A novel hybrid MCDM approach for outsourcing supplier selection

Abstract

Purpose The purpose of this paper is to determine the criteria weights of outsourcing and their key role in ranking outsourcing suppliers. Design/methodology/approach A new hybrid multi-criteria decision-making approach merges three tools, namely, decision making trial and evaluation (DEMATLE), fuzzy analytic network process (FANP) and ordinal/cardinal data envelopment analysis (DEA) model. Afterwards, experts’ opinions were gathered from a Pipe and Fittings company. Finally, their opinions were incorporated in three-stage approach for outsourcing suppliers’ selection. Findings The findings of this study show that among the selective criteria for outsourcing, business development, focus on basic activities and order delays are the three most important criteria. Also, the proposed approach ranks suppliers to facilitate decision making for selection. Research limitations/implications The number of suppliers, selection criteria and the number of members of the respondents’ team have been identified as some of the limitations of the present study. Practical implications The study has significant and practical implications for the managers and for the organizations which have to choose top suppliers, particularly in the case of dealing with numerous and qualitative/quantitative criteria. Originality/value This paper proposed a new three-stage approach that incorporates outputs of previous as inputs of next stage to increasing results accuracy. Also, it showed that by incorporating results of FANP method into DEA model, key role of experts’ opinions as a qualitative and quantitative criteria can be caused by increasing flexibility of decision process.