An Integrated QFD-TOPSIS Methodology for Supplier Selection in SMEs

Abstract

Supplier selection, within a supply-chain network, is a decision of strategic importance to SMEs. The selection involves trading-off multiple cardinal and ordinal criteria in an optimal fashion. Such a decision is multi-criteria in nature. “Technique for Order Preference by Similarity to Ideal Solution” (TOPSIS) is a distance-based multi-criteria decisionmaking tool that considers both ideal and negative-ideal solutions within its feasible solution domain. In reality, ideal solution is not attainable. Therefore, TOPSIS considers the shortest Euclidean distance from the ideal solution to have a composite of the best performance values exhibited by a candidate-alternative for each of the criteria. However, TOPSIS does not have provision to allow cross-functional planning criteria evolved from the multi-functional teams of SMEs. At this juncture, Quality Function Deployment (QFD), an existing cross-functional planning technique, is suitable integrated with TOPSIS for latter’s better flexibility. The proposed methodology is validated using a benchmark problem from the literature. As an example, ten candidatesuppliers are ranked using the developed methodology considering eight disparate criteria and cost factors. Selection of the best candidate-supplier is made based upon a nondimensional selection-index containing the objective factor decision weight. The implication of the research lies within the flexibility of the proposed methodology for the purpose of the decision-making in SMEs.