Utilizing analytic hierarchy process for improved decision making within supply chains

Abstract

With a growing global economy and competition and increased outsourcing, the supplier selection process has gained more focus and importance within many business enterprises for developing an integrated supply network. Analytic Hierarchy Process (AHP) has been identified as an ideal multi-objective decision support tool to assist firms in completing the supplier selection process as part of strengthening their procurement strategies. This paper involved secondary research methods to gain an understanding of AHP, its various applications, and exploration of how to incorporate non-traditional selection criteria such as environmental criterion into the process. AHP's application for optimal supplier selection to support integrated procurement process is illustrated through an example of a Medical Device Manufacturer (MDM), known for established supplier-customer partnerships and alliances. Major limitation in studying this example included data availability to complete a comprehensive AHP decision management model. However, it was found that AHP is a powerful, structured but flexible method of addressing the multi-criteria supplier selection decision that facilitates building an integrated supply chain.