A Hybrid Fuzzy Decision Making Approach for Provider Selection in Third-party Logistics

Abstract

Outsourcing some of logistics activities is a useful strategy for companies in recent years. This makes possible firms to concentrate their main issues and processes, presents facility to improve logistics performance, to reduce costs and to improve quality. Therefore provider selection and evaluation in third-party logistics becomes an important activity for companies. Making a strategic decision like this is significantly hard and crucial. In this study we proposed a Fuzzy MCDM (Multi Criteria Decision Making) approach to effectively select themost apropriate provider. First we identify the provider selection criteria and build the hierarchical structure of decision model. After building the hierarchical structure we determined the selection criteria weights by using Fuzzy AHP (Analytical Hierarchy Process) technique. Then we applied Fuzzy VIKOR (Vise Kriterijumska Optimizacija I Kompromisno Resenje) to obtain final rankings for providers. And finally an illustrative example is also given to demonstrate the effectiveness of the proposed model.