Supplier selection in an agile manufacturing environment using Data Envelopment Analysis and Analytical Network Process

Abstract

Supplier selection is one of the most important activities of organisations, where the short- and long term success of a buyer's organisation depends upon proper selection of its suppliers. The current competitive environment has placed increasing competitive pressures on suppliers to match the needs of buyer(s) in terms of quantity, quality, product mix, cost, time and place of delivery, to name a few performance measures. The focus on competitive supply chains and extended enterprises requires the adoption of agile manufacturing practices requiring their suppliers to have agile attributes. This study designs and implements a procedure for judging the suitability of suppliers for an organisation competing on agile manufacturing characteristics. Quantitative and qualitative factors are used to appraise and select appropriate suppliers to fit within an organisation's agility practices. In seeking to achieve this task, the synergistic integration of two techniques, the Analytical Network Process (ANP) and Data Envelopment Analysis (DEA) is applied in a multi-phased supplier selection approach. Initially, ANP is executed to appraise suppliers on their qualitative benefits, generating quantitative data from these qualitative dimensions. Secondly, DEA is used to synthesise the data to arrive at a ranking of the suppliers. The technique is validated in a small company case study.