Supplier selection using compromise ranking and outranking methods

In today’s highly competitive manufacturing environment, an effective supplier selection process is very important for the success of any business organization. Selection of the best supplier is always a difficult task for the purchasing manager. Suppliers have varied strengths and weaknesses which require careful assessment by the purchasing manager before selecting and ranking them. Any supplier selection procedure is to be based on the establishment of various criteria which may include quality, cost efficiency, delivery dependability, volume flexibility, information and customer service. This paper attempts to solve the supplier selection problem using two most potential multi-criteria decision-making (MCDM) approaches and compares their relative performance for a given organizational environment. The first MCDM approach is ‘Vlse Kriterijumska Optimizacija Kompromisno Resenje’ (VIKOR), a compromise ranking method and the other one is ‘ELimination and Et Choice Translating REality’ (ELECTRE), an outranking method. These two methods are used to rank the alternative suppliers, for whom several requirements are considered simultaneously. Two real-time examples are cited in order to demonstrate and validate the effectiveness and flexibility of these two MCDM methods. The rankings of the alternative suppliers as obtained using these two MCDM methods almost match with those as derived by the past researchers.