Web based casting supplier evaluation using analytical hierarchy process
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Web based casting supplier evaluation using analytical hierarchy process MM Akarte, NV Surendra, B Ravi* and N Rangaraj Indian Institute of Technology, Bombay, India Manufacturing companies are increasingly dependent on outsourcing to improve their competitive position. At the same time, the approach to supplier selection has dramatically changed from being price-driven to one based on overall capability of the supplier, very much in evidence in the automobile castings sector facing the challenge of mass customization. In this study, 18 criteria have been identi®ed for casting supplier assessment and segregated in four groupsÐproduct development capability, manufacturing capability, quality capability, and cost and delivery. A systematic approach to evaluating casting quality suppliers has been developed using the analytical hierarchy process, which enables the combination of tangible and intangible criteria and checking the consistency of decision-making. The approach has been implemented in a prototype web-based system. Keywords: supplier evaluation; outsourcing; AHP; internet; casting
Introduction Today, manufacturing companies are facing intense global competition and consequently an incredible pressure to reduce the cost and development time of a new product. It is well known that a substantial proportion of the cost of a typical engineering product is accounted for in raw material, components and other supplies; on average, manufacturers' purchases of goods and services amounts to 55% of revenue.1 Purchasing is thus one of the most crucial and vital activities of business, as it has a signi®cant impact on ®nance, operations and competitiveness of the organization.2 In this context, outsourcing is rapidly gaining importance due to a number of reasons related to cost, core competence and managerial complexities of organization and activity specialization.3 Therefore, many organizations are now allocating more resources for outsourcing activities to increase their competitive position. This is mainly achieved by a judicious combination of in-house manufacturing and outsourcing while preserving the core competencies of the organization. Selecting an appropriate supplier for outsourcing is now one of the most important decisions of the purchasing department, as it has to ful®l the strategic goals apart from operational requirements of the organization.2 This decision generally depends on a number of different criteria.4 Traditionally, cost has been the main criterion used in selecting a supplier, but slowly non-price criteria *Correspondence: B Ravi, Department of Mechanical Engineering, Indian Institute of Technology, Powai, Mumbai 400 076, India. E-mail: [email protected]
such as quality, delivery and overall capability are becoming equally important.5 Outsourcing activities have to be organized with the overall goal of customer requirement in terms of cost, quality and delivery. Often the supplier may h
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