Development of a model based on FMEA, AHP and 2-tuple fuzzy linguistic representation for supply risk assessment

Abstract

Purpose This paper proposes a model based on analytic hierarchy process (AHP), 2-tuple fuzzy linguistic representation and failure mode and effect analysis (FMEA) to measure risks associated with suppliers of critical items. Design/methodology/approach In the proposed model, AHP measures the relative importance of failure modes and 2-tuple aggregates quantitative and qualitative risk evaluations to calculate RPN values for each supplier. A test application of the model was conducted at a philanthropic hospital, where Risk Priority Number (RPN) values for three suppliers of surgical gloves were calculated. Findings The test application shows that AHP was effective in determining the relative weights of failure modes and 2-tuple enabled the evaluation of risks by aggregating quantitative measures derived from historical data and qualitative judgments made by experts. The application considered unit costs, delivery reliability, quality and service as the failure modes. Three suppliers were evaluated and the quality risk was found to be low in all of them, while one of them had high risks in unit costs. Originality/value This paper puts forward a novel approach to calculate risk scores of suppliers of critical items that combines FMEA, AHP and 2-tuple fuzzy linguistic representation to assess supplier risk, allowing the combination of qualitative and quantitative metrics in the calculation of RPN values. Although the test application was done in hospital setting, the steps of the proposed model are generic and can be applied in other industries.