Performance Evaluation of Subcontractors Using Weighted Sum Method through KPI Measurement

Abstract

Key Performance Indicators (KPIs) help measure objectives critical to business sustainability. This research takes place in a toy factory’s injection moulding department that has yet to develop indicators for subcontractor performance. Poor subcontractor performance significantly impacts the injection moulding production. In the last three months, the delivered quantity exceeded the target by 27%, delivery time consistency is only 78%, there were 1.31% rejects, and inventory accuracy and material efficiency were 81% and 93% respectively. The objective of the study is to determine the KPI and develop an evaluation procedure for the injection moulding supplier and select the best supplier. Multi-criteria decision-making, i.e., weighted sum method, was used. Five employees were involved in determining the criteria weights. The evaluation was based on each supplier’s performance. A written KPI for the company's subcontractor and performance evaluation procedures were developed. There were six subcontractors of which subcontractor H received the highest score (78.42) and subcontractor G received the lowest score (69.42). The subcontractor performance needs to be improved in the future. In the interest of the company’s sustainability, it is recommended that this subcontractor performance evaluation be institutionalised to support subcontractor performance. Successful subcontractors support the business performance.

Keywords

• kpi
• subcontractor
• injection moulding
• multi-criteria decision-making
• weighted sum method