An analytical framework for supplier evaluation and selection: a multi-criteria decision making approach

Abstract

A good supplier is a key resource for an organisation in reducing costs, improving productivity and quality of the product. Hence, selection of potential suppliers has become an important task of supply chain management. Traditionally, procurement is considered as buying the material at cheapest price and maximises the buyer's profit. But this does not necessarily lead to an optimal situation for all members of a supply chain. This paper attempts to propose an analytical framework for supplier evaluation and selection using analytical hierarchy process (AHP) and linear programming problem (LPP). Supplier selection process includes evaluation of multiple criteria and various constraints associated with them. A case of auto parts manufacturing firm is analysed. After analysing the case, the suppliers were ranked based on their performance using AHP technique and LPP is then adopted to determine the optimum quantity to be procured from each of the best ranked supplier.