Fuzzy Analytical Hierarchy Process for Supplier Selection: A Case Study in An Electronic Component Manufacturer

Abstract

Supplier selection has become one of the essential effects on the entire electronic supply chain network to gain competitiveness. In the upstream supply chain, companies are able to achieve a high quality and value of products to reduce the potential risks from both internal and external stakeholders by selecting the right suppliers. The case study company produces a nano sim-card connector in which four different types of raw materials are processed into different parts. Currently, the case study company selects each raw material supplier based on its appraisal record. Nevertheless, the appraisal record is measured by the department of procurement. When candidate suppliers are categorized at the same level, the cost becomes the priority criteria to select the supplier, which increases the potential risks of, for example, the components defect rate, a penalty from clients, and a reduction in orders. This paper proposed a Fuzzy analytic hierarchy process (FAHP) model for the selection of raw material suppliers by collecting data from two of the company’s departments (procurement and engineering) and the clients to address qualitative and quantitative elements, uncertainty, and linguistic vagueness based on the company’s scenario in two parts. First, the main and sub-criteria can be weighted using a decision-maker (DM) to identify the level of importance. Second, the FAHP model also dealt with personal preferences and judgement so that the right supplier(s) for each raw material could be selected by collecting and computing the data from the respondents. Then, the sensitivity analysis is applied to observe how the decisions change when the model parameters in the top five sub-criteria change. The proposed model can offer better information and solutions for the DM in the case study company to differentiate the crucial main and sub-criteria and select the suitable raw material suppliers effectively.