A Multi-criteria Decision Making Approach for Supplier Selection

In today's global environment, supplier selection has been formulated as a multi-criteria problem to include both qualitative and quantitative factors, affecting criteria like purchase cost, quality levels, supplier risk, environmental factors, and geographical locations. Selecting the best supplier is crucial and many times there is a great need to tradeoff between tangible and intangible factors. This paper integrates Analytic Hierarchy Process (AHP), Fuzzy AHP and Quality Function Deployment (QFD)-Fuzzy to determine the best casting industry supplier for automobile spare-parts. AHP is used to obtain the relative importance of the evaluation criteria. The QFD approach — typical to supplier selection in the house of quality (HOQ) — is used in determining the importance weights for the customer requirements. Utilizing the linguistic factor to organize criteria and sub-criteria weight, Fuzzy set are pair wise compared with QFD-Fuzzy and solved by a proposed fuzzy suitability index (FSI). The proposed method is used in the selection of suppliers using relative benchmarking (against other foundries) as well as absolute benchmarking (against an ideal foundry), which offers a tangible means by which to evaluate suppliers. In light of the heterogeneous capabilities of suppliers, the decisionmakers can objectively assess each supplier interface and detect when corrective action may be necessary.