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An integrated grey-based multi-criteria decision-making approach for supplier evaluation and selection in the oil and gas industry

An integrated grey-based multi-criteria decision-making approach for supplier evaluation and selection in the oil and gas industry
An integrated grey-based multi-criteria decision-making approach for supplier evaluation and selection in the oil and gas industry
Purpose
The oil and gas industry is a crucial economic sector for both developed and developing economies. Delays in extraction and refining of these resources would adversely affect industrial players, including that of the host countries. Supplier selection is one of the most important decisions taken by managers of this industry that affect their supply chain operations. However, determining suitable suppliers to work with has become a phenomenon faced by these managers and their organizations. Furthermore, identifying relevant, critical and important criteria needed to guide these managers and their organizations for supplier selection decisions has become even more complicated due to various criteria that need to be taken into consideration. With limited works in the current literature of supplier selection in the oil and gas industry having major methodological drawbacks, the purpose of this paper is to develop an integrated approach for supplier selection in the oil and gas industry.

Design/methodology/approach
To address this problem, this paper proposes a new uncertain decision framework. A grey-Delphi approach is first applied to aid in the evaluation and refinement of these various available criteria to obtain the most important and relevant criteria for the oil and gas industry. The grey systems theoretic concept is adopted to address the subjectivity and uncertainty in human judgments. The grey-Shannon entropy approach is used to determine the criteria weights, and finally, the grey-EDAS (evaluation based on distance from average solution) method is utilized for determining the ranking of the suppliers.

Findings
To exemplify the applicability and robustness of the proposed approach, this study uses the oil and gas industry of Iran as a case in point. From the literature review, 21 criteria were established and using the grey-Delphi approach, 16 were finally considered. The four top-ranked criteria, using grey-Shannon entropy, include warranty level and experience time, relationship closeness, supplier’s technical level and risks which are considered as the most critical and influential criteria for supplier evaluation in the Iranian oil and gas industry. The ranking of the suppliers is obtained, and the best and worst suppliers are also identified. Sensitivity analysis indicates that the results using the proposed methodology are robust.

Research limitations/implications
The proposed approach would assist supply chain practicing managers, including purchasing managers, procurement managers and supply chain managers in the oil and gas and other industries, to effectively select suitable suppliers for cooperation. It can also be used for other multi-criteria decision-making (MCDM) applications. Future works on applying other MCDM methods and comparing them with the results of this study can be addressed. Finally, broader and more empirical works are required in the oil and gas industry.

Originality/value
This study is among the first few studies of supplier selection in the oil and gas industry from an emerging economy perspective and sets the stage for future research. The proposed integrated grey-based MCDM approach provides robust results in supplier evaluation and can be used for future domain applications.
0368-492X
Kaviani, Mohamad Amin
a971a393-5bdb-4c18-bbf2-6e4edf6f326f
Karbassi Yazdi, Amir
da9bd035-0fc8-428b-96a8-cbe18e91272b
Ocampo, Lanndon
01a4b6d0-c860-4308-a5c2-bebb85274d37
Kusi-Sarpong, Simonov
a7e68240-2b34-456e-9849-c01bd10c68f7
Kaviani, Mohamad Amin
a971a393-5bdb-4c18-bbf2-6e4edf6f326f
Karbassi Yazdi, Amir
da9bd035-0fc8-428b-96a8-cbe18e91272b
Ocampo, Lanndon
01a4b6d0-c860-4308-a5c2-bebb85274d37
Kusi-Sarpong, Simonov
a7e68240-2b34-456e-9849-c01bd10c68f7

Kaviani, Mohamad Amin, Karbassi Yazdi, Amir, Ocampo, Lanndon and Kusi-Sarpong, Simonov (2019) An integrated grey-based multi-criteria decision-making approach for supplier evaluation and selection in the oil and gas industry. Kybernetes. (doi:10.1108/K-05-2018-0265).

Record type: Article

Abstract

Purpose
The oil and gas industry is a crucial economic sector for both developed and developing economies. Delays in extraction and refining of these resources would adversely affect industrial players, including that of the host countries. Supplier selection is one of the most important decisions taken by managers of this industry that affect their supply chain operations. However, determining suitable suppliers to work with has become a phenomenon faced by these managers and their organizations. Furthermore, identifying relevant, critical and important criteria needed to guide these managers and their organizations for supplier selection decisions has become even more complicated due to various criteria that need to be taken into consideration. With limited works in the current literature of supplier selection in the oil and gas industry having major methodological drawbacks, the purpose of this paper is to develop an integrated approach for supplier selection in the oil and gas industry.

Design/methodology/approach
To address this problem, this paper proposes a new uncertain decision framework. A grey-Delphi approach is first applied to aid in the evaluation and refinement of these various available criteria to obtain the most important and relevant criteria for the oil and gas industry. The grey systems theoretic concept is adopted to address the subjectivity and uncertainty in human judgments. The grey-Shannon entropy approach is used to determine the criteria weights, and finally, the grey-EDAS (evaluation based on distance from average solution) method is utilized for determining the ranking of the suppliers.

Findings
To exemplify the applicability and robustness of the proposed approach, this study uses the oil and gas industry of Iran as a case in point. From the literature review, 21 criteria were established and using the grey-Delphi approach, 16 were finally considered. The four top-ranked criteria, using grey-Shannon entropy, include warranty level and experience time, relationship closeness, supplier’s technical level and risks which are considered as the most critical and influential criteria for supplier evaluation in the Iranian oil and gas industry. The ranking of the suppliers is obtained, and the best and worst suppliers are also identified. Sensitivity analysis indicates that the results using the proposed methodology are robust.

Research limitations/implications
The proposed approach would assist supply chain practicing managers, including purchasing managers, procurement managers and supply chain managers in the oil and gas and other industries, to effectively select suitable suppliers for cooperation. It can also be used for other multi-criteria decision-making (MCDM) applications. Future works on applying other MCDM methods and comparing them with the results of this study can be addressed. Finally, broader and more empirical works are required in the oil and gas industry.

Originality/value
This study is among the first few studies of supplier selection in the oil and gas industry from an emerging economy perspective and sets the stage for future research. The proposed integrated grey-based MCDM approach provides robust results in supplier evaluation and can be used for future domain applications.

Text
Revised Manuscript February 12, 2019 Final - Accepted Manuscript
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More information

Accepted/In Press date: 12 February 2019
e-pub ahead of print date: 1 April 2019

Identifiers

Local EPrints ID: 434512
URI: https://eprints.soton.ac.uk/id/eprint/434512
ISSN: 0368-492X
PURE UUID: 2e205864-fb9d-4edf-9ae1-f653b50d2ab7

Catalogue record

Date deposited: 25 Sep 2019 16:30
Last modified: 09 Dec 2019 17:31

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Contributors

Author: Mohamad Amin Kaviani
Author: Amir Karbassi Yazdi
Author: Lanndon Ocampo

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