Supplier Selection with Fuzzy Analytical Hierarchy Process and Taguchi Loss Function: An Application in Aerospace Industry

Abstract

Purpose - Outsourcing operations and material supply processes are as critical as in-house operations in the manufacturing industries, and the success of enterprises is directly related to working with efficient and collaborative suppliers. This study aims to select the proper suppliers under certain criteria for a case company in the aerospace industry. Design/methodology/approach- The criteria for selecting the supplier were determined based on the interviews with the purchasing manager and the weights were obtained by the Fuzzy Analytical Hierarchy Process. Supplier losses based on performance values were calculated over the criteria determined by using the Taguchi Loss Function Method for ranking the suppliers. Findings – Quality, financial conditions, delivery, capacity and 11 sub-criteria related to these main criteria were determined as supplier selection priorities for the company. According to the supplier losses, the supplier that brings the least cost to the business were selected for outsourcing. According to which criteria other suppliers should improve their performance was shown with loss analysis. Discussion – Supplier evaluation and selection process with different characteristics is a multi-criteria decision-making problem. Criteria that have different degrees of importance in accordance with the sector, usage and needs of the business is used with different methods in evaluating the performance. This study evaluates the performance of suppliers from the point of view of the loss they bring to the business depending on their deviation from the expected value. The study provides guidance in the context of method and criterion selection, especially in the selection of suppliers of companies in the aerospace industry.