An AHP Model Approach to Supply Chain Flexibility: A Case Study of Indian FMCG Firm


Author

Rohit Kr Singh
ABV Indian Institute of Information Technology & Management, Gwalior, India

P. Acharya
ABV Indian Institute of Information Technology & Management, Gwalior, India


Content

The current business environment is becoming increasingly uncertain, unpredictable and turbulent. Organizations always keep themselves ready to face any eventuality. Flexibility is one of the ways to cope up with uncertainty. Supply chain flexibility refers to the ability to change the supply chain system as per the current business need. The purpose of this paper is to identify the stage of supply chain which can help enhance its overall flexibility. Dimensions of supply chain flexibility are extracted from extant literature and their importance in the three stages of supply chain has been analysed based on the responses received during a survey carried out in an FMCG firm. An analytic hierarchy process (AHP) model has been developed. In this study 14 dimensions of supply chain flexibility are considered and these are grouped under the inbound, in-house and outbound stages of supply chain.

Keywords: supply chain, analytic hierarchy process, flexibility, FMCG

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Supply chain flexibility is ability of any organisation to respond to the changes that occurs frequently in the surrounding environment. Changes may occur in terms of customer requirement, change of location of customer, changes in government’s business policies, implementation of new technology, volume changes as per product demand in market, design changes etc. The current business environment is becoming increasingly uncertain, unpredictable, and competitive as a result increasingly more complex (Singh and Acharya, 2013). Since last one decade it has been observed that customer demand is highly volatile and companies that are able to create values for their customers by satisfying their needs and wants generally increase their market share and their profitability. Thus an important part of any business, certainly for any supply chain, is making it easy for customers to do business with. In order to be competitive, some of the Indian manufacturing industries have already started implementing flexibility in different segments of the SC by several means and ways.

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In this study authors have used analytic hierarchy process to prioritize the stages of supply chain as well as flexibility dimensions associated with each stage of supply chain. AHP is a tool to find the optimal outcome from a multiple criteria scenario by employing a hierarchal approach to arrive at best solution. Singh (2013) discussed the various phases of AHP:

– Structuring the problem and building AHP model

– Collecting data from expert interviews

– Determining the normalized priority weights of individual factors and sub factors

– Synthesis finding solution to problem

– Prioritizing the factors for Flexible Supply Chain Using AHP

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The current business environment is becoming increasingly uncertain, unpredictable, and competitive as a result increasingly more complex. In today’s context flexibility in supply chains allows firms to grow at rapid rate, make reach to maximum number of customers and helps in avoiding any future disruption. The main reason of acquiring flexibility concepts in Indian FMCG industry is customer highly volatile demand. This paper has tried to identify different dimensions of supply chain flexibility through extensive literature review and tried to prioritize them through AHP. By this prioritization, firms will have an idea of flexibility dimensions having more impact or importance in achieving supply chain flexibility in organisation. Outbound stage of supply chain comes out to be the most important one followed by In-house stage and inbound stage.

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About Author

Rohit Kumar Singh has obtained his bachelor degree in Mechanical Engineering followed by his Master’s degree in business administration from IIIT Gwalior. Currently he is pursuing his PhD in area of supply chain management from ABV Indian Institute of Information Technology & Management Gwalior. His area of interest lies in operations and supply chain management and have published papers in national and international journals.

Padmanav Acharya is an Associate Professor in the Institute. Acharya has done his M.Tech and Ph.D. from IIT Kharagpur after his B.Tech in Mechanical Engineering from Utkal University. He has 18 years of teaching experience. Prior to joining ABV-IIITM, he was working as an Assistant Professor at IGIT, Sarang, Orissa. He has published several papers in Journals of international and national repute and also presented papers and chaired sessions at international and national conferences. He has been a reviewer of prestigious international journals. His areas of interest include Software Engineering and Management, Busyness System Simulation, Operations Management.