007-2009-2010). Such information is
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publicly available for limited liability and public companies in the country in which the
research has been carried out. Credit scores have been updated with a positive or
negative outlook based on the most recent financial data and trends as determined by
experienced consultants. The competitiveness score is determined through the
aggregation of non-financial data related to competencies and competitive positioning
of the supplier and collected through company visits and interviews. The aggregation
methodology, performed through a fuzzy multi-attribute technique described in the
following, computes a single, normalized value that is placed on the vertical axis of the
portfolio matrix.

3.1 Field study and data collection

We analyzed a sample of 38 companies in a three-month field study, as illustrated in the
flowchart depicted in Figure 2. The companies are all suppliers of a major international
company developing solutions for mass transportation to which we will refer
generically as “the buyer company” for the sake of anonymity.
The large majority of suppliers were small and medium enterprises with less than 50
employees and a turnover below €5 millions. All the analysts, with previous experience
in organizational and financial analysis, received a checklist for the interview, a short
manual for the delivery and use of the questionnaire, the questionnaire itself and a
template for the final report. A permanent help desk was available to support the teams;
it was also responsible for the set up and administration of the project database and for
the input of the data in a software dashboard developed for this project and was called
VINCI (Valutazione INtegrata della Competitività delle piccole Imprese – integrated

Figure 1.
The portfolio matrix
 Knowledge
elicitation and
mapping

537
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Figure 2.
Data collection and
analysis flowchart

evaluation of small firms’ competitiveness). For each company, the teams, composed by
two or three analysts, collected more than 120 indicators, 70 per cent of which refer to
non-financial information. After the data collection was completed, the teams produced
38 suppliers’ reports, one aggregated report and an executive report for the buyer
company. All the data and the final reports were stored in a centralized database, one of
the components of the VINCI platform.

3.2 Data collection tools

The data were collected through a structured interview articulated in ten subsections:
one section containing demographic information (company name, industry, products,
location, turnover and number of employees), eight subsections dedicated to
organizational competencies and one section for the description of the strategic
positioning and mix adopted by the company. Each section contained a set of questions
aimed at eliciting qualitative and quantitative performance dimensions associated with
each competence area through evaluation scales that will be described later. The critical
incident method was also used to identify competence meaning and evaluation
dimensions, by adapting the original technique develop by McClelland (1973) to elicit
individual competencies.
Although based on a pre-defined structure, the interview was, in fact, an iterative
process through which the analyst identified competencies’ descriptions and validated
these descriptions and their associated performance dimensions with the interviewees.
3.2.1 Validation of the organizational competencies contained in the questionnaire.
Through a literature analysis, we have classified the elicited capabilities into eight
organizational competencies (Spanos and Lioukas, 2001; Ortega, 2010; Yam et al., 2011).
We have adapted existing classifications from Spanos and Lioukas (2001) and Yam et al.
(2011) in which competencies area are organized functionally:
• Organizational learning: capability to acquire and accumulate technical
knowledge.
 VINE • Planning and control: capability to use management systems for monitoring costs
45,4 and projects advancement and minimizing performance gaps.
• New product development and engineering: capability to acquire and apply
technological know-how to develop products according to the technical needs and
users requirements provided by the buyer company.
538 • Sourcing: capability to acquire and develop production factors (human resources,
capital, suppliers).
• Organization: capability to implement mechanisms to coordinate activities and
ensure effective job divisions.
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• Production: ability to produce the required outputs given volume, time and costs
constraints.
• Marketing: ability to increase the company market share through promotion and
sales, and to analyze and understand customers’ needs as well as the
characteristics of the competition.
• Strategic planning: ability to develop and implement strategic plans that are
coherent with the company mission.

