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ABSTRACT
Supply chain involves all activities of meeting customers demand and transferring material through downstream into
upstream of chain for fulfilling the demands. To achieve supply chain objectives organizations should control the
activities for increasing the efficiency and effectiveness. . In recent years many methodologies have been developed in
terms of quantitative measures but most of them merely focus on the control mechanism based on reported measures
whereas the qualitative aspect of the work is still unexplored. Fuzzy logic can be a powerful tool for managers to use
instead of traditional mathematical models when evaluating the performance of supply chains. The flexibility of the
model allows the decision maker to introduce vagueness, uncertainty, and subjectivity into the evaluation system.
Performance evaluations represent a critically important decision that often involves subjective information. Fuzzy logic
models provide a reasonable solution to these common decision situations. After extensive exploration of the literature,
we recommend an outcome of exploring Fuzzy logic approach in evaluating qualitative aspects of performance of
supply chain management. In this paper, responsiveness and reliability as some of the important factors of evaluating
qualitative performance is discussed to be measured by means of fuzzy logic in Supply Chains Management.
Keywords: Supply Chain, Performance Measurement, qualitative measures and fuzzy logic
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knowledge that don’t have well-defined boundaries [5]. subjective views of the expected behavior of the
Fuzzy set theory is a generalization of the ordinary set systems in those circumstances. In the field of
theory. A useful approach for examining many real- performance measurement, inevitability of subjectivity
world problems is fuzzy approximate reasoning or fuzzy has to an extent been accepted. They recognized that
logic. This technique is based on the fuzzy set theory [6] elimination of judgmental criteria and their associated
that allows the elements of a set to have varying degrees subjectivity are unlikely. This suggests that many
of membership, from a non-membership grade of 0 to a performance evaluation factors are subjective, and
full membership of 100 per cent or grade 1. This smooth hence qualitative in nature.
gradation of values is what makes fuzzy logic match
well with the vagueness and uncertainty typical of many According to [7] SC performance measures are
real world problems. Fuzzy is an appropriate modeling categorized in three main types; Resource, Output and
method to deal with intangible and qualitative measures Flexibility and declared that output measures include
which uses fuzzy set theory and linguistic values and customer responsiveness, quality and quantity of the
has been applied widely in various areas of Supply final product produced. Some of the output measures
Chain Management [2]. can be measured numerically such as number of items
produced but some of them such as customer
In dealing with many aspects of our daily life we satisfaction, responsiveness and product quality cannot
recognize that many phenomena, situations and issues be measured numerically.
are imprecise. We use words such as high, low, In his new classification, [7] introduced performance
moderate, adequate, extremely, large, tall, adult, mature, measures of SCM. They divided all the metrics into
competent etc. to deal with problems ranging from law, quantitative and qualitative and then established sub
financial management, engines, to psychology and factors for each category. Qualitative category is
education. Yet such expressions are incompatible with divided into quality, flexibility, visibility, trust and
traditional quantitative modeling and information innovativeness [7]. They claimed that quality factor of
system design which generally require an either a yes or the mentioned criteria have a full picture of the
no response to a question. However it is only making a mentioned criteria which should be interpreted in the
small step to argue Degree of membership that if we can SCM qualitative performance. Quality is categorized
‘reason’ using such imprecise information, so should into customer satisfaction, customer response time, lead
our machines [30]. It is often difficult to quantify time, on time delivery, fill rate, stock-out probability
performance dimensions because all critical parameters and accuracy.
in a Supply Chain Management are indicated
subjectively by linguistic terms and are characterized by Another performance measurement classification of
ambiguity [12] .Fuzzy set theory is primarily concerned agri-food was presented by [7] which include efficiency,
with quantifying and reasoning using natural language flexibility, responsiveness, and food quality.
in which many words have ambiguous meanings. Responsiveness classified in fill rate, product lateness,
customer response time, lead time, customer
2. THEORETICAL LITERATURE complaints, shipping errors. Supply Chain Operations
Reference (SCOR) model presented the following five
REVIEW attributes of Supply Chain performance [8].
