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Integrative performance
evaluation for supply chain
system based on logarithm
triangular fuzzy number-AHP
method
Jianhua Yang
School of Business Administration,
Shandong Institute of Business and Technology, Yantai, China
Abstract
Purpose The purpose of this paper is to analyse the efficiency and benefits of supply chain (SC)
scientifically and validate the usability of methods on performance evaluation index system.
Design/methodology/approach At the performance evaluation index, the enhanced balanced
scorecards (BSC) are developed based on the BSC. Regarding society environment and future
development, the construction of performance evaluation index system includes five aspects such as
finance, customer service, intra-flow process, learning and development, and society development
within SC. The indexes of performance evaluation system are all quantified to achieve their practical
application. Another new point is that the logarithm triangular fuzzy number-analytic hierarchy process
(AHP) method expanding from fuzzy environment and developing from traditional AHP method is
creatively used to evaluate the integrative performance evaluation index system.
Findings The enhanced BSC and the special AHP method can overcome some disadvantages that
experts directly give definite numbers when the traditional method is used to value certainty and
evaluate the qualitative index. It is a scientific qualitative and quantitative evaluation tool.
Research limitations/implications Accessibility and availability of data are the main limitations
affecting which model will be applied.
Practical implications This paper is a very useful method for SC managers.
Originality/value The new approach of performance evaluation index system is attempted due to
structure and fuzzy sets. The paper is aimed at operational researchers, engineers and special managers.
Keywords Cybernetics, Supply chain management, Performance appraisal, Fuzzy control
Paper type Research paper

1. Introduction
Supply chain (SC) management is a novel management concept and enterprise operation
mode, and is increasingly attracting more attentions around the globe. It is predicted
that the enterprise competition is SC competition in the future. In order to analyse the
efficiency and benefits of SC scientifically and objectively, the performance evaluation
system and method of SC should be established accordingly (Ma, 2005).
Kybernetes
Vol. 38 No. 10, 2009
pp. 1760-1770
q Emerald Group Publishing Limited
0368-492X
DOI 10.1108/03684920910994277

This paper is supported by natural science foundation of Shandong (No. Y2005H10), Social
Science Program Foundation of Shandong (No. 05CJZ10) and Soft Science Foundation of
Shandong (No. B2005093).

In China, the initial evaluation of collaboration partner is mainly dependent on

experience and is mostly influenced by personal ideas, and the evaluation method is
simple and the results are unreliable. Thus, it is necessary to set up a scientific efficient
evaluation method to standardize collaboration partner evaluation.
2. Origin, development and current research activities of SC integral
performance evaluation methods
2.1 Current research activities and shortages of SC integral evaluation index system
Dickson (Yang, 2003) is the leading scholar in the research of SC performance
evaluation index system. As he thought, quality is the first important factor
influencing SC performance; seven factors including consignment history performance
are very important; and another 14 factors such as the quote procedure and
communication system are commonly important; the last factor cussent arrangement
is just important.
Yahya and Kingsman (2004) got the same evaluation indexes as Dickson after
surveying 16 experienced GFSB managers and the supervisors.
In 1999, professor Huo (Song et al., 2003) at Tongji University in China did a great
deal of research on the performance evaluation index system of SC regarding
manufacturer as the core of SC, and put forward four types of supplier performance
evaluation index systems on the basis of product category and cooperation term:
short-term efficient type, short-term creative one, long-term efficient one and long-term
creative one.
From the survey data and related reports in China, it is found that there are
numerous problems for company to evaluate SC: company makes its decision
randomly based on some subjective opinions, or its private impression on product of
SC. Furthermore, the evaluation standard of the supplier isnt comprehensive.
Unfortunately, it does not form a integral evaluation index system of SC performance
and cannot evaluate SC in detail objectively and integrally.
Thus, it is necessary to develop an integral evaluation multi-index system to
evaluate SC performance.
2.2 Current research activities and shortages of implementation methods of sc integral
performance evaluation
Based on the evaluation indexes and goals, implementation methods of SC integral
performance evaluation are developing around the world such as public bidding,
negotiate selection, experience estimation, purchase cost compare, ABC cost method,
NN arithmetic, SCOR, analytic hierarchy process (AHP) methods and so on (Gao et al.,
2003). Of course, these methods have their advantages and disadvantages.
AHP method is a relatively perfect evaluation system, which is convenient to
calculate and is also applicable for multi-goals and multi-rules. But, it is hard for AHP
to determine weighing value. In this paper, the main idea is to combine AHP method
and logarithm triangular fuzzy number (LTFN) and then to determine weighing value
foe every index based on fuzzy method.
3. Establishment of SC integral performance evaluation index system
From aspects of SC operation and involved factors inside and outside SC, evaluation
system with strong support one another is needed to satisfy the needs of integral

