Cost reduction strategies in supply chain: evaluating suppliers in china with the spherical fuzzy multimoora approach

Global shifts in economy coupled with deepening market integration underpinned the central position of the concept of competition in the contemporary business mindset. Conventionally addressed as a matter of price and competitive advantage, the competition has today become a multidimensional fact which is shaped not only by economic performance of the businesses but also by their organizational efficiencies, technological innovation capacities, environmental awareness and sustainable development approaches. It is a basic fact, as frequently stressed in both theoretical literature and applied research, that the competition is a key factor which guides strategic decision-making processes of the business, and therefore directly affects the production and management dynamics. The effectiveness of competition, particularly in liberal market economies, is not only limited with internal performances of the firms but also encourages effective distribution of resources, contributes to overall efficiency of economy and triggers decreases in production costs and increases in product/service quality. It, at the micro level, helps firms to optimize their production, marketing and supply processes, while, at the macro level, creating positive effects on the indicators such as economic growth, employment growth and social welfare. In this context, the competition goes beyond being a simple element of survival strategies of businesses into a core component of development policies at both national and global scale. At this backdrop, businesses need not only to maintain operational excellence but also to embrace strategic cost management practices in order for them to have a sustainable advantage in the heat of global competition. Especially for manufacturers, it is of vital importance to analyze costs systematically, keep them under control and restructure them with a continuous improvement approach in order to gain an edge in price competition, increase customer satisfaction and hold a strong position in the market. At this point, lean manufacturing practices and multi-criteria decision-making methods are among the priority areas of research and practice in strategic management literature and practices. In this context, the present study is designed to find solutions to the critical problems encountered by a valve manufacturer, such as high manufacturing costs and decreased sales volume. The basic aim of the study is to reduce total manufacturing costs sustainably by eliminating wastage, inefficiencies and bottlenecks, and, as a result, to reinforce competitiveness of the firm in the industry. For this purpose, Value Stream Mapping method, a core principle of Lean Manufacturing approach, is employed in the first stage of the study. Value Stream Mapping provides a systematic visualization on the present state of the manufacturing processes, making it an effective analysis tool to identify the processes which fail to generate value, as well as opportunities for process improvement. xxii As part of the study, we first charted a detailed map of the existing manufacturing process, identifying bottlenecks, and process steps plagued with time loss and wastage. Then we used the results from the analysis to optimize the manufacturing process, thanks to which we achieved a 17% decrease in manufacturing costs. This improvement is made possible thanks to removal of process stream imbalances, elimination of processes failed to create value, and improvement of overall manufacturing efficiency. However, this cost advantage is not found sufficient to achieve the goals of the firm vis-a-vis the global competition, and therefore more indepth strategic solutions are needed. To this end, the second stage of the study included a survey on the alternative sourcing options as part of supply chain management as well as an analysis on the import-based sourcing strategies, in particular. Conducted to identify low-cost sourcing options, these analyses suggested the import as the most viable option. However, import process entails various risks as much important as the cost advantage, therefore, SWOT Analysis is applied before proceeding to the strategic decision-making. This analysis systematically demonstrated the internal capacity of the business and external opportunities/threats, contributing to a healthier base for decision-making. As a result of the analysis, "selecting right supplier" is identified as one of the key risk factors, and advanced data analysis methods are used to minimize this risk. In this context, China-origin 13 potential suppliers are short-listed as a result of the analysis based on Harmonized System codes. These firms were subjected to a multicriteria evaluation, such as quality, cost, lead time, reliability, where Spherical Fuzzy MULTIMOORA method, a multi-criteria decision-making method, is used for analysis. This method is chosen as it has capability to work with data which entails uncertainty and fuzziness, going beyond conventional decision-making methods. As a result of analyses, the most suitable firm is identified among potential suppliers, and then import process is initiated. Thanks to this strategic sourcing from China, production costs are reduced by an additional 35%, resulting in a total cost advantage of 52%. This result clearly demonstrates the transformative effect of strategic decisions based on the use of external sourcing on the cost structure and competitive capacity of the business, besides the internal efficiency increases with lean manufacturing methods. As a result, this study concretely demonstrates how effective combination and integration of lean manufacturing philosophy and multi-criteria decision-making methods is in optimization of manufacturing costs, and sustainability of competitive advantage. This holistic approach offers a feasible strategic road map not only for the business studied but also for similar firms operating in similar industries. The findings from our study show that effective and systematic application of Value Stream Mapping, a Lean Manufacturing method allows for a holistic analysis on, and operational optimization of, the manufacturing processes. Said improvement process is not only limited to short-term outputs such as reduction of wastage, and effective use of resources, but also offers strategic acquisitions such as identification of process bottlenecks and maintenance of process continuity. On the other hand, integration of Spherical Fuzzy MULTIMOORA approach, a multicriteria decision-making method, in order to reinforce rationality of strategic-making process provides decision-makers with a solid decision-making support mechanisms based on scientific principles in the multidimensional and uncertainty-dominant cases. This advanced method enables more systematic and objective comparisons among alternatives while making use of flexibility offered by fuzzy logic in modelling of the uncertainties. Thanks to this methodological integration, businesses have the means to achieve concrete and quantifiable cost savings in the short-term, while laying an important ground for decision-making processes which will create competitive advantage in the long-term, prioritizing sustainability and contributing to corporate development. Consequently, this research offers solid tools for manufacturers to improve their operational effectiveness while also suggesting an integrated model built on a scientific basis in strategic decision-making processes. With this aspect, the study not only makes genuine contributions to the academic literature, but also provides practitioners with a practicable, feasible and guiding framework to further develop decision-making support system