Multi-Criteria Decision Making on Supplier Selection in Supply Chain Network

Abstract

The competition among industries nowadays lies in how to manage the suppliers. Choosing the right supplier is critical for the survival of the industry. This research discusses the supplier selection of the electrical manufacturing company. There was a problem with the delivery order from the three suppliers currently used. It was identified that during 2018 there were 8 purchase orders (PO) out of 125 POs or 8% delay in delivery for 1 week to 10 working days. The delay caused an interruption in production and affected fulfilling the customer order delivery time. A Forum Group Discussion (FGD) was formed to formulate the problem and define criteria to determine the best supplier. A survey was made to parties in the organization concern about the production and order fulfillment. To accommodate many parties in making a decision is Multi-criteria decision-making (MCDM). A combination of two methods AHP (Analytical Hierarchy Process) and Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) method were used to select the supplier. The results presented there were 5 criteria and 10 sub-criteria measured in determining suppliers. From the analysis, the value obtained for the supplier of A is 0.89, supplier C 0.50, and supplier B, 0.05. It concluded the best performance supplier is A. This research has shown the importance of consensus in the teamwork that will control the end result of the study.