Supply Chain Strategy Based Supplier Evaluation-An Integrated Framework

Abstract

Evaluation of suppliers basing on the manufacturing strategy is the prime function of the purchasing department of the organization in today's highly competitive business environment. Cost is the market winner in lean manufacturing strategy, thus the organizations focus on eliminating waste and achieve low cost. Service level can be considered as market winner in agile manufacturing strategy and the organization should be more flexible to meet the volatile demands. In leagile manufacturing strategy, the organizations need to quickly responding to the variations in the customer demand with effective cost reduction. Supplier's strategy need to be in-line with manufacturing strategy of the organization. In this paper, hybrid methodology of Fuzzy positive Ideal rating /Fuzzy Negative Ideal rating and Membership Degree Transformation-M (1, 2, 3) is proposed for evaluation of supplier's performance basing on the supply chain strategy. A wide literature review is made and six selection criteria namely: Cost, Quality, Service, Business performance, Technical Capability and Delivery performance are considered for evaluation. A detailed application of the proposed methodology is illustrated. The proposed methodology is useful not only to judge the overall performance of the supplier basing on the supply chain strategy but also to know which criteria/sub-criteria need to be improved.