A fuzzy preference relations model for evaluating key supplier relationships in TFT-LCD TV panel manufacturing industry

Abstract

Purpose – Interest in investigating key supplier relationships from both academic and corporate spheres has increased in recent years. However, it is difficult to develop a sustainable and effective model for evaluating key supplier relationships because the information available in the practical environment is often uncertain and asymmetric. The purpose of this paper is to identify critical factors concerning key suppliers selection derive from resource-based view and construct a hierarchical evaluation framework which has elements of implied change or transformation of the firm’s resources for operation strategies when evaluating key suppliers relationships. Moreover, the authors propose a fuzzy preference relations (FPR) model, with a hierarchical evaluation framework, to address the imprecise and inconsistent information used by managers to evaluate key supplier relationships and further to select appropriate suppliers. Design/methodology/approach – The FPR model based on the consistent FPR methodology not only provides an efficient and systematic evaluation for key supplier relationships by using the performance and evaluation scores of each key supplier, but also solves problems arising from the conventional multi-criteria analysis approach. This methodology is faster to execute and enhance the consistency and accuracy with regard to the decision makers’ judgments. To illustrate how the model is created and assessed, the authors use the TFT-LCD TV panel manufacturing industry as an empirical subject. Findings – The FPR model holds promise for assisting TFT-LCD TV manufacturers in evaluating key supplier relationships with TFT-LCD TV panel suppliers. The findings indicate that first, “the supplier’s product quality” is the most important factor when evaluating key supplier relationships, followed by “selling price set by the supplier” and “specialized supplier development capability”; second, after the 1980s, all suppliers had similar delivery capabilities with only small differences in delivery times, such that the relative importance of “time required for shipments” has become less significant, and customer awareness of the “customer assistance and service” factor has been heightened; third, the provision of excellent product quality and attractive low prices by suppliers requires technical capability, therefore, from the perspectives of industry experts, “specialized supplier development capability” is far more important than “time required for shipments”; and fourth, TFT-LCD TV manufacturers need to focus on their product quality performance continually, and concentrate on applying process technology strategy as well as product and service development strategy to build up “difficult to imitate resources” for competitive advantages. Originality/value – The main contribution is to provide managers with an efficient and systematic model that can evaluate the performance of key supplier relationships in terms of critical factors derived from resource-based theories. By focussing on employing the proposed model with successful management for key supplier relationships, the authors hope to help buying companies improve the benefits of supplier relationships. Because of the uncertainties and complexities of real strategy making in TFT-LCD TV panel industry, the authors offer a model that implicitly assume that managers can have influences over the strategic direction of their organization.