Vol.04, Issue 03, March 2019 Available Online: www.ajeee.co.in/index.php/AJEEE SELECTION OF SUPPLIER CHAIN PARTNERS USING AHP AND HYBRID AHP-WSM
APPROACHES: A CONCEPTUAL REVIEW S. Nagori1, Payal Bhargava2
1M.E. Research Scholar; 2Assistant Professor
Department of Mechanical Engineering, Shri Aurobindo Institute of Technology, Indore (M.P.)
Abstract - Asupply chain is characterized as a procedure that changes a material into items and conveys them to clients through explicit exercises. It comprises of all gatherings included, straightforwardly or in a roundabout way, in satisfying a client asks. Supply chain esteem including a chain which excludes the maker and sellers, yet in addition incorporates transporters, distribution centers, retailers and client themselves. Inside every industry, the store network incorporates all capacity engaged with satisfying a client ask for (item improvement, promoting, task, dispersion, money, client administration). Present research work acknowledges the research contributions of the researchers in the field of supply chain management, gaps in the researchers, and objectives of a new research.
Keywords: Supply chain, management, gaps in the research, suppliers.
1. INTRODUCTION
In the supply chain, great coordination between a maker and seller is vital on the grounds that the disappointment of coordination results in exorbitant postponements, low-quality item and at last prompts the poor client administration. Along these lines, the achievement of a store network in profoundly relies upon the choice of a good seller. Purchaser-provider relationship remains dependent on cost is never again adequate. The expanding significance of provider determination choice are compelling association to reevaluate their they obtaining assessment systems in light of the fact that an effective buying choice straightforwardly rely on choosing the correct seller. Nowadays, aggressive business condition has constrained organizations to fulfill clients who request expanding item assortment, lower cost, better quality and quicker reaction one of the imperative cost parameters is the cost of crude materials. In assembling businesses, the crude material and segment parts can break even with up to 70% of the item cost.. In present research work, efforts are made to investigate the research contributions of researchers in the field of supply chain management. In the paper, research contributions of the researchers of the field are acknowledged, research gaps are investigated and objectives of a new research are being proposed.
2. LITERATURE REVIEW
Following are the contributions of different researchers in the field of supply chain management.
a) Beskese and Evecen (2012)
The researcher has focused on the issue of supplier selection in healthcare industry and says that although the vendor selection is one of the well-studied subjects within the literature, its application in healthcare industry is still awaited, and therefore, this research work is devoted to fulfill this gap. For this purpose, a research was carried out to investigate the supplier selection criteria in healthcare industry and were prioritized for a specifically designed hierarchical model with the help of managers of six firms in Istanbul, Turkey.
b) Pal (2012)
The aim of this study was to suggest a analytical tool to judge and choose the most effective supplier(s)/vendor(s) in fuzzy environment for television (TV) producing organization. A hierarchy through which decision manufacturers will achieve a comparison among the suppliers was figured out and software for identical was developed. The methodology for choice was primarily based upon multiple criteria decision creating/multiple attribute higher cognitive process (MCDM/MADM) technique using technique for order preference by similarity to ideal solution (TOPSIS). MCDM approach and application of TOPSIS tested to be a robust technique for fast, performance
Vol.04, Issue 03, March 2019 Available Online: www.ajeee.co.in/index.php/AJEEE evaluation, comparative assessment and
selection of supplier(s). Biasness in decision making} process was avoided using weights for DM’s supported their proficiency within the problem into consideration. The suppliers were evaluated and chosen on the basis of criteria/attributes (quality, delivery, price, and suggestion acceptance) and weights were allotted (0.5, 0.3, 0.1, and 0.1) to them. The ranking/selection order of ten suppliers (alternatives) decided as C4, C5, C10, C7, C2, C6, C1, C8, C9, and C3.
