Dynamic grey relational analysis-based supplier selection in a health-care unit

Abstract

Purpose In the present-day highly customer-conscious service environment, supply chain management has become a critical component of health-care industry, helping in fulfilling patient expectation, optimizing inventory and automating departmental activities. Supplier selection is one of the crucial elements of health-care supplier chain, establishing mutually beneficial relationships with the reliable suppliers that provide the most value of money. Health-care supplier selection with feasible sets of alternatives and conflicting criteria can be treated as a multi-criteria decision making (MCDM) problem. Among the MCDM methods, grey relational analysis (GRA) appears as a potent tool due to its simple computational steps and ability to deal with imprecise data. The purpose of this paper is to explore the applicability of a newly developed MCDM tool for solving a health-care supplier selection problem. Design/methodology/approach In GRA, the distinguishing coefficient (ξ) plays a contributive role in final ranking of the alternative suppliers and almost all the past researchers have considered its value as 0.5. In this paper, a newly developed MCDM tool, i.e. dynamic GRA (DGRA), is adopted to evaluate the relative performance of 25 leading pharmaceutical suppliers for a health-care unit based on nine important financial metrics. Instead of static value of ξ, DGRA treats it as a dynamic variable dependent on grey relational variator and ranks the health-care suppliers using their computed rank product scores. Findings Based on rank product scores and developed exponential curve, DGRA classifies all the suppliers into reliable, moderately reliable and unreliable clusters, helping the health-care unit in identifying the best performing suppliers for subsequent order allocation. Among the reliable suppliers, alternatives A2 and A11 occupy the top two positions having almost the same performance with respect to the considered financial metrics. Originality/value Application of DGRA along with determination of the most reliable suppliers would help in effectively adopting multi-sourcing strategy to increase resilience while diversifying the supply portfolio, thereby enabling the health-care unit to minimize chances of sudden disruption in the supply chain. It can act as an intelligent decision-making framework aiding in solving health-care supplier selection problems considering perceived risks and dynamic input data.