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Conventional evaluation systems are representatives of A feature typical of the natural language, to be in no way
structured systems that employ quantifiable and non- circumvented, is the vagueness of its semantics. That is why
quantifiable measures of evaluation. It is often difficult to a description delivered in the natural language cannot be
quantify performance dimensions. For example, translated directly into mathematical formulas [17]. To be
“responsiveness” may be an important part of evaluating able to apply the classical mathematics, we have to have the
performance of supply chains. However, how exactly does task described in precise figures. This method, however, can
one measure “responsiveness”. Fuzzy approach can be return unsatisfactory results, as precise figures often do not
effectively utilized to handle imprecision and uncertainty properly reflect the reality. Fuzzy logic offers a solution to
[15]. This approach to performance evaluation allows the the problem, since it allows us to model the meanings of
organization to exercise professional judgment in evaluating words used in the natural language [18].
its supply chains. In real problems, performance evaluation
techniques engage in handling cases like subjectivity, Fuzzy logic is, however, not fuzzy. Basically, fuzzy logic is
fuzziness and imprecise information. a precise logic of imprecision and approximate reasoning
[17]. More specifically, fuzzy logic may be viewed as an
It is often difficult to quantify performance dimensions attempt at formalization/mechanization of two remarkable
because all critical parameters in a Supply Chain human capabilities. First, the capability to converse, reason
Management are indicated subjectively by linguistic terms and make rational decisions in an environment of
and are characterized by ambiguity [14] .Fuzzy set theory is imprecision, uncertainty, incompleteness of information,
primarily concerned with quantifying and reasoning using conflicting information, partiality of truth and partiality
natural language in which many words have ambiguous of possibility; in short, in an environment of imperfect
meanings. Application of the fuzzy set theory in evaluation information. And second, the capability to perform a wide
systems can improve evaluation results [2]. variety of physical and mental tasks without any
measurements and any computations [6].
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Reality has almost always an aspect of randomness and an In his study, [19] developed a fuzzy expert system approach
aspect of vagueness. The mathematical apparatus of the to forward looking performance measurement system of
theory of fuzzy sets provides a natural basis for the theory delivery metric in two Thai textile companies. The
of possibility, playing a role which is similar to that of developed system enables managers to develop systematic
measure theory in relation to the theory of probability [6]. ways to predict future performance and identify potential
Vagueness can be modeled using the theory of fuzzy sets, problems in a company. Using the SCOR model delivery
while the randomness is modeled with reliance on the metric is only one of the factors of responsiveness and hence
probability theory and possibly other theories like the theory cannot be used to evaluate the complete supply chain
of possibility, different rates of veracity, etc. [18]. Viewed in performance management.
this perspective, a fuzzy restriction may be interpreted as a
possibility distribution, with its membership function In his study, [1] Presented innovative fuzzy logic process
playing the role of a possibility distribution function, and a based method for performance measurement in SCM. Their
fuzzy variable is associated with a possibility distribution in Qualitative category was divided into quality, flexibility,
much the same manner as a random variable is associated visibility, trust and innovativeness. This framework didn’t
with a probability distribution [6]. cover all the responsiveness and reliability factors which
according to the SCOR model are two of the parameters that
Fuzzy provides a remarkably simple way to draw definite can be used to measure supply chain performance.
conclusions from vague, ambiguous or imprecise
information. In a sense, fuzzy logic resembles human Fuzzy rules applied to define qualitative terms. [20]
decision making with its ability to work from approximate proposed a methodology for monitoring the SC network
data and find precise solutions. [29] set up the following with applying fuzzy logic for some reasons such as
steps which are necessary for successful application of accuracy, reliability, compactness and lack of the concept of
modeling through a general fuzzy system: Fuzzification of justification in rule-base system. This study focused on
the input and output variable by considering appropriate monitoring the supply chain network and not evaluating the
linguistic subsets, Construction of rules based on expert performance of supply chain management.
knowledge and/or the basis of available literature, The result
appears as a fuzzy subset and therefore, it is necessary to 3. METHODOLOGY
defuzzify the output and obtain a crisp output.
Qualitative performance measurement evaluation of Supply
2.4 Related Work Chain management for was done in five steps. Following the
process of methodology will be described.
