A fuzzy AHP and TOPSIS methodology to evaluate 3PL in a supply chain

Purpose – The purpose of this paper is to provide an insight into the use of an integrated approach of fuzzy analytical hierarchy process (fuzzy AHP) and TOPSIS in evaluating the performance of global third party logistics service providers for effective supply chain management. Design/methodology/approach – In this study, the integration of fuzzy AHP with TOPSIS is proposed in determining the relative importance (weight) of criteria and then ranking of 3PLs. Findings – Findings show that the logistics cost and service quality are two most important criteria for performance rating of 3PLs. Deciding the relative importance of various criteria for 3PLs evaluation is a complex task. The superiority of one criterion over the other varies from person to person and firm to firm. Therefore, to capture the variability in decision fuzzy extended AHP is very useful tool. Finally, the preference raking of alternatives are found using TOPSIS. Research limitations/implications – Fuzzy AHP is a complex methodology and requires more numerical calculations than the traditional AHP and hence it increases the effort. But in this paper single stage fuzzy AHP is used to simplify the process. Fuzzy AHP is integrated with TOPSIS for preference ranking of 3PL, which provides a good methodology to rank 3PLs. Originality/value – There is a lack of research in the literature to deal directly with the uncertainty of human decisions in evaluating the relative importance of multiple criteria. Therefore, fuzzy AHP is an appropriate methodology to find the relative importance of the criteria to rank the 3PLs using TOPSIS.