224

Int. J. Value Chain Management, Vol. 3, No. 2, 2009

Supplier selection and evaluation method using

Analytical Hierarchy Process (AHP): a case study on
an apparel manufacturing organisation
Mohammad Marufuzzaman
and Kazi Badrul Ahsan*
Department of Industrial Engineering & Management (IEM)
Khulna University of Engineering & Technology (KUET)
Khulna-9203, Bangladesh
E-mail: maruf237@yahoo.com
E-mail: badal_ipe@yahoo.com
*Corresponding author

Ke Xing
School of Advanced Manufacturing and Mechanical Engineering
University of South Australia, Australia
E-mail: Ke.Xing@unisa.edu.au
Abstract: Supplier selection, one of the most important issues of a company,
must be systematically considered from the decision makers perspectives.
For this reason, the supplier selection process were evaluated by researchers
for many years in a large framework comprised of various experimental and
analytical techniques and successful applications were done in various sectors.
In this paper, supplier selection is considered a multicriteria decision problem
and a model is proposed by using Analytical Hierarchy Process (AHP). The
evaluation criteria are developed and used successfully in the proposed model.
A detailed step-by-step implementation method is presented in this paper and a
case study based on an apparel manufacturing organisation is conducted to
prove the validity of the method.
Keywords: analytical hierarchy process; AHP; supplier selection; key
evaluation indicators; multicriteria decision making.
Reference to this paper should be made as follows: Marufuzzaman, M.,
Ahsan, K.B. and Xing, K. (2009) Supplier selection and evaluation method
using Analytical Hierarchy Process (AHP): a case study on an apparel
manufacturing organisation, Int. J. Value Chain Management, Vol. 3, No. 2,
pp.224240.
Biographical notes: Mohammad Marufuzzaman is a Lecturer of Industrial
Engineering and Management (IEM) at Khulna University of Engineering
and Technology (KUET), Bangladesh. He has completed his BSc Engg. in
Industrial and Production Engineering at Shah Jalal University of Science and
