Innovative Multi-Criteria Decision-Making Approach for Supplier Evaluation: Combining TLF, Fuzzy BWM, and VIKOR

Abstract

When confronted with underperforming suppliers, the need to evaluate and improve supplier performance becomes apparent. However, the inherent inaccuracies in information introduce complexity, especially when subjective human judgment is involved in the supplier evaluation process. Associated with such problem, this study presents a novel methodology for supplier performance evaluation in the crumb rubber industry, integrating the Taguchi Loss Function (TLF), fuzzy Best-Worst Method (BWM), and VIKOR technique in group decision-making environment. Aimed at addressing the challenges in industries with variable supplier quality and performance, such as the crumb rubber industry in Indonesia, the methodology was empirically tested to demonstrate its practical utility. The process involved identifying evaluation criteria through literature review tailored  to the needs of decision makers (DMs), applying TLF to quantify losses from supplier performance deviations, using fuzzy BWM to determine criteria weights based on the DMs judgment, and employing the VIKOR technique for comprehensive supplier ranking. The findings underscore the methodology's effectiveness in enhancing decision-making, offering a unified metric that accommodates diverse criteria and balances precise data with subjective assessments. This approach simplifies the evaluation process, particularly in situations with conflicting interests among decision-makers. Demonstrating its practical application in the crumb rubber industry, the study highlights the methodology's potential for broader industrial applicability. Future research could explore comparative analyses with other analytical methods, further establishing the methodology's robustness and adaptability in different management contexts.