A fuzzy multi-criteria decision making approach for supplier selection in supply chain management

In the recent years, supply chain management (SCM) has gained immense importance since enterprises are now competing on supply chain rather than manufacturing or service operations. One of the key strategic considerations in the supply chain is supplier selection problem.  The supplier selection problem is a multi objective problem involving both qualitative and quantitative factors. These factors and their interdependencies make the problem highly complex one. From the managerial perspectives, it is always convenient to express the variables and weights through linguistic values. This paper uses a fuzzy approach to deal with the supplier selection problem in supply chain. The method is based on hierarchical multiple criteria decision making (MCDM) using fuzzy approach to select suitable supplier. In such type of decision making problems, all the decision makers are assumed to be equally important resulting in impractical aggregation of decision. Therefore, an analytic hierarchy process (AHP) like procedure based on Eigen value has been proposed to derive the weightages of decision makers. Then, weightages of decision makers are incorporated with fuzzy decision making paradigm to arrive at robust selection of suppliers in SCM. The methodology has been demonstrated with the help of a case study in a steel plant.   Key words: Supplier selection, multi criteria decision making, fuzzy numbers, supply chain management, distance measure.