Multiobjective optimisation model for the selection of critical suppliers integrating sustainability criteria

Abstract

Most companies are seeking their supplier base around the world. However, sourcing from a global supply base exposes buying companies to a notable set of risks and naturally increases transportation distance with the associated environmental consequences. In this study, we propose a multiobjective order allocation model for selecting primary and backup suppliers in a global supply chain setting. Our model explicitly minimises product costs, transportation costs and the cost of exceeding CO2 allowances within total procurement cost, while also minimising lead-time, sustainability risks and greenhouse gas (GHG) emissions. We present a case study where our model is applied to a global manufacturer of consumer goods and the current supply scenario is compared against an optimal scenario given by the proposed model. Even though total procurement cost is given the highest priority, the optimal scenario (which assigns orders to primary suppliers locally located) represents important advantages in relation to all the criteria evaluated.