Though the study concentrates on TV producing organization, however the methodology is adopted by any organization if the standards and alternatives are clearly outlined. Results have provided valuable suggestions to suppliers on a way to improve every criterion in order that they might bridge the gap between actual and aspired performance values within the future. The decision-aiding software was enforced in C language to automatize the supplier(s) selection process.
c) Wu et al. (2007)
Supplier evaluation and selection, a vital component in supplier-based manufacturing and supply chain management has been gaining attention in each academic literature and industrial observe. In this paper, the researchers presented a changed information enclosure analysis (DEA) methodology for vendor selection which may operate underneath conditions of imprecise information. A brief description of the importance of vendor evaluation and selection is given, followed by an summary of DEA, in conjunction with many extensions of DEA applied specifically to supplier evaluation and selection. Contributions of our proposed approach embody the elimination of the poor discriminatory power and inability of ancient DEA to rank the economical suppliers. Additionally, our method is often employed in situations with imprecise information.
d) Kassaee et. al. (2013)
Vendor selection is a vital issue in most company based on several criteria that features ambiguous or uncertain information. Thus within the study, it is essential that fuzzy approach is employed for dealing with the uncertainty and
achieving a lot of accurate results. In other hand, the relationships between criteria and sub-criteria are complex; for encompassing the complexity, most typical decision models cannot facilitate us justify the interrelationships among the factors. In this paper, a hybrid multi- criteria deciding (MCDM) technique is projected to work out the structural relationships and therefore the interrelationships among all the evaluation’s dimensions based the Analytic Network process (ANP) technique deciding appropriate weightings to every sub-criterion. Then alternatives priority ought to be determined which can aid the decision making. For the purpose, The TOPSIS (Technique for Order Performance by Similarity to Ideal Solution) is employed to rank all competitive alternatives in terms of their overall performances. In MCDM studies and analysis, applying TOPSIS in ranking alternatives has recently been customary as a result of its benefits. In the end, a case study of an Iranian company, in automotive business, is demonstrated to Illustrate the proposed model can improve finding of vendor selection problem.
e) Mutai and Okello (2016)
This study sought to work out the impact of supplier evaluation on performance of acquisition function of Public Universities.
The public Universities campuses in Kericho County were concerned in the survey. to realize the target of the study, the investigator tested three hypotheses;
supplier quality commitment doesn't have important impact on performance of procurement functions of public universities campuses in Kericho County, monetary stability of supplier doesn't have impact on the performance of acquisition function of public universities campuses in Kericho County and supplier competency doesn't have important impact on performance of acquisition function of public universities campuses in Kericho County. This was a cross sectional survey study where information was collected in public universities campuses in Kericho County at a single point in time. Population of the study was the employees within the public universities’ campuses in Kericho County while the sample was selected staff in finance and acquisition and accounts and finance departments. Information was
Vol.04, Issue 03, March 2019 Available Online: www.ajeee.co.in/index.php/AJEEE collected through structured
questionnaires that were administered through drop and pick technique. The collected information was analyzed through SPSS version 21. Mean and standard deviations were used to describe the variables in the study where as multivariate analysis was conducted to determine the impact of supplier evaluation on performance of procurement function of the public universities campuses in Kerico County.
The findings of the study discovered that suppliers’ quality commitment, suppliers’
financial capability and suppliers’ ability have vital impact on performance of acquisition of procurement function of public universities campuses in Kericho County separately with t=3.144; p=0.003, t=1.101; p=.046 and t=4.335; p=0.000 respectively and collectively with R-square value of 0.661. From the findings, the study recommends that experts who are knowledgeable and have expertise should be consulted in conducting supplier evaluation. Supplier evaluation criteria should concentrate on suppliers’ quality commitment, financial capability and competency should be thought-about when awarding supply contracts to suppliers. The study suggests that a comparative study should be conducted to ascertain if there's distinction in the effects of supplier evaluation on acquisition performance between physical product organizations and service organizations. Additional studies should be conducted to relate supplier evaluation and acquisition performance in private universities in kenya to ascertain whether there's any distinction. Lastly, additional study might also be conducted on the application of seven progressive steps of supplier evaluation.
