PERFORMANCE EVALUATION AND FLOW ALLOCATION 04 DECISION MODEL FOR SUSTAINABLE SUPPLY CHAIN

Abstract

The thesis proposes a sustainable supply chain performance evaluation, partner selection and flow optimization decision making model. Both qualitative as well as quantitative criteria are considered to gauge the sustainable supply chain performance, having the objectives of economic growth, environmental protection, and societal development. A three echelon supply chain network is considered which includes different suppliers, manufacturers, and distributors. An integrated methodology of structural equation modeling (SEM), fuzzy analytical hierarchy process (FAHP), and fuzzy multi-objective linear programming (FMOLP), has been applied to the proposed model. The methodology is realized in three stages. In the first stage. SEM approach is applied to estimate the weightage of the sustainable supply chain performance evaluation criteria and their sub criteria. In the second stage, FAlIP is applied in finding the relative weightage of available alternatives for partnership at different stages of the supply chain. The relative weights of the alternatives are calculated with respect to the sustainable supply chain performance evaluation criteria and their sub criteria. The weights estimated by SEM approach and FAHP approach are combined together to obtain the overall relative weightings of the supply chain alternatives available at different stages of the chain. Finally, in the third stage FMOLP approach is applied to partner selection and flow allocation to optimize the overall sustainable performance. The proposed model is demonstrated with a sample of Indian apparel industry supply chain network. For sustainable supply chain performance evaluation, 3 criteria and 19 sub criteria are selected based on the analysis of existing literature and subsequently followed by suggestions from the experts in academia as well as practitioners working in the Indian apparel industry supply chain network. The 3 selected criteria are sustainable supplier partnership performance, sustainable production performance, sustainable delivery and logistics performance. A structured questionnaire was designed to obtain the respondents' perception to know how important the above mentioned criteria and their sub criteria are. The questionnaire was administered using a mail survey to 496 organizations having at least 10 years of their operational experience. 278 usable respoiises were received which result in 56% response rate. A second order confirmatory SEM model is formulated to estimate the relative weightage of above mentioned criteria and their sub criteria based on the responses. The results indicate satisfactory reliability, validity, and overall model fit. The reliabilities of the different measures included in the model ranges from 0.95 to 0.98 thus indicating good item reliability. The composite reliabilities for all the constructs are above the threshold value of 0.70 (ranging from0.95 to 0.98), indicating high reliability for all the constructs (Fornell and Larcker, 1981). The average variance extracted values ranged from 0.93 to 0.98, exceeding the 0.50 threshold value and indicates good convergent validity. The overall fit indices for the proposed model with, Chi square/df= 1.62, RMSEA = 0.048, GFI = 0.914, CFl = 0.985, indicates an acceptable fit (Fornell and Larcker, 1981).The results indicate that highest weightage is given to sustainable production performance (0.71) followed by sustainable supplier partnership performance (0.62) and finally, sustainable delivery and logistic performance (0.47) to improve the overall sustainable apparel industry supply chain performance. To demonstrate the FAI-IP approach application, a case study of Indian apparel industry's supply chain network is exercised. In the case study, a set of 3 fabric suppliers, apparel manufacturers, and distributers are considered at each stage respectively. The relative weightages of the suppliers, manufacturers, and distributors are calculated by the FAHP approach with respect to each sustainable supply chain performance evaluation criteria and their sub-criteria. The weights estimated by SEM approach (for sustainable supply chain performance evaluation criteria and their sub-criterion) are combined with the relative weights calculated by the FAI-IP approach (for suppliers, manufacturers and distributors) to obtain the overall relative weights of the suppliers, manufacturers and distributors. These overall weights are used in the FMOLP model formulation for flow allocation decision making. In the FMOLP model formulation, the expected demand at 3 distribution centers, for 3 different time periods are considered. The five objective functions as; (1) Maximizing the Total Value of Sustainable Purchasing Performance, (2) Maximizing the Total Value of Sustainable Production, (3) Maximizing the Total Value of Sustainable Deliver and Logistics Performance, (4) Minimization of Total Cost, (5) Minimization of Total Carbon Emission are considered. By using the Zimmerman's approach, the FMOLP problem is solved. The optimization results indicate that the supply chain partners are selected and flow quantities are allocated to them who perform better on overall sustainable supply chain performance evaluation criteria. The salient characteristics of different analytical tools are combined together to bring out a reliable and effective evaluation process. The evaluation structure proposed in this thesis provides a concise approach to supply chain managers to monitor their supply chain performance with the relative importance of sustainability criteria and their sub criteria in Indian apparel industry supply chain network. Furthermore, this can help them to stimulate continuous improvements. The thesis proposes an idea that, for effective sustainability practices in the apparel industry supply chain, the proposed methodology can be used for partner selection and flow allocation decision making.