Construction of capital procurement decision making model to optimize supplier selection using Fuzzy Delphi and AHP-DEMATEL

Abstract

Purpose – Supplier selection for capital procurement is a major strategic decision for any automobile company. The decision determines the success of the company and must be taken systematically with the utmost transparency. Therefore, the aim of this study is the construction of capital procurement decision making models to optimize supplier selection in the Indian automobile industry. Design/methodology/approach – To achieve the stated objective, a combined approach of fuzzy theory and AHP-DEMATEL is applied. Evaluation parameters are identified through an extensive literature review and criteria validation has been introduced through a Fuzzy Delphi method by using fuzzy linguistic scales to handle the vagueness of information. AHP is employed to find the priority weight of criteria although an inter-relationship map among criteria is not possible through AHP alone since it considers all criteria as independent. To overcome this, DEMATEL is used to establish cause-effect relationships among criteria. Findings – The results show that the total cost of ownership is the first weighted criterion in supplier selection for capital procurement, followed by manufacturing flexibility and maintainability, then conformity with requirement. The cause-effect model shows that supplier profile, total cost of ownership, service support and conformity with requirement are in the cause group and are considered to be the most critical factors in selecting the supplier. Originality/value – The study’s outcome can help the automobile industry to optimize their selection process in selecting their suppliers for capital procurement; the proposed model can provide guidelines and direction in this regard.