Supplier Selection for Manufacturing Industries

Abstract

As global markets become more competitive, companies are under pressures to find ways for cutting costs to survive and remain competitive in their respective markets. Therefore, good supplier selection is very important issue in production process and business for cost saving and quality improvement. Most supplier selection models take into account the buyer’s point of view and maximize the buyer’s profit. This does not lead to the best situation for all members of the supply chain. Thus, this study applies analytical hierarchy process (AHP) technique for supplier selection process. In this study, the authors chose 3 main criteria and 14 sub-criteria to evaluate importance level of each criterion in supplier selection process. Following the results, this study finds that product quality, price/cost, and manufacturing capability are the top three supplier selection criteria. Meanwhile, research & development, geographical location, and environment and safety are the least important issues.