Supplier evaluation using hybrid multiple criteria decision making approach

Abstract

In the face of acute global competition, supplier management is rapidly emerging as a crucial issue to any companies striving for business success and sustainable development. To optimise competitive advantages, a company should incorporate ‘suppliers’ as an essential part of its core competencies. Supplier evaluation, the first step in supplier management, is a complex multiple criteria decision making (MCDM) problem, and its complexity is further aggravated if the highly important interdependence among the selection criteria is taken into consideration. The objective of this paper is to suggest a comprehensive decision method for identifying top suppliers by considering the effects of interdependence among the selection criteria. Proposed in this study is a hybrid model, which incorporates the technique of analytic network process (ANP) in which criteria weights are determined using fuzzy extent analysis, Technique for order performance by similarity to ideal solution (TOPSIS) under fuzzy environment is adopted to rank competing suppliers in terms of their overall performances. An example is solved to illustrate the effectiveness and feasibility of the suggested model.