Rather than contributing to competencies’ description of classification, our primary

focus was on the development of an agile and easy way to operationalize competencies’
assessment.
3.2.2 Competencies assessment. We have adopted the resource-based view paradigm
(Wernerfelt, 2006; Penrose, 1995) in which organizational competencies are associated
with the ability to acquire and develop critical and distinctive resources (Barney, 2001),
with the development of knowledge needed to coordinate and integrate diverse
technologies and skills (Prahalad and Hamel, 1990) and with the capability to implement
distinctive processes aimed at recombining specific assets and characterized by
development paths that have been designed or learned by adaption and experience
(Teece et al., 1997).
Following such theoretical perspective, the assessment of organizational competencies is
based mostly on objective indicators or documentable judgments related to the
accumulation of critical resources, availability and use of management systems and use of
formalized organizational knowledge applied in the implementation and control of critical
processes.
Organizational competencies are evaluated through 80 items: about 20 per cent of the
items are assessed through objective metrics; the remaining ones are appraised using
verbal scales. The verbal scales used in our survey are of two types: maturity and
behavioral scales.
Maturity scales are inspired to the concept of maturity as defined in the CMM. They
help to assess a competence in terms of critical tasks or processes that are associated
with the competence and are based on the following levels:
• Absent: processes or tasks are not implemented.
• Awareness: managers are aware of the importance and impact of at least some of
the critical tasks/processes but have an incomplete and subjective understanding
or representation of the tasks; do not use metrics to evaluate tasks performances;
are not able to consistently implement follow-up actions based on their subjective
 assessment; tasks implementation is partial, ad hoc and informal; and there is no Knowledge
clear and formal attribution of responsibility in tasks execution or control. elicitation and
• Execution: tasks are implemented, but the company has not implemented a mapping
system for planning, controlling and monitoring tasks execution or the system is
formally in place, but it is not consistently or systematically adopted in practice.
Formalization is partial. An explicit set of performance metrics is available, but
there are no consequential and consistent follow-up procedures (e.g. in risk 539
management, risks are measured, but there are not formally defined and
consistent mitigation/recovery plans).
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• Managed: processes are planned and controlled through explicit indicators.

Managers and employees use formal management tools. Performance is managed
through a consistent and rich set of follow-up actions aimed at reducing the gaps
between expected and actual performances, anticipating critical issues and
support continuous improvements.

We are aware that the maturity scale represents an extremely simplified attempt of
CMM implementation, but this level of simplification is functional for the application of
the maturity concept to the assessment of small and medium companies that quite often
lack internal complexity, resources and structure to afford full CMM implementation.
Behavioral scales are used for simpler processes or tasks for which the description of
desirable behavior is straightforward and more appropriate than maturity scales.
Behavioral scales are inspired to those used to assess individual competencies as
applied by Spencer and Spencer (2008). They are used to describe intensity levels in the
displaying of desired behaviors to be associated with the levels in the scale. For example,
for the task related to the competence “organizational learning and knowledge
management”, it would be unrealistic to assume that small supplier companies possess
an R&D unit or use a formal system to manage this type of task, it makes more sense to
identify a set of simple, desirable behavior levels including: establishing personal
contacts and occasional partnerships (Level 1), establishing and managing contacts and
medium-term partnerships on a regular basis (e.g. internships for graduate students)
(Level 2), exhibiting a consistent track record of collaboration based on R&D projects
(Level 3).
Both maturity and behavioral scales display ten levels grouped in four anchors,
where 1 ⫽ absent, 2-4 ⫽ aware, 5-7 ⫽ executed and 8-10 ⫽ managed. This structure
allows evaluators to express nuances in their assessment, as they can select a range of
values in the scale rather than a specific value. To express his/her judgment, the analyst
marked a specific box on the scale or selected an appropriate range to signal uncertainty
or variability in the behavior. The judgment is based on the evaluator’s subjective
perception, but it is constrained by the structure of the scale. Besides, evaluators are
required to report evidence to support their judgment in the section “evidence/facts” (e.g.
events, references, concrete examples offered by the interviewees, etc.) appearing below
the scale for each item.
A limited number of items are evaluated directly by the buyer company, mainly in
the section on engineering and new product development. These questions require the
buyer to express its degree of satisfaction for each item in terms of misalignment
between expected and actual behavior.
 VINE 3.3 Items aggregation
45,4 The evaluations collected by the analysts are aggregated through a fuzzy
multi-attribute algorithm to compute a synthetic indicator related to all the assessed
competencies, reported on the x-axis of the portfolio matrix. Fuzzy multi-criteria
operators support the aggregation of quantitative and qualitative information as well as
keep into account the qualitative uncertainty expressed by the analysts through the
540 maturity or behavioral scales. The algorithm has been successfully tested and used in
previous studies (Iandoli et al., 2009) and in real-world management applications,
including customer satisfaction analysis (Cannavacciuolo et al., 1999) and personnel
evaluation (Capaldo et al., 2006). In the following, we report a compact description of the
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aggregation procedure and redirect the readers to the references quoted above for more
detail.
The aggregation is performed in three steps:
(1) The evaluations reported by the analysts are modeled through fuzzy verbal
scales (3) and so mapped into partially overlapping fuzzy sets.
(2) Fuzzy sets are mapped on a couple of truth values through the dual truth value
(DTV) model (Cannavacciuolo et al., 1996).
(3) Couples are aggregated through fuzzy multi-criteria operators – OWA, ordered
weighted average (Yager, 1992).

