Selecting sustainable supplier countries for Iran's steel industry at three levels by using AHP and TOPSIS methods

Abstract

Supplier selection as a multi-criteria decision-making problem that highly depends on the decision makers’ vision has a major issue among supply chain (SC) managers. SC sustainability, which pays attention to the environmental, economic, and social aspects in SC, has been recently highlighted in the evaluation process undergone by the SC managers. Suppliers, as the basic components of the SC, play a significant role in creating a sustainable SC. Hence, the first aim of this research is to determine the weights of sustainability criteria by using analytical hierarchy process. The second aim of this study is to evaluate suppliers based on four main criteria, CO2 emissions, the number of employees in the suppliers’ country industry, water consumption and distance from supplier's country to the destination at three SC levels and the macroeconomic (international) level. In order to address the second goal of this research, the Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) method as a multi-criteria decision-making method has been applied. In this research, Iran's steel industry has been selected as the case study. Results show that the Iranian mining industry is the best sustainable supplier for Iran's steel industry. In addition, Iran was found as the best sustainable supplier country for most suppliers in Iran's steel industry SC based on the three SC sustainability criteria at three levels. Finally, a sensitivity analysis has been applied according to the different weights of the sustainability criteria. The results of this research can help managers in the steel industry to deal with the supplier selection problem at the macro-level. Furthermore, the presented approach in this research can assist managers of other industries to select and evaluate their suppliers.