Supplier Selection and Order Allocation in Highway Construction Projects Using a Hybrid MCDM Approach

Abstract

Supplier selection and order allocation (SSOA) is an important phase in any construction project that affects the project cost, quality, and time. Supplier selection is a multi-criteria decision-making (MCDM) problem as it involves a number of qualitative and quantitative criteria based on which the project manager selects the fittest suppliers. This work proposes a hybrid analytic network process (ANP) and preference ranking organization method for enrichment evaluations (PROMETHEE) approach to rank the suppliers for a major construction company in India. At first, the materials are grouped into clusters based on their consumption value. The criteria weights are computed using ANP. The suppliers in each product cluster are then ranked using PROMETHEE. Following the company's policy, the initial orders are allocated to the top two suppliers in each product cluster. Upon the receipt of the materials, the supplier's performance is evaluated using a linear averaging method. The order allocation for the subsequent periods is revised considering the deviations in the supplier's performance. The proposed approach is developed as an add-in in Excel to support the company's supplier selection process.