f) Bhatt (2015)
A multi-criteria problem is the one which is evaluated against qualitative and quantitative factors. A practical example of such problem is vendor selection. A vendor selection problem deals with each tangible and intangible factor to pick out the best suppliers. It becomes more sophisticated in presence of constraints like capacity, cost, quality etc. in such circumstances, manager faces two problems: (1) who are the most effective suppliers (2) what proportion} quantity should be purchased from every chosen
supplier. The work addressed during this paper describes an integration of Analytical Hierarchy technique (AHP), Technique For Order Preference By Similarity To Ideal solution (TOPSIS) and linear programming to resolve a multi criteria supplier selection problem wherever each qualitative and quantitative factor are taken under consideration. While AHP qualitatively confirm the weights allotted to different criteria, TOPSIS determines ranking of suppliers and linear programming mathematically verify the optimal order quantity from chosen suppliers by taking the output of TOPSIS as its input. A case study of an automobile company is presented and future scope is mentioned.
g) Nazeri et. al. (2011)
On the issue of supplier selection researchers argue that choosing the most effective suppliers has strategic importance in this competitive environment for firms. Supplier selection consists of both qualitative and quantitative criteria, therefore it is considered as a multi-criteria decision- making (MCDM) problem. There are several investigations concerning supplier selection and many publications are issued since currently, however they need not separated qualitative and quantitative criteria for evaluating suppliers and allocating orders. Hence, we propose an integrated model that evaluates suppliers and allocates order to them. In the beginning, we appraise suppliers by qualitative criteria such as financial structure, services and loyalty with Fuzzy analytical hierarchy process (FAHP) and gain their weights. Meantime, the fuzzy logic and triangular fuzzy numbers are used to handle ambiguity of human judge. within the second step, for evaluating suppliers and allocating orders with quantitative criteria like cost, defect rate, and delay considering company's demands and suppliers' limitations a multi objective linear programming (MOLP) is developed. This model consists of four objective functions: minimizing defect, delay, and costs. For influencing the suppliers' weights which are achieved from qualitative evaluation by FAHP, an objective function is outlined to maximize the overall weights of suppliers. A case study is applied to illustrate the stages of
Vol.04, Issue 03, March 2019 Available Online: www.ajeee.co.in/index.php/AJEEE provider selection, evaluation and order
allocation.
h) Yang etal. (2008)
According to the researchers vendor selection is an analysis process that is based on several criteria that uses inaccurate or uncertain information. But while the factors are usually numerous and also the relationships between higher-level criteria and lower-level sub- criteria are complicated, most standard decision models cannot facilitate us clarify the interrelationships among the sub-criteria. Their proposed integrated fuzzy multiple criteria decision making (MCDM) technique addresses this issue among the context of the supplier selection problem. First, they use triangular fuzzy numbers to precise the subjective preferences of evaluators.
Second, we use interpretive structural modeling (ISM) to map the relationships among the sub-criteria. Third, we use the fuzzy analytical hierarchy process (AHP) methodology to work out the relative weights for each criterion, and we use non-additive fuzzy integral to obtain the fuzzy synthetic performance of each common criterion. Fourth, the most effective vender is decided according to the overall aggregating score of every merchandiser using the fuzzy weights with fuzzy synthetic utilities. Fifth, we use an empirical example to indicate that their proposed technique is preferred to the traditional technique, particularly when the sub-criteria are interdependent.
Finally, results give valuable suggestions to vendors on a way to improve each sub- criterion thus that they will bridge the gap between actual and aspired performance values in the future.
i) Dehghani et. al. (2013)
In recent decades, buying management in a supply chain has been a challenge for many companies. In most industries, price of raw materials constitutes the principal cost of the ultimate products.
Therefore, purchasing department can play a key role in company's efficiency and effectiveness. Absolutely, with the increasing importance of purchasing, purchasing choices have also been a lot of necessary. In recent years, the amount of environmental consideration are one of the vital issues was added to vendor selection choices. During this study, an
approach is proposed for vendor selection and allocation taking into consideration the environmental implications. In that case, the foremost necessary purchase things are known using ABC analysis.
