A Short Review of Multi Criteria Decision Making Approaches for Supplier Selection Problem

Background

Supply chain management can be defined as the process of effective and efficient management of all events related to the flow and transformation of goods and services in a supply chain network. A typical supply chain network consists of several suppliers, manufacturing sites, distribution centers, retailers and customer zones, etc. The three major flows that occur in a supply chain are physical, information, and money (Lee, (2000)). Physical flow generally starts with the process of providing raw materials from several suppliers and finishes when the end customer is reached with a finished product. Information flow involves transmitting orders, manifest, invoice. Money flows covers all money transactions among all entities of a supply chain.

Basically, a supply chain aims to optimize its including decisions such as inventory levels, transportation, make or buy decision, facility location, supplier selection or as a whole whatever an organization does to plan, source, make and deliver its products. One of the significant decisions of supply chain management is the supplier selection process which can be defined as the core of purchasing function. Inherently, a supplier selection decision requires the ability to take multiple criteria and measures in order to arrive at a clear and straightforward prioritization or final selection (Ho, Xu, and Dey (2010)).