SC system based
on LTFN-AHP
method
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evaluation, it also attempts to focus on performance evaluation from every aspect of

balanced operation, to illustrate the standards of SC integral strategy, and to achieve
interaction among integrated indexes, multi-flow indexes and diagnostic indexes.
In order to emphasize the important role of organization strategy in the performance
evaluation system, enhanced balanced SC-scorecards (EBSC-SC) is developed as a SC
evaluation tool from the balanced SC-scorecards (BSC-SC) proposed by Kaplan and
Norton (Robert and David, 2001) in Harford Business Comment.
Similar as balanced scorecards (BSC), the index system and related logical relation
are described in Table I and Figure 1. Five aspects of EBSC-SC represent SC
intra-operation, customer, enterprise interest, development and community,
respectively, and every aspect has their new goals and tasks.
EBSC-SC attempts to classify the evaluation objects within SC operation and group them
based on the above five aspects, determine their interaction based on the whole flow and
corresponding support system, motivate them based on SC performance and set up their
logic relation dependent on the order of performance persistence and success, and achieve
the strategy goals of potential factors of SC performance. So SC operation can be surveyed
based on the integral organization from these five aspects. When some problems happen to
one evaluation object, which can be known very well, the solution can be found from
consequence of SC. Thus, the role of SC member can be realized based on the integration
system in case of paying more attentions to one aspect and ignoring other aspects.
4. SC integral performance evaluation model based on LTFN-AHP method
Laarhoven proposed LTFN-AHP method in 1983. He used triangular fuzzy numbers
(TFNs) for fuzzification of the pair wise evaluation matrix and solved the hierarchy
Goals

Table I.
Frame of enhanced BSC
of SC performance
evaluation

Finance value
Income
Cost
Efficiency
Business flow
Period reduction ahead of schedule
Elastic response
Cost operation
Design innovation
Future development
Flow
Information integration
Organization harmony
Customer service
Order time
Tenure client
In-time service
Customer value
Society satisfaction
Environment
Occupation

Evaluation level
SC capital return ratio
SC stock level
Cash velocity
Efficient ratio of period ahead of schedule
Time flexibility
Target cost
New product sale ratio
Product ultimate assembly line
Information share ratio
Group participation degree
Order
Client
Client
Client

cycle period
retaining
response time self-identity
value ratio

Environment protection efficiency, raw material and

resource usage rate, product recycle interest
Employee numbers per ten thousand capital

Finance
value

Capital return of SC
Cash return period
SC stock period

Stock cost of SC
Client retaining

Client response self-identity

Customer
service

Client value

1763

Order period ahead

of schedule
Internal
flow

Future
development

Produce time flexibility of SC

Target cost of SC

Effect recycle period of SC

New SC organization

Data share ratio

Deferred produce

Society
satisfaction

SC system based
on LTFN-AHP
method

Environment protection efficiency

Raw material & resource usage

Group participation degree

Product recycle interest

Employee number per
ten thousand capital

of element, with the application of TFNs and logarithm least squares (Hao et al., 2006).
This method makes decision-making process approach human thinking-process,
which is easy to understand and apply fairly. In this paper, LTFN-AHP method is used
to solve the problems concerning the integral performance evaluation in the SC.
4.1 Triangular fuzzy number
Let us introduce TFN briefly. Given F(R) is the whole vague aggregate on R of real
numbers: R (2 1, 1), and N [ F(R), the subjection function of N is mN: R !
[0,1] can be represented as following (Yang and Gao, 2000):
8 x
2 l ; x [ l; m

>
>
< m2l m2l
x
u
4-1
mN m2u 2 m2u ; x [ m; u

>
>
: 0;
otherwise
where 1 # m # u, and N is a TFN. Generally, a TFN is the special class of fuzzy
number whose membership is defined by three real numbers, expressed as (l, m, u)
where m is the most possible value of a fuzzy number N, l and u are the lower and
upper bounds, respectively, before and beyond them the element will have no
membership to be set (Figure 2). So, N {x [ Rjl , x , u}.
4.2 LTFN-AHP
Based on the above-mentioned discussions to compute elementary relative weight
under the single rule, the logarithm least squares is referred to solve the weighting
vector. According to the equation (4-2), there is a vector W w1; w2; . . . ; wnT as the
approximate solution of W and minimal solution of Z.
When partners are chosen, element aij in the evaluation matrix A may have several
numbers (meaning suggestions of different experts) because the evaluation committee
is made up of different experts. So, the equation (4-2) can be transformed as follows:

Figure 1.
Schematics of EBSC-SC
evaluation objects

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Figure 2.
TFN, N and its function

n X
n
X

Inaij 2 Inwi Inwj 2

4-2

i1 j1

n X
n X
u
X

Inaijt 2 Inwi Inwj 2

4-3

i1 j1 t1

In the equation (4-3), aijt t 1; 2; . . . ; u illustrates that there are u times

comparisons between ui and uj. When u 0, there is no comparison between ui and uj.
Generally, u is a constant number as the number of experts.
In order to compute the minimal solution of Z, both sides of the equation (4-3) are
operated with partial derivative on wk, k 1; 2; . . . ; n; then let this equation is zero as
the following:


 X


n X
u
n X
u
X
1
1
Inakjt 2 Inwk Inwj 2
Inaikt 2 Inwi Inwk

0
wk
wk
j1 t1
j1 t1
k 1; 2; . . . ; n
4-4
Then:
n 2 1uInwk 2 u

n
X

Inwj

j1
jk

n X
u
X
j1
jk

Inakjt

k 1; 2; . . . ; n

4-5

t1

Let logarithm fuzzy number replaces the element of the equation (4-5), and
wk lk ; mk ; uk and akjt rkjt ; skjt ; tkjt : Then, the equation (4-5) can be transformed
as the following:
n 2 1uInl k ; mk ; uk %u

n
X
j1
jk

It can be concluded as:

In

n X
u
X
1

Inr kjt ; skjt ; t kjt

l j ; m j ; uj
j1 t1
jk

4-6

n21uInl k ; Inmk ; Inuk %u

n

X
j1
jk

 X
n X
u
1
1 1
In ; In In
Inr kjt ; Inskjt ; Int kjt
uj
mj l j
j1 t1
jk

SC system based
on LTFN-AHP
method

4-7
Then operating with the equation (4-2) for k 1; 2; . . . ; n; the following equations can
be obtained:
n 2 1uInl k 2 u

n
X

Inuj

n X
u
X

j1
jk

n 2 1uInmk 2 u

n
X

j1
jk

Inmj

j1
jk

n 2 1uInuk 2 u

n
X

n X
u
X
j1
jk

Inl j

j1
jk

4-8

Inskjt

4-9

t1

n X
u
X

j1
jk

Inr kjt

t1

Int kjt

4-10

t1

Since akjt (rkjt, skjt, tkjt) is a known number, the solution wk (lk, mk, uk) can be got
according to equations (4-8)-(4-10). The vector wk is normalized to get the following
equation:

vk wk

n
X

!21
wi

1
l k ; mk ; uk Pn

i1 ui

i1

lk

Pn

i1 ui

mk
; Pn

i1 mi

uk
; Pn

i1 l i

1
; Pn

i1 mi

1
; Pn

i1 l i


4-11

Above all, if LTFN-AHP is used, the process of choosing and evaluating the objects can
be summarized as these steps:
(1) Constructing an evaluation group made up of different experts.
(2) Confirming the evaluation matrix R of every hierarchy TFN and calculating the
weighting value related to the significance of every rule.
(3) Calculating the synthetic weighting value of every level from the upper to the
bottom using the objective level as a control. (Assuming every sub-principle
Ai in the last sub-principle level has a synthetic weighting vector as W using
the objective level as a control).
(4) Calculating the relative synthetic weighting vector Wsn in the last sub-principle
level based on every project according to information database (s is the level
number of stepping structures, n is the number of candidate projects).
(5) Finally, calculating the general weighting of every project by compared with
the objective level based on Wsn [ W, then representing the strength of every
project and the problems needed to improve.