Then, in order to evaluate the performance of suppliers accurately, performance evaluation criteria are investigated and screened. Next, with the help of Analytic Network process (ANP), suppliers are graded. Finally, orders allocation is accomplished to qualified suppliers through implementing a linear multi-objective programming model. to point out the relevancy of planned approach, purchasing method of Asia Pishro Diesel Company was studied as a case study.
j) Ho et. al. (2010)
Supplier evaluation and selection problem has been studied extensively. Varied decision making approaches are projected to tackle the problem. In modern supply chain management, the performance of potential suppliers is evaluated against multiple criteria instead of considering one factor-cost. This paper reviews the literature of the multi-criteria decision making approaches for vendor evaluation and selection. Connected articles showing within the international journals from 2000 to 2008 are gathered and analyzed so the subsequent three questions can be answered: (i) which approaches were prevalently applied? (ii) Which evaluating criteria were paid a lot of attention to? (iii) Is there any inadequacy of the approaches? Based on the inadequacy, if any, some enhancements and doable future work are suggested. This research not solely provides proof that the multi- criteria decision making approaches are better than the standard cost-based approach, however additionally aids the researchers and decision makers in applying the approaches effectively.
k) Kumar et. al. (2012)
A survey of the literature reveals the very fact that there have been continuous efforts to judge suppliers by fashioning varied methodologies. A number of the literature suggests techniques to mix each cardinal and ordinal preferences throughout the selection of suppliers.
Several of the cases, whereby the fuzzified techniques and ANN strategies are used, have to be compelled to be tested before
Vol.04, Issue 03, March 2019 Available Online: www.ajeee.co.in/index.php/AJEEE applying those in real-world supplier
selection decisions. Sometimes, use of a cumbersome technique might frustrate the DM likewise as managers to adopt the methodology whereby the decision does not obtain such complicated techniques.
So, Taguchi Loss function has been proposed as a model for supplier selection.
l) Nanaji and Apte (2015)
Construction materials occupy a major part of the construction’s value tributary nearly 500th. Thus when selecting construction materials, it is vital that correct decisions should be created.
Literature evidences show that the most issue with building materials purchasing comes with supplier selection, and rely on careful examination of supplier economics among alternative criteria. Supplier selection is the buying function that forms the foundation for the success or failure of projects. Therefore supplier selection criteria should be well outlined.
Supplier selection may be a multi-criteria decision making problem which incorporates each qualitative and quantitative concerns. This paper presents a review of supplier selection processes and decision making methods reported in academic and other literature associated with the construction trade.
m) Ghadimi and Heavey (2014)
Purchasing activities consume over half of producing and mercantilism organizations sales capitals. Effective acquisition is tied with efficient and extremely correct assortment of information required for purchasing the proper material with the suitable} quality from appropriate suppliers. supply chain management (SCM) consists of complicated networks of distributed actors within which the problem of identifying the suitable suppliers and allocating optimum order quantities supported the Triple Bottom Line (TBL) attributes is strategically vital.
However, implementation of an autonomous and automatic assessment that may incorporate dynamics and uncertainty of the total supply chain throughout the assessment amount is not addressed. in the current research paper, a completely unique framework is intended and proposed to narrow the aforesaid gap. Agent technology has been incorporated within the developed
framework to decrease the supplier chain uncertainty by decreasing human interactions and automating the process of supplier evaluation and order allocation.
n) Chaghooshi et. al. (2012)
Nowadays, the problem of supply chain partner selection has emerged as an energetic research field where numerous analysis papers are revealed around this area within previous few years. Supplier selection plays a key role in provide chain management (SCM) and deals with evaluation, ranking and selection of the most effective option from a pool of potential suppliers particularly within the presence of conflicting criteria. During this study, the researchers have a tendency to offer a completely unique conjunctive multiple criteria decision- making (MCDM) approach that addresses dependent relationships among every measuring criterion. As such, we utilize a decision-making trial and evaluation laboratory (DEMATEL), a fuzzy analytical network process (FANP), and a method of VIKOR to pick out the most effective supplier that considers the interdependence and therefore the relative weights of every measurement criterion.
o) Singla (2009)
This study identifies on the findings of two cross-sectional surveys of the top 5,000 largest firms in Taiwan, undertaken in 2003 and 2006. It presents the organizations’ criteria for choosing enterprise resource coming up with (ERP) software package package and its vendors. The various selection criteria for ERP software package and its suppliers between the two fact-finding years are discussed. From the results, the researchers conjointly discovered that a number of selection criteria are extremely associated with a domestic or international ERP package’s utilization and ERP supplier’s adoption.
