A fuzzy approach method for supplier selection

Abstract

Supplier categorisation, selection and performance evaluation are decisions of strategic importance to companies. Global competition, mass customisation, high customer expectations, and harsh economic conditions are forcing companies to rely on external suppliers to contribute a larger portion of parts, materials, and assemblies to finished products and to manage a growing number of processes and functions that were once controlled internally. Thus supplier performance evaluation is very important to choose the right vendor for the right product. In this paper a fuzzy supplier selection algorithm (FSSA) is utilised to rank the technically efficient vendors according to both predetermined performance criteria and additional product-related performance criteria. The algorithm is based on calculating fuzzy suitability indices for the efficient vendor alternatives, and then, ranking the fuzzy indices to select the best supplier alternative. A comprehensive example is provided to illustrate the decision procedure.