AHP (Analytical Hierarchical Process): A novel approach of decision making in Aerospace industry supply chain optimization

Abstract

There is always a big challenge for business managers to improve business performance consistently and develop firm capabilities and productivity. Improvement of business performance need learning of required skill and application of gained skill through knowledge sharing with the co-operation of all employees across the supply chain of the industry. Supply chain management became a great source for making high profit at low cost. Fundamental characterise of supply chain management is a holistic structure with integration of all business functions including physical, logistical, managerial, decisional, legal etc. Compared to other industry aerospace industry deals with many challenges like limited vendor, low volume, high investment, high quality product, high end technology, geo-political uncertainty, and complex supply chain network, greater obsolesce of product, high reliability, more stringent regulatory standards and long procurement and manufacturing lead time. Resources (Man, machine, material, methods, money) allocation and vendor selection are two main decision for aerospace supply chain managers in supply chain management. A supply chain manager solves problems considering single criterion, for instance, cost, and customer satisfaction, and quality, reliability of service or delivery time. Normally various operational excellence techniques like Lean, six sigma, Theory of constraints (TOC), methods of optimization is being used to address the optimization of processes or product performance relating to aerospace business.

Analytic Hierarchy Process (AHP) is a Multi Criteria decision making technique for organising and analysing complex decisions based on mathematics and psychology in a structured way. It was originally developed by Prof. Thomas L. Saaty. AHP decomposes decision problem into hierarchy, goal and alternatives. It represents most accurate approach for quantifying weights of the criteria basing on the opinions of experts. Individual expert’s field experiences are utilised to estimate the relative magnitude of factors through pair wise comparison methods. Each expert is has to compare relative importance between two factors under specially designated questionnaire. Small   inconsistency in judgment is also happened as human judgement is not always consistent. The judgment factors of highly experience and less experience are also taken care of in this method using geometric mean of weightages given in comparison. The ratio scales are made using principal Eigen vectors and the consistency index is derived from the principal Eigen value. Consistency ratio (CR) is derived and compared with standard values using Satty’s table conformance. This paper present two case studies of decision taking mostly occurred in aerospace industry.