3.3.1 Representations of verbal judgments. As it can be observed in Figure 3, a single X

on the graded scale is represented though a triangular fuzzy set Vi belonging to a term
set T of ten elements T ⫽ {absent, more or less aware, aware, very aware, more or less
executed, executed, very well executed, more or less managed, managed, very well
managed}, where absent is represented by a fuzzy singleton {0,1}. If an evaluator
expresses his judgment on a range rather than on a single value in the scale, the
corresponding fuzzy representation is a trapezoidal function obtained by convoluting
two or more contiguous triangular functions.
The fuzzy set V is then mapped on a couple of truth value (a,b) in the following way:

(a, b) ⫽ ( sup兵min(mv(u), mLOW(u)) 其, sup兵min(mv(u), mHIGH(u))其) (1)

Where mv(u) is the membership function representing V, and mLOW(u) ⫽ 1-u and
mHIGH(u) ⫽ u with u 僆 [0, 1] are two fuzzy antonyms representing, respectively, the sets
“absolutely low” and “absolutely high”. In the DTV model, the values a and b can be
interpreted, respectively, as the degree of truth of the following propositions:

Figure 3.
Representing
judgments on fuzzy
verbal scales
 P1. V is an absolutely negative evaluation”, “V is an absolutely positive evaluation. Knowledge
As each judgment is mapped on a couple of truth values, the model tries to capture the elicitation and
intrinsic ambiguity of verbal evaluations by quantifying the amount of negative and mapping
positive sentiment embedded in a same opinion. It is easy to verify that the larger is the
range selected by an evaluator, the closer are the values because the judgment is more
ambiguous. Conversely, the more fine grained an evaluation is, the more the two values
tend to be the logical complement of each other; if the cardinality of the term set tends to 541
infinite, a tends to its negation a= ⫽ 1 – b.
To transform a fuzzy set V into a single numerical value vc, V has to be defuzzified.
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There is no unique way to defuzzify a fuzzy set, and the choice of the type of
defuzzification is generally contingent to the specific application. In our case, we
defuzzify the truth couple (a, b) through the following transformation:

vc ⫽ (1 – a ⫹ b)/2 (2)

3.3.2 Judgments aggregation. A fuzzy multi-criteria operator is a function F:

F:V1, …, Vn ⫽ ⬎V (3)

that given n evaluation V1 …, Vn of a same entity X with respect to n evaluation criteria

computes an aggregated evaluation of X based on the considered criteria. Several
aggregation operators are available in the literature on fuzzy multi-criteria
decision-making, and the choice of an operator is typically dependent on the context of
the application and on the exhibition of desired characteristics as established by the
designers of the method (Chen and Hwang, 1992). A family of fuzzy aggregation
operators that satisfy most of the properties required to a multi-criteria function (e.g.
unanimity, idempotency, monotonicity, non-dictatorship, etc.) and that can be easily
integrated with the DTV representations of verbal judgments is the OWA operators
(Yager, 1988, 1992). An OWA operator is a function F with an associated weighting
vectors W ⫽ [w1, w2 …,wn] such that:

wi 僆 [0, 1], ∀i ⫽ 1, …, n wi ⫽ 1 (4)

F(x1, x2, x3, …., xn ) ⫽ ⌺iwiyi (5)

Where (x1, x2, x3 …., xn) ⑀ Rn and yi is the largest i-th xi. Yager (1992) proves that any
OWA operator can be compensative to a given degree. In particular, it can be proven
that:

min (xi ) ⱕ F(x1, x2, x3, …., xn ) ⱕ Max (xi ) (6)

In other words, the lower bound for any OWA operator aggregation is the logical AND,
whereas the upper bound is the logical OR. Moreover, Yager shows that the weights wi
can be computed through a fuzzy quantifier Q(r) with r 僆 [0,1]:

