Analytical Hierarchical Process to Establish the Criteria for Choosing Explosives Suppliers in Small and Medium Mining Companies

Abstract

Mining plays a pivotal role in economies worldwide, contributing to employment, infrastructure, and the supply of essential raw materials. Chile’s global mining powerhouse, particularly in copper production, exemplifies this industry’s economic significance. The supplier selection process in the mining industry, a complex and multifaceted task, is explored in detail, specifically focusing on explosives procurement, a critical component for mineral extraction. The paper underscores the importance of informed supplier selection decisions, especially for SMEs, which often need more resources and capabilities for efficient management. To address these challenges, the study proposes applying the Analytic Hierarchical Process (AHP), a multi-criteria decision-making methodology, to identify and prioritize the criteria and sub-criteria pertinent to choosing explosives suppliers. A case study in the Coquimbo Region, Chile, involving SMEs in the mining sector is the empirical foundation for this research. Our research highlights that the foremost criterion for SMEs in the Coquimbo Region’s mining sector is “relationship with the environment and communities”. This reflects the national context of mining community tensions and the rising environmental standards and social expectations, which can profoundly impact mining operations. “Quality of products and services” is the second most crucial criterion, underscoring SMEs’ drive to enhance productivity and efficiency. “Contractual compliance” follows closely, signifying the integration of SMEs into broader social and environmental sustainability efforts. Conversely, “innovation” ranks as the least relevant criterion, indicating that SMEs prioritize traditional processes due to limited resources and cost constraints. These insights are valuable for mining supplier company managers, emphasizing the need for sustainability, corporate social responsibility, and management control systems.