While fuzzy logic techniques have earned their place in a
variety of field ranging from engineering to financial sector, The first step was designing the questionnaire for gathering
to medicine, few efforts have been made to test the potential true required information from various supply chains in
usefulness of these methods in the modeling supply Kenya. The information was used to construct the proposed
performance evaluation. This section discusses the literature framework of performance measurement in Supply Chain
survey about the past and current research application of Management. The answers contain the most interesting
fuzzy logic. criteria which were used as input variable of the framework.
Moreover, the questionnaire was designed in a way that it
In his study, [1] , proposed a Fuzzy logic framework for would help the researcher to define the correct membership
quality as one of the important factors of qualitative function and fuzzy rules based on the range of answers.
performance is discussed to be measured by means of fuzzy Therefore, role of the questionnaire in the research is to
logic controller in Malaysian rubber glove manufacturers. A obtain the robust data of the Supply Chain Management
suitable fuzzy inference mechanism and associated rule has which can be applied in the proposed Fuzzy Logic
been discussed. It introduces the principles behind fuzzy Framework.
logic and illustrates how these principles could be applied by
Supply chain managers to evaluate supply chain Questionnaire was designed in two sections. The first section
performance. This study only focused on one aspect of gathered general respondents information and information
qualitative performance measurement of supply chain on what extent do they measure qualitative aspects of
management. performance of supply chains based on the predetermined
factors. The second section gathered information on
responsiveness and reliability of supply chain performance.
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The third fusion was on Fill rate and shipment errors. This
indicator measures the ability of the supplier to fill POs
correctly. Shipments should always be checked against the
shipping notice and the PO. What was shipped may not be
what was ordered.
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numerical group will be measured as “high” or “low”. While covered range of data which are less than 1 day. Therefore,
the proportional group will be measured as “poor” and four alternatives cover four types of membership function.
“good”. A fuzzy set is an extension of a crisp set which Figure 3.12 shows the membership functions plots for the
allows partial membership. The permissiveness of fuzziness mentioned factors.
in the human thought process suggests that much of the logic
behind thought processing is not traditional two valued logic
or even multivalued logic, but logic with fuzzy truths.
Therefore a partial membership label “Medium” will be
added in the linguistic term set for the numerical group and
“Average “ for the proportional group of the performance
measurement variables.
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F=100-67 =0.74
100-50
(1)
(2)
F=60-40 =0.67
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Reliability Correct Correct Time Correct Correct Table 4.1: Supply Chain Reliability data
Measurement Product Quantity documen
Parameters Delivery tation
Number of customer complaints: 1.2 Figure 4.1: Supply Chain overall performance
(in numbers)
5. CONCLUSION
on time delivery: 3.27
This study has addressed the questions of how to measure
Fill rate (%): 3
supply chain. Supply performance has become an important
avenue in recent times. Many organizations around the
Shipping errors (%): 2 world have been attempting to implement performance
concepts in their supply chain. The evaluation of supply
Percentage out of stock (%): 2.3 chain performance gains vital importance in modern
scenario. Performance in nature is associated with
complexity and ambiguity; therefore conventional
Accuracy (%): 4 evaluations are inappropriate and incompetent. However
fuzzy logic is a very powerful tool to compensate this
limitation and deal with vague and complex situations.
performance of any supply chain can be effectively
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evaluated using fuzzy inference system. Exploration of Pacific Industrial Engineering and Management
fuzzy logic helps in dealing with decision-makers’ linguistic System. Malaysia.
evaluation information efficiently, thereby eliminating
ambiguity, imprecision and vagueness arising from
subjective human judgment. Also for any industries to be [8]. Supply Chain Council, Inc. (2010). Supply Chain
survive in today competitive market they should periodically Operations Reference (SCOR) mode. Overview -
evaluate their supply chain performance. Well performing Version 10.0.
supply chain result in improving the response and service to
the customer, therefore increasing the supply chain
profitability. [9]. Deepak K., Ramakrishna, H., & Jagadeesh, R.
(2011). Assessment of Supply Chain Agility Using
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