Distribution Channel Selection Using FUCOM-ADAM: A Novel Approach

Abstract

The selection of the appropriate distribution channel is crucial for the success of any business dealing with physical goods. When dealing with this selection, it is crucial to have an effective decision support system (DSS) that can assist with such decisions. While various DSS approaches exist in the literature, not all are suitable for real-world applications. This research aims to address this gap by developing practical DSS tools that can aid decision-makers in making optimal decisions even in situations of uncertainty. The paper explores six different distribution channels (retailer’s warehouse, wholesaler’s warehouse, manufacturer’s warehouse, cross-dock, 3PL services, and direct delivery) in order to select the optimal one based on nine established criteria (inventory costs, distribution costs, delivery speed, service level, market coverage, product availability, order consolidation capability, reverse logistics, and order tracking) by using the FUCOM (Full Consistency Method) and ADAM (Axial-Distance-Based Aggregated Measurement) methods. After applying the FUCOM method, C1 (inventory costs) had the highest value when observing criteria weights, whereas C9 (order tracking) had the lowest. The results of the ADAM method showed that A5 (3PL services) was the best-ranked alternative, whereas A4 (cross-dock) was ranked as the worst. Based on the results, a model validation, and sensitivity analysis was conducted to determine whether the final ranking of the alternatives will change. This research provides decision makers with the necessary tools for better decision making, leading to improved distribution operations and increased profitability for the business.