p) Patil et. al. (2016)
Supplier evaluation and management could be a terribly strong idea in developing trade, however needs to come back a long way within the construction projects. In projects, particularly in India, it's thought-about as a region of the unorganized sector. While developing a vendor survey for the vendee it's to be
Vol.04, Issue 03, March 2019 Available Online: www.ajeee.co.in/index.php/AJEEE decided that performance classes to
incorporate. The first criteria are cost/price, quality and delivery, which are generally the foremost obvious and most important areas that have an effect on the buyer. for several things, these three performance areas would be enough, however for crucial items needing an in- depth analysis of the supplier’s capabilities, a lot of elaborated supplier evaluation study is needed. This paper reviews the literature of assorted approaches for vendor evaluation and selection. Vendor evaluation and Management initiates them to adopt the foremost efficient approaches in order to make sure the smooth flow of the execution of the Project. Study puts efforts in effectiveness in selection of vendors and their evaluation.
q) Jarial and Garg (2012)
It has been found that no single supplier is best appropriate for every criterion, taken on an individual basis. The ranking of vendors changes with reference to criterion. The proposed deterministic quantitative models supported multi criteria decision making (MCDM) - Matrix strategies are capable for analysis, evaluation, and selection and ranking of vendors for all criteria considered together in an integrated manner. The results are conferred in terms of a benefit worth of quality index/ permanent operate that has been used for ranking of the vendors.
The ranking of the vendors supported all criteria taken along is created on the premise of decreasing order of suitability index/ permanent function that provides a novel algebraically illustration of the supplier selection system. The Mathematical modeling and permanent function offers necessary technical information regarding the system and has been found to be a powerful tool for structural analysis that features characterization, identification, comparison and ranking of supplier selection systems. It has been found that no single supplier is best appropriate for every criterion, taken on an individual basis. The ranking of vendors changes with reference to criterion. The proposed deterministic quantitative models supported multi criteria decision making (MCDM)- Matrix strategies are capable for analysis, evaluation, and selection and ranking of vendors for all criteria
considered together in an integrated manner. The results are conferred in terms of a benefit worth of quality index/
permanent operate that has been used for ranking of the vendors. The ranking of the vendors supported all criteria taken along is created on the premise of decreasing order of suitability index/ permanent function that provides a novel algebraical illustration of the supplier selection system. The Mathematical modeling and permanent function offers necessary technical information regarding the system and has been found to be a powerful tool for structural analysis that features characterization, identification, comparison and ranking of supplier selection systems.
r) Triruchelvan and Tookey (2011) The increasing importance of supply chain management (SCM) is forcing organizations to rethink and improvise their purchasing-related matters. In place of that, the vendor selection procedure plays a vital role in buying activity. The vendor selection procedure has undergone vital changes within the past forty years.
These changes have proved themselves useful to each the buying purchasers and therefore the suppliers. The vendor selection process involves multiple criteria comprising each qualitative and quantitative aspect. Sometimes, there could be some contradictions between tangible and intangible criteria which can necessitate a trade-off between conflicting criteria. This paper provides An overall image of analysis on vendor selection issues and vendor selection practices.
Different selection criteria, rising questions of vendor selection and also the solutions for these matters are summarized. This review shows that the implementation of a structured decision making technique is vital, particularly underneath the complicated conditions that embody each qualitative and quantitative criteria.
s) Sari and Timor (2016)
Supplier evaluation and selection technique is one among the foremost vital decision downside for companies. Vendor selection should be considered as Multi- criteria (MCDM) process, since the problem involves each tangible, intangible and additionally conflicting criterion.
during this study a bunch of main
Vol.04, Issue 03, March 2019 Available Online: www.ajeee.co.in/index.php/AJEEE criteria; “delivery”, “price”, “quality”,
“working conditions”, “financial status”,
“managerial capabilities” and
“environmental health” are explored for their interrelations and importance degrees. Analytic network process (ANP) is employed for calculations of the weights of the criteria and these weights are transferred to quality loss via Taguchi loss functions. A case study in automotive trade is given and eventually a comparison with PROMETHEE method is mentioned. This study presents a delicate and precise answer to a complex choice problem by comparing traditional and non-traditional strategies.
t) Paul et. al. (2011)
The basic objective of this research work is to offer different multi-criteria decision making techniques and to investigate a comparison among them on the basis of similarities and dissimilarities, and advantages and disadvantages on the issue of enhanced supplier selection.