Wi ⫽ Q ( ni ) ⫺ Q( i ⫺n 1 ) (7)
 VINE Where i ⫽ 1, .., n and n is the number of criteria. According to this formulation, the
45,4 weight can be interpreted as the incremental satisfaction deriving from satisfying one
more criterion. Besides, the value of F(x1, x2, x3 …., xn) corresponds to the degree of truth
of the proposition “Q criteria are satisfied” by X. Consequently, by assigning a semantic
to Q, one can actually establish an aggregation criterion; for instance, if Q is the fuzzy
quantifier Most, F(x1, x2, x3 …., xn) would represent the degree of truth of the proposition
542 “most criteria are satisfied by X”.
To apply OWA operators to verbal evaluations represented through truth couples,
we define an ordering relationship as follows: given two couples V1 ⫽ (a1, b1) and V2 ⫽
(a2, b2):
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V 1 ⬎ V2 ⇔ 兵a1 ⬍ a2
b1 ⬎ b2

The aggregated value V is then computed as follows:

F(V) ⫽ F(V1, …, Vn) ⫽ V’ * W ⫽ [(a=1, b=1 ), …, (a=n, b=n )]

* W ⫽ [(a=1, …, a=n ) * W, (b=1, …, b=n ) * W] ⫽ (a, b) (8)

Where V ⫽ (V1 …, Vn), V’ is the ordered vector, W is the weighting vector associated to
the operator F, (a=1 …, a=n) and (b=1 …, b=n) are the left and right values of the couples (ai,
bi) ordered, respectively, in the increasing and in the decreasing sense, and (a, b) is the
truth couple corresponding to the aggregated judgment.

4. Field evaluations
The pilot project to experiment VINCI methodology has produced two typologies of
results:
(1) the test of the VINCI platform
(2) the assessment of the suppliers’ sample analyzed in the case study.

The platform developed in the pilot project is an application able to manage and
visualize single and aggregate evaluations of suppliers’ portfolio. The managers of
buyer firms can use VINCI outcomes to perform benchmarking analyses, define entry
criteria and thresholds for suppliers’, identify improvement targets and service levels to
be considered in the definition of supply contracts.
The evaluation system produces analytical reports for each supplier. Such reports
contain the following:
• a detailed analysis of the financial statements of the firm;
• the competence profile and the values of indicators;
• qualitative comments of the analysts;
• a set of suggestions related to possible improvement actions, identified during the
field research and ranked in terms of priority.

Furthermore, the system automatically generates additional visualizations through

which it is possible to have a representation of the state of the whole suppliers’ pool or of
one of its subsets.
 Figure 4 reports some examples of visual outputs generated automatically by VINCI, Knowledge
including the position of the company in the portfolio matrix (left upper corner), a few elicitation and
financial indicators and the company credit score, the company competencies profile mapping
compared with a benchmark (e.g. average profile) and a balanced scorecard (Kaplan and
Norton, 1992) providing some level of details on the potential causes affecting the firm’s
competitiveness (left-bottom corner).
Instead, for the assessment of the 38 suppliers analyzed in the testing phase, a 543
straightforward visual representation of the state of a group of suppliers respect to
financial performance and competence core is showed in the portfolio matrix (Figure 5)
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in which the most critical quadrants are those in which there is a misalignment between
the financial and the competence performance.
In detail, the results obtained for our sample are as follows:
(1) Many firms have a medium to low credit score. This negative financial result is
also influenced by the general economic crisis that was happening at the time of
the data collection as well as too long time needed to cash their credits. The delay
is in part due to negotiation power asymmetry between small suppliers and a
large customer.
(2) About one-third of the firms in the sample lie in the North-West quadrant (good
financial state, poor competencies score). We identified several reasons that
induced firms to do not implement competencies’ development strategies:
• Economic uncertainty/volatility.
• Limited vision and lack of clear growth strategies, also due to small size and
dominance of family businesses.

Figure 4.
Example of outputs
available in the
suppliers’ reports
 VINE
45,4

544
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Figure 5.
The portfolio matrix
(each circle is
associated to a
supplier in the
sample)

• Need of accumulating financial stocks to cope with lack of liquidity in the

hard times.
(3) A group of five companies (South-East) have interesting competitive
potential, but they need financial support to move upward in the North-East
quadrant.
(4) Only two firms in the sample are solidly placed in the North-East quadrant,
while most of firms are positioned in the worst quadrant.

