Multicriteria-based customer-focused vendor selection through the analytic hierarchy process

Abstract

Vendor selection and evaluation are arguably some of the most critical functions for the success of an organisation. The competitive international business environment has forced many organisations to focus on supply chain management to cope with the rapidly increasing competition. The vendor selection problem involves multiple criteria that are both tangible and intangible. It would be difficult for the decision maker to select the best vendor from the available vendors by the traditional Analytic Hierarchy Process (AHP) for vendor selection, which considers the quality, price and delivery criteria, especially when the overall scores of two or more vendors are almost equal. This paper aims to establish a new vendor selection system using AHP from the customer satisfaction orientation. This new model is very useful in the vendor selection process, as it combines the multiplicity of judgements in a systematic way to obtain the best vendor. This paper shows how the customer-focused AHP is able to select the most efficient vendor. It involves a multicriteria decision-making process with various objectives. A real-time example has also been cited to demonstrate the usefulness of this approach.