An analytical hierarchy process for supplier's selection in an automotive industry

Supplier selection and evaluation is increasingly studied as a critical decision in supply chain management. Various decision making approaches have been proposed to tackle this problem. Supplier selection is a complex multi criteria decision making problem including both quantitative and qualitative factors rather than a single factor such as cost in a traditional way. This paper proposes Analytical Hierarchy Process (AHP), as one of the multi criteria decision making (MCDM) approaches, for selecting and rating potential suppliers in an automotive industry. MCDM methods are formal approaches to structure information and decision evaluation in problems with multiple, conflicting goals. AHP integrates experts’ opinions and evaluation scores, and devises the complex decision making system into a simple elementary hierarchy system. The evaluation method in terms of ratio scale is then employed to perform relative importance pair-wise comparison among every criterion. Finally, a realistic case study is presented in which an automobile manufacturer evaluates and ranks the suppliers of "coil spring" part of "Tiba" automobile based on several criteria of supply reliability.