An in-depth analysis of single suppliers permitted to identify specific improvement

actions for firms placed in the North-West and South-East quadrants. For example, it is
possible to understand for the first group of firms (North-West) whether the low
competencies score is due to an actual lack of competitiveness potential, scarce
propensity to growth or other structural limitations to innovation.
With respect to the analysis of competences’ profiles, most of competencies achieve
only the awareness level on average (the lowest values were observed for strategic
planning and marketing). More in depth, it is possible to outline the following average
competence profile:
• Sufficient control of technical and engineering aspects related to design and
production, but low scores for new product development and production
planning.
• A certain level of awareness for innovation needs and the main competitive
challenges exists, but it is accompanied with weak strategic planning and
poor relationship with external research and innovation networks.
• The level of diversification of customers’ portfolio is greater than expected,
but it is associated to a scarce propensity to expand the actual markets and to
increase the international market share.
 • A certain capability to control the efficiency through processes innovation has Knowledge
been observed. At the same time, product innovation strategies are weakly elicitation and
implemented.
mapping
• Most of firms in the sample employ a highly qualified and loyal workforce in
production and design, but the presence of qualified managers to control
critical processes (production management, management and control.
545
The empirical results presented in this paper represent a first evaluation of VINCI
methodology. A thorough statistical analysis will require a larger sample of companies
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and will be the objective of future work. At the moment, an analysis of validity of the
questionnaire has been conducted with positive preliminary results. In terms of face
validity, the results were presented and discussed both with the buyer company and
with the suppliers involved in the analysis, obtaining very positive feedback about the
ability of our methodology to produce a rich and informative representation of the state
of the things.

5. Conclusions
The objective of this work was to present a decision support system for the evaluation
and development of the suppliers’ portfolio for large companies that design and
assemble technologically complex products or systems. The platform aims to support
the buyer company in rationalizing its supplier base, so as to select only a limited
number of strategic suppliers to whom to delegate the management of lower-level
suppliers, according to a leading system integrator perspective. The system was
constructed in a bottom-up fashion, by validating and re-using subjective knowledge
actually used by managers to evaluate suppliers in their regular business practice. This
approach allowed us to build a highly customized and customizable KBS that
adequately reflect strategic and operational needs of the buyer company in the specific
business environment in which it operates.
The empirical test of the platform, carried out on a sample of 38 suppliers of a large
company working in the field of mass transportation and producing the same subclass
of goods, allowed us to test the validity of the approach and its usability in a real context
of use, in particular in terms of providing its users with a structured, efficient and “good
enough” method to evaluate organizational competencies.
Different versions of the proposed method have been tested by some of the
authors in the past in other domains, including the assessment of individual
competencies. The adaptation to the case of organizational competencies required to
revise the method with respect to the different theoretical concepts that are used to
describe organizational competencies. Following the same approach, the
computational engine described in this work could be adapted to other domains in
which there is the need to combine objective and subjective knowledge into compact
indicators. There are many applications in which this need is particularly felt. A
case in point is the development of recommendation systems to support
decision-making in online applications, e.g. in e-commerce, in which objective data
based on collaborative filtering are combined with preferences expressed by
individual decision-makers, on line buyers in this case.
The test also allowed us to spot opportunities for improvements, in particular in
terms of additional efficiency. One of the future developments of this research is a test on
 VINE a larger scale. With a bigger data base, it might be possible to reduce the amount of
45,4 information to be collected by eliminating redundancy, identify as many reliable
indicators as possible that do not require the involvement of an expert for their
assessment and identify patterns and relationships among variables to support
knowledge discovery and construction of better evaluation models.
A further limitation of the work regards its applications to different cases and
546 contexts. The methodology has been designed in a specific case and tailored to the needs
of a particular company. The adaptation to other domains requires a contextualization
of the questionnaire. However, we expect that the methodological structure and the
theoretical assumptions are general enough to make the adjustment a relatively easy
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task.
In future work, the authors intend to explore in depth and on a statistical basis the
relationship between performance and skills. The available data at the moment do not
allow making such an analysis, as the performances measured in this research are only
of financial nature. Furthermore, it was not possible to have access to operational
performance indicators, due to the lack of historical data from the suppliers and the
buyer. Other studies in the literature, however, have shown that there is a causal
relationship between competence and performance, also at the organizational level.
However, for practical purposes, a buyer firm is certainly interested to assess what
competencies have the greatest impact in specific cases with reference to a particular set
of performance drivers. Consequently, the platform should provide an additional
module to enable such analysis on the database of its suppliers.
More broadly, the platform could be enhanced through the addition of data
mining modules that can provide management with both aggregated information
and insights about key indicators, relationships between indicators, clusters of
suppliers based on competencies profiles, trends and projections aimed at
identifying the trajectory of development of competencies with and without
improvement actions. For instance, data mining techniques could be used over
larger databases to identify distinctive profiles of best performing suppliers based
on the way they combine competencies into specific mixes. It could also be possible
to find out which are the competencies that have a larger impact on performance.
Finally, using historical data, data mining could help to identify the patterns of
development of critical skills to find out whether such development can be ascribed
to specific development actions (e.g. a training program) and/or whether there are
skills that are developed together because of synergic effects that support leaning
processes happening in contiguous or connected skills. More broadly, our method,
by supporting the systematic accumulation of performance and skills data for a
large number of suppliers, can enable the development of more analytic and
evidence based decision-making in the management of articulated and systemic
supply chains.

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About the authors

Lorella Cannavacciuolo, PhD in Engineering Management, is a Researcher at the Department of
Industrial Engineering of the University of Naples Federico II. Her research interests include
technology transfer, small and medium-sized enterprises innovation networks, performance
management, costing models, planning and control systems with particular attention to their
design and implementation in health-care organizations. She is the author of several international
publications. Lorella Cannavacciuolo is the corresponding author and can be contacted at:
lorella.cannavacciuolo@unina.it
Luca Iandoli is an Associate Professor of Engineering Management at the School of
Engineering, University of Naples Federico II (Italy). He is also a Former Fulbright Visiting
Scholar at the MIT Center for Collective Intelligence and a Visiting Research Professor of
Engineering Management at Stevens Institute of Technology. His research activities include
knowledge mapping, knowledge diffusion and creation in online communities, collective
intelligence, distributed innovation and digital entrepreneurship. Luca has received several
awards over the course of his career. Within the past five years, he has received the ICSB
Presidential Award for Excellence in Service, the Best Case Study Award at the ECSB Case Study
Competition, the Global Information Technology Management Association (GITMA) Fellowship
and a Fulbright Scholarship as a Research Visitor at the MIT Center for Collective Intelligence. He
is Immediate Past President of the European Council for Small Business and Entrepreneurship
and serves as President-elect in the board of the International Council for Small Business and
Entrepreneurship.
Cristina Ponsiglione is an Assistant Professor in Engineering Management at the
University of Naples Federico II. Since 2010, she is an Associate Researcher of the Centre for
Research in Social simulation at the University of Surrey (UK). Her current research interests
concern knowledge dynamics in innovation networks, territorial innovation systems and
agent-based modeling for policy advice. On these topics, she published some papers in
international journals, such as Central European Journal of Operations Research, JASSS and
VINE.
 VINE Giuseppe Zollo is Full Professor of Engineering Management at the University of Naples
Federico II, Italy. He is the President of the Innovation Agency of Campania Region (Italy). He
45,4 is the Coordinator of the International Doctorate in Science and Technology Management.
During the years 1985-1986, he was Visiting Research Associate at the Department of
Economics of Northeastern University, Boston (MA), USA. He has published many articles in
the area of technological innovation, small innovative enterprises, information technology
management, competencies management, software industry, fuzzy sets and evaluation
550 systems. He is a member of several association such us AOM, ECSB, SIGEF and the Italian
Association of Engineering Management. He has received multiple awards and honors
including the Entrepreneurship Award from the Universitat Autonoma de Barcelona (1992);
Downloaded by SP Jain Institute of Management and Research At 03:55 11 December 2015 (PT)

RENT Award from the European Institute for Advanced Studies in Management, Brussels
(1993 and 1995); Best Paper Award from FGF Universitat of Dortmund (1994); European
Quality Award for Thesis on T.Q.M from EFQM (1997).

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