Supplier selection in the oil & gas industry: A comprehensive approach for Multi-Criteria Decision Analysis

Abstract

The focus of this paper is on selecting suppliers in the Oil and Gas (O&G) industry by developing a comprehensive approach for Multi-Criteria Decision Analysis (MCDA) based on alternative methods capable of assessing different aspects of supplier selection uncertainty in terms of utility functions and criteria related to efficiency. The O&G industry has a key role in the public sector of various countries such as Iran with its revenues being of prime importance to develop infrastructure facilities such as for healthcare, education, and transportation. This comprehensive approach walks through various stages for selecting Critical Success Factors (CSFs), ranking suppliers, and for setting partial weighting alternatives. While CSFs are selected using a traditional Delphi approach, the partial supplier rankings are defined based on Complex Proportional Assessment (COPRAS) utility functions together with criteria weights derived from Step-wise Weight Assessment Ratio Analysis (SWARA) for each CSF. As it concerns information reliability of utility and efficiency functions of both methods obtained via expert preferences or perceptions, Z-numbers are used to address the intrinsic fuzziness level inherent to each analytical stage. Iran's economy depends on revenues from oil and other related production, which means that by earning more income from this industry, most of its economic indicators such as GDP and employment rate should increase significantly, thus leading to economic growth. Various countries put plans in place related to production for increasing their social economics. One of these plans is focused on suppliers since they have a high impact on providing essential items such as equipment, HR, and transportation, so by choosing the best suppliers in all fields, costs will decrease and consequently revenue will increase. This research points out how to rank O&G industry suppliers using MCDA methods in an uncertain environment. An example based on actual data from an Iranian O&G company is provided to show the applicability of the approach proposed. Results suggest that the complexity of O&G operations on selecting suppliers can be adequately handled by information reliability techniques applied to traditional economic concepts such as utility- and efficiency-related factors, particularly in business environments characterized by a trade embargo.