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5. Case analysis
Two SCs (A and B) are formed based on A and B as core enterprises and their
respective supplier and distributor.
The integral evaluation of SC A and SC B is performed by using LTFN-AHP
method. Based on SC performance evaluation as whole goal, there are five related
fundamentals: finance value, customer service, intra-flow, future development, and
society satisfaction. Corresponding to these five rules, 19 indexes can be sub-classified
including quantitative and qualitative indexes. This system will follow every
fundamental and step to evaluate the weighting value and evaluation number using
every index.
5.1 Weighting value calculation of five fundamentals
Owing to numerous complicate calculating steps, the particular illustrations are not
given on calculating steps here. But the weighting value under five rules above can be
solved by this method shown in Table II.
5.2 Weighting value calculation of every performance index for SC A and B
The performance value of every index from the bottom of hierarchy can be calculated
by the mentioned method in Section 4.2. Every value of every rule for chains A and B is
summarized in Table III. In fact, every performance value for every rule of SC is a fuzzy
number, and their functions are shown in Figures 3-7.
Finally, the integral performance value can be obtained for chains A and B under
certain target, shown in Table IV. Here is a corresponding triangular fuzzy function for
integral performance shown in Figure 8.
Conclusions can be achieved based on discussions above:
.
The ranking order of SCs A and B under every fundamental can be obtained
from Table III or Figures 3-7. SC A is much better than B in finance and
intra-flow, but SC B is better than A in customer and future development). So the
merits and potentials of every SC can be known clearly in order to improve them.
.
Conclusion from Table II or Figure 8 is that A integral performance is better
than B. Integral performance is the most important to evaluate SC and is also a
final evaluation result of SC performance. After a comprehensive analysis, it can
be found that sum of finance and flow weighting value is 0.74 since they are the
most important factors among SC performance. It is worth noticing that
weighting values for finance and flow of SC, A are higher 30 and 18 per cent than
that of B, respectively. The sum of other three weighting values is 0.26 for SC A,
which is much less than the first two. Therefore, it can be concluded that the core

Rule

Table II.
Rules and their
weighting value

Finance value
Customer service
Intra-flow
Future development
Society satisfaction

Weighting value
0.255
0.101
0.304
0.062
0.034

0.350
0.121
0.391
0.093
0.045

0.472
0.217
0.496
0.123
0.071

A
B

SC

0.479
0.358

0.566
0.434

0.683
0.541

Finance performance
L
M
U
0.203
0.577

0.322
0.678

0.404
0.798

Customer performance
L
M
U
0.409
0.307

0.534
0.466

0.669
0.565

Flow performance
L
M
U
0.197
0.310

L
0.414
0.586

Development
performance
M

0.482
0.680

0.378
0.459

0.486
0.514

0.548
0.623

Society performance
L
M
U

SC system based
on LTFN-AHP
method
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Table III.
Performance value of SC
under every fundamental

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status of finance and flow determines mainly the evaluation result of SC

performance.
Both SC, A and B are chains on the basis of manufacturing. Produce quality,
marketing, and profit, related to production, are very important factors influencing SC.
So flow is the core and finance is the primary goal. Since the flow and finance
performance of SC A is better, its integral performance is better than Bs.

N
B
1

A
B

Figure 3.
TFN of finance
performance

0.3

0.5

0.7

0.8

0.7

N
A

Figure 4.
TFN of customer
performance

0.2

0.4

0.6

N
B

Figure 5.
TFN of intra-flow
performance value
0.3

0.5

N
A

Figure 6.
TFN of development
performance

0.2

0.4

0.6

0.8

In summary, the SC performance evaluation system not only provides the tool to
evaluate SC, but also most importantly, provides a helpful method for us to realize their
shortage and fields that should be improved. Thus, enterprises among SC can know
their potential to improve and find a good way to grow up together, which is double
win and also is the primary goal to achieve by setting up the collaboration between
enterprise and its partners.

SC system based
on LTFN-AHP
method
1769

6. Conclusion
SC management is to achieve the integration and optimization of all resources by
collaborating with each member in the chain. The integral performance evaluation of
SC is much different from that of enterprise and partner. In order to decrease the
running risk of SC, it is necessary to establish a scientific decision-making method to
evaluate SC. Hence, the structure and implement model of SC performance evaluation
system is proposed to build up the theoretical foundation of setting up and optimizing
SC management system, which benefit to choose strategic partner sand then
collaborate with them in order to achieve the expected goals.

N
A B
1

0.2

SC

0.4

0.6

Figure 7.
TFN of society
performance

Integral performance value based on certain target

A
B

0.473
0.402

0.536
0.464

0.612
0.567

Table IV.
Integral performance
value of SC

0.4

0.5

0.6

0.7

Figure 8.
TFN of SC performance

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References
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Further reading
Liu, S.Y. and Sun, J.H. (2003), An infrastructure for agent-based supply chain integration &
coordination, Advances in Systems Science and Applications, Vol. 3 No. 3, pp. 322-32.
Corresponding author
Jianhua Yang can be contacted at: billyang@eyou.com

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