Comprehensive Method for Supplier Selection in the Indonesian Leather Industry Considering Sustainable Development Goals Criteria

Abstract

Objective: This pivotal research aims to rank raw material suppliers at an Indonesian leather company using the Technique for Order Preference by Similarity to Ideal Solution (TOPSIS). It is based on Sustainable Development Goals (SDGs) criteria selected by many decision-makers through the Delphi method, with a compromise criteria weight between Methods based on Removal Effects of Criteria (MEREC) and Stepwise Weight Assessment Ratio Analysis (SWARA) II. Theoretical Framework: The global and national commitments of Sustainable Development Goals (SDGs) to improving society's welfare, including the sustainable use of resources, are not just theoretical concepts. They are practically applied in this research to guide supplier selection in the leather industry. These criteria are then weighted using objective weighting (MEREC) and subjective weighting (SWARA) II, and the results are compromised to form the basis for evaluating suppliers using TOPSIS. Method: The proposed method in this research consists of three stages. The first stage is selecting the SDGs criteria using the Delphi method, a structured communication technique involving experts. The second stage is weighting the criteria using MEREC for objective weighting and SWARA II for subjective weighting. The third stage is supplier evaluation using TOPSIS based on the weight of the compromised criteria. Results and Discussion: The ranking of leather raw material suppliers for Indonesian leather companies is Kediri, Rembang, Jombang, Cirebon, Wonogiri, Lumajang, Cianjur, and Sidoarjo. This ranking is based on the SDGs criteria. Responsible leather sourcing, eco-friendly tanning processes, water use audits, and waste management are the SDGs' criteria for selecting suppliers in the Indonesian leather industry. Responsible leather sourcing is the only sustainability criterion more important than the price criterion. This criterion directly affects the quality of the animal skin, which is why it is rejected. Research Implications: The manager should prioritize the SDGs criteria, such as the product's significance to the organization's survival over cost and other factors, which have become secondary due to high demand. Apart from rejecting and delivery factors, management also considers responsible leather sourcing. This means that good animal care impacts the reject factor, and management prioritizes this factor. The rejection criterion must be prioritized for the production process to operate efficiently. Originality/Value: It is imperative to establish a technique for managers in the Indonesian leather sector to choose sustainability suppliers incorporating Delphi, MEREC, SWARA II, and TOPSIS.