Integration of the AHP-TOPSIS Approach in Material Supplier Selection

Abstract

A medium-scale manufacturing company that produces various kinds of stainless furniture products does not have clear criteria for supplier selection. Additionally, there is no long-term relationship and the purchasing method involves selecting the supplier with the best offer (spot purchase). Materials have been delayed several times, resulting in cost overruns that impact both additional time and production. The delay is caused by the unavailability of the ordered raw materials from the supplier, leading to production delays and posing a risk of customer order fulfilment delays. Therefore, there is a need to identify the best supplier capable of meeting the company’s requirements. The purpose of this research is to determine the optimal supplier for critical materials using the AHP-TOPSIS method. The supply positioning model is employed to categorize materials and formulate procurement recommendations by considering two dimensions, there are supply risk, and expenditure. The TOPSIS method is used to identify the best alternative supplier, leading to supplier A being ranked with the highest level of preference, followed by suppliers B and C. Alternative strategies for procuring critical materials can include reducing supply risks, establishing long-term partnerships, and implementing partnership contracts.