Selection of supplier management policies using clustering and fuzzy-AHP in the retail sector

Abstract

Supplier development contributes to supply chain integration and performance, thus playing an essential role in any industry. In the retail market, no formal procedures exist for the selection-assignment of supplier development programs, meaning that respective management is complex and unclear given actor and requirement heterogeneities. Multi-criteria techniques are currently used for selection and evaluation processes. However, no models exist that integrate clustering and multi-criteria techniques together to efficiently select-assign supplier development programs. This study proposes a four-phase methodology - diagnosis, program design, assignment, and proposal - that considers supplier clustering through K-means and multi-criteria fuzzification. Additionally, case-study analysis of 149 retail suppliers in Colombia clustered businesses into high (8), medium (32), and low (109) risk sets, each of which was assigned tailored development programs. The obtained results support use of the proposed methodology to improve supply chain performance for organisations with many suppliers requiring development programs.