A Hybrid Model Based on SEM and Fuzzy TOPSIS for Supplier Selection

Abstract

How to select the right suppliers has become a crucial strategic decision for manufacturing companies facing various performance measures. This study proposed a hybrid selection model integrating factor analysis, structural equation modeling (SEM), and the fuzzy Technique for Order Performance by Similarity to Ideal Solution to (TOPSIS) design a supplier selection model. The study distilled 70 original selection criteria from the relevant literature and identified eight main influencing factors based on factor analysis. The relevance of factors was evaluated by SEM and the performance of suppliers assessed by fuzzy TOPSIS. The model was applied in a manufacturing company in China to verify its practical significance. By combining different methods, the model can select relevant and important supplier selection criteria and include unquantifiable, incomplete, and vague information in the decision model. The hybrid model merges the advantages of each method and takes into account of uncertainty associated with supplier selection process.