Application of fuzzy VIKOR and cluster analysis for performance evaluation of Original Equipment Manufacturers

Abstract

Today’s markets are driven by stiff competition which necessitates firms to develop a customer-driven operations strategy with a purpose to bring in line the organizational objective with its core processes and competences. Operations and supply chain management is the foundation stone of all sectors of a business. Operations/manufacturing is complex and warrants the integration of a large number of internal and external factors. Firms (both manufacturing and service) grow up gradually and it requires exhaustive efforts to build and install resources, technology, facilities, equipments, operating processes and procedures, trained personnel, supplier etc. Manufacturing outputs of a firm depend on factors such as the production workforce, technology adopted, quality assurance, the reliability of the suppliers, including the Original Equipment Manufacturers (OEMs). Among many other critical strategic decisions to be made by the firm’s managers, OEMs/vendors selection, development and retention decisions are crucial since the quality, cost, reliability and reputation of the firm’s output (product or service) is dependent on such decisions. Apart from selection, the performance monitoring of the current OEMs of a firm has also to be an integral part of the management system, since OEMs must align their performances and capabilities with the levels desired by the firm. The present work is a departure from the conventional approaches, such as balance score card etc and undertakes a taxonomy approach for establishing a firm’s strategic partnership with their OEMs by translating the rational subjective perspectives into objective decision making using fuzzy VIKOR decision making technique along with the application of cluster analysis.