A Decision Support Tool for Supplier Evaluation and Selection

Ana Paula Lopes,Nuria Rodriguez-Lopez

doi:10.3390/su132212387

Abstract

The supplier selection process is considered one of the most relevant decisions in supply chain management due to its effect on the product quality and on buyer performance. Supplier selection is often unstructured, and is generally based on the lowest-price proposal. However, this type of selection involves a high risk, sometimes resulting in project delays, poor quality of acquired goods, and large financial losses. Price is undoubtedly an important criterion when choosing a supplier; however, other equally important criteria must be considered. Therefore, supplier selection should be formulated as a multi-criteria decision-making (MCDM) problem. This study uses the PROMETHEE-GAIA (Preference Ranking Organization Method for Enrichment of Evaluations—Geometrical Analysis for Interactive Assistance) method to classify and select suppliers in an agrifood company. One of the advantages of this method is that it allows decision-makers to set their preferences considering all the relevant criteria simultaneously, and their relative importance. The case study demonstrates that PROMETHEE constitutes a flexible MCDM tool for supplier evaluation and selection, rank the different alternatives, and provide valuable insights. The results show that the supplier selection process has a strong point related to the existence of two groups of suppliers, one focused on economic criteria and other related to the innovative capacity. However, a flaw emerges, as little relevance is associated to the environmental criterion.

Highlights

The role of small and medium-sized enterprises (SMEs) in market revitalization, and in economic development, is as important as that of big companies
The literature shows many different approaches or techniques to solve the problem of supplier selection and evaluation; most of the approaches are based on multi-criteria decision making frameworks [2,3,4,5,6], using two methods [7] the so-called “American School”
In the area of the American School, for example, Analytic Hierarchy Process (AHP) [10,11] Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) [12,13,14], Analytic Network Process (ANP) [15,16,17], VlseKriterijumska Optimizacija I Kompromisno Resenje (VIKOR) [18,19] or Decision-Making Trial and Evaluation Laboratory (DEMATEL) [20,21] methods demonstrated its effectiveness in supplier selection and evaluation problems

Summary

Introduction

The role of small and medium-sized enterprises (SMEs) in market revitalization, and in economic development, is as important as that of big companies. The literature shows many different approaches or techniques to solve the problem of supplier selection and evaluation; most of the approaches are based on multi-criteria decision making frameworks [2,3,4,5,6], using two methods [7] the so-called “American School”. The main purpose of applying decision-making methods is that both alternatives and criteria are fixed a priori and the decision occurs once This basic assumption limits the accuracy of the results, especially when values change over time and the pair-wise decision matrix is not fixed as is the case with the supplier selection problem. A PROMETHEE-GAIA (Preference Ranking Organization Method for Enrichment of Evaluations—Geometrical Analysis for Interactive Assistance) method was applied This method allows for the hierarchical organization of the firm’s main suppliers according to a set of criteria.

The Supplier Selection Problem

PROMETHEE I and II

The GAIA Interactive Visual Tool

Application of PROMETHEE—GAIA to the Supplier Selection Problem

Results and Discussion

PROMETHEE