Multi-criteria supplier selection model using the analytic hierarchy process approach

Abstract

Purpose– The purpose of this paper is to propose a supplier selection model for an automobile company using analytic hierarchy process (AHP) approach. Supplier selection is now growing to be an important but complex issue, as it involves a large number of factors and decisions. These factors have complicated operational and financial implications.Design/methodology/approach– A case study of an Indian automobile company is used to illustrate and propose a supplier selection model using AHP approach.Findings– Key criteria of the supplier selection problem are identified based on the literature review and case study. Then, a model is proposed for supplier selection using AHP approach followed by a detailed sensitivity analysis.Practical implications– This paper contributes to supplier selection process, and points out the importance of supplier selection. It proposes a supplier selection model for an automobile industry which often faces heterogeneous supply environments. The proposed model provides key criteria for supplier selection in Indian context. This model may have high acceptability, where a large number of suppliers are available to supply the materials or provide the services.Originality/value– The proposed model can provide guidelines and directions for managers involved in purchasing function to effectively select suppliers on the basis of the identified criteria in the heterogeneous manufacturing environment.