According to the researcher an important problem in such a type of decision analysis is to investigate the difference between two or more different rankings for a given set of alternatives. According to researchers since a qualified supplier is considered a one of the key element as well as a good recourse for a firm in reducing costs, evaluation and selection of potential vendors has become an essential component in supply chain. In the research work some of the multi- criteria decision making approaches like linear weighted method, categorical technique, fuzzy approach, and analytical hierarchy process are presented and discussed with example. The objective of this research work is to understand operating decision area for the process of supplier selection for the purpose of helping the decision makers with varying degrees of importance to achieve consensus in rating different suppliers.
u) Harju (2001)
The thesis work aims at identifying the significant variables which affect the buying decisions of an organization and considering the factors which influence the buying process. The research questions were designed through survey of literature and research made by the researcher. In addition, a systematically designed questionnaire was distributed at
Almaco Group by interviewing four personnel working in purchasing department. According to the researcher, organizational buying is not a single act, but a kind of decision making process.
According to him a organizational buyer gets influenced by four sets of factors, viz., individual, interpersonal, organizational, and environmental. The basic motive of this research work is to provide enhanced guide lines for future decision making which affect the development of marketing strategies for the concerning firm.
v) De Boer et. al. (2001)
This research work presents a review of decision making methods in support to supplier selection problem, based on in depth search of academic literature. In the research work, the researchers identify the contributions from researchers in a frame work which takes the diversity in procurement situations in the terms of complexity and importance into account and involves all the different phases of supplier selection process starting from problem definition, formulation of criteria and qualification of suppliers, to the final choice of supplier from the set of identified suppliers.
Moreover, the researchers propose techniques for decision making that previously have not been suggested in the context of purchasing. The proposed techniques specifically used in accommodating buying situations for which few or no decision models were published. The research work also extends previous reviews by different researchers like Weber, Hold, Degraeve, in the manner that it classifies the models in the framework developed by De Boer, which recognizes more steps in the buying process than only final among qualified vendors and supports the diversity in procurement situations.
w) Tam and Tummala (2001)
On the issue of vender selection for a telecommunication system, researchers report that such a decision is considered as one of the important decisions of the sector because it depicts a long term investment and on it success of the company depends directly. It is considered as a complex multi-person, multi-criteria decision problem, and such a group decision making process can be
Vol.04, Issue 03, March 2019 Available Online: www.ajeee.co.in/index.php/AJEEE improved by assessing priorities
systematically and logically, based on judgments provided by several people belonging to different functional areas within the firm. According to the researchers, analytical hierarchy process (AHP) can be useful in case of many decision makers with different conflicting objectives, and for achieving a consensus decision. In the present research work, an AHP-based model is formulated and applied to an existing telecommunications system for the purpose of examining its feasibility in selecting a vendor for the firm, and according to the researchers the use of proposed vendor selection model can be used for the purpose of improving group decision making for selection a vendor which satisfies the customer’s specifications. It was also found that use of AHP based model yields systematic and quick results.
3. GAPS IN THE RESEARCH AND OBJECTIVES OF NEW RESEARCH Following are the gaps investigated from the research:
a) There is very limited research available which focuses small and medium scale industries; and
b) There is very limited research which advocates the use of multi criteria decision making techniques for the purpose of supplier selection.
Based on above mentioned gaps, following objectives are being proposed to initiate new research:
a) To find out the various criteria for supplier selection for a firm;
b) To use multi criteria decision making approach for a firm.
4. CONCLUSION
The objective of supply chain management is to be efficient and cost effective across the entire system i.e. total system cost, from transportation to distribution to inventories of raw material, work in process, and finished goods, are to be minimized. Considering objective of the concept and research gaps as well as objectives of a new research a new research in the field can be initiated.
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