A trasilient decision making tool for vendor selection: a hybrid-MCDM algorithm

Abstract

Purpose – The vendor selection process refers to a sourcing decision and it is one of the strategic decisions that is used by enterprises to reduce costs and improve their performance. However, unsuitable selection may compromise the financial and operational status of the enterprise. Therefore, the vendor selection is a complex, multi-criteria decision-making process because different and conflicting criteria needs to be considered and assessed in order to find suitable suppliers. Consequently, evaluating and selecting the best vendor is the key to successful business. Traditionally, vendors are normally selected on the basis of traditional criteria, such as costs and quality, neglecting other important factors, for example resilience criteria (e.g., agility and flexibility) has been increasingly becoming paramount to sustain the service. Thus, enterprises ultimately realize that a selecting method which only uses the traditional criteria can be said to be not suitable and needs to be changed. This paper presents research that was set in motion by a real life problem in industry. Design/methodology/approach – It proposes a user-friendly decision making tool for selecting the best vendor from a potential pool of suppliers that submitted their tenders for implementation of the proposed radio frequency identification (RFID) based passport tracking system. The traditional and resilience (‘trasilience’ henceforth) selection criteria were used in a unified framework in collaboration with experts in the institution. Next, a decision-making trial and evaluation laboratory (DEMATEL) algorithm is proposed to determine the relative importance of each criterion and the weights thus obtained were integrated into the ELimination Et Choix Traduisant la REalite (ELECTRE) algorithm. Furthermore, the Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) algorithm is also adopted, to evaluate the performance of vendors and to select the best one. Finally, the Spearman rank correlation coefficient (SRCC) as applied to obtain the statistical difference between the ranking orders obtained from the two algorithms. Findings – The efficiency of the proposed decision making tool was proved from the real case study of 7 tenders submitted for implementing a RFID-based passport tracking system. The SRCC also revealed a “very strong” association value between TOPSIS and ELECTRE. Practical implications – The developed trasilient decision-making tool can easily be used to solve similar vendor or supplier selection problem. Moreover, other criteria can be added to fit other cases. Later, the tool was made available to the institution under study for solving future evaluation problems. Originality/value – The literature shows that none of the previous writers presented an integrated trasilient approach that considers resilience criteria and traditional criteria simultaneously. This study presents a new trasilience tool for selecting a vendor.