Two-stage solution approach for supplier selection: A case study in a Taiwan automotive industry

Taiwan's automotive industry has undergone tremendous changes during the past decades as a result of joining the World Trade Organization (WTO) in 2002. After entering the WTO, Taiwanese automotive industries are facing the impact of tariff reduction, open import and the cancellation of self-made rate and taxation preferential, they are also encountering global competitive environmental threats, hence a reduction in operation costs and reinforcement of competitive advantage of the enterprise are required to embrace WTO's impact. A key strategy to reinforce competitiveness is effectively selecting the best supplier for operation cost reduction. The supplier selection is a multi-criterion decision making problem which includes both qualitative and quantitative criteria. Many criteria may conflict with each other which makes the decision making process complicated. In this paper, we propose to develop a systematic process for automotive industry supplier selection: a two-stage solution approach for supplier selection using Fuzzy Analytic Network Process-Goal Programming (FANP-GP) and De Novo Programming (DNP). The first stage is the FANP method integrated with the GP model to select the best supplier and to decide the optimal order quantity. In the second stage, the selected suppliers are evaluated based on the DNP method by adjusting their resource constraints and increase their capacity to achieve the minimum total procurement budget. Furthermore, a case study is conducted to illustrate the stages in the supplier selection for the lead industry-automotive industry. The result provides the idealised supplier selection model for automotive industry by the systematic process to facilitate in the decision making activity and helps to effectively select the best supplier significantly reduces purchasing costs and improves corporate competitiveness.