Multi Criteria Decision Approach for Supplier Selection in Lean Manufacturing System - A Case Study

Background: This paper focusses on selection of the suppliers based on the parameters matching the requirements of manufacturer by selecting data and information from a company supplying components for an automobile component manufacturing firm. The supplier adopts lean practices in line with the manufacturer’s requirement and reducing inventory. Methods: The study focuses on using three popularly used multi criteria methods i.e., Analytical Hierarchy Processing (AHP), Fuzzy Approach and Analytic Network Process (ANP) for selection of suppliers. The data and information have been obtained from four suppliers and four important criteria including quality, price, service and delivery are selected to choose a supplier. The study is conducted in automobile component manufacturing firm. In each method, the supplier ranking was made and choice is given to purchase manager for final selection of supplier. Findings: The methods used for supplier selection, has its own merits and demerits. The implementation of these methods depends on the type of buyer requirements and parameter dependency. However, AHP method is not stable, if numbers of parameters are more than 10; ANP method is not stable when dependency of the parameters are considered. The drawback of fuzzy method is that, it considers the same importance for the parameters which is not true in real situation. Improvements: Further study can consider hybrid method for designing an algorithm for supplier selection, which may yield better results and hence better decision making. In a dynamic and changing environment, these analytical tools would be required in many sectors of business, wherever, there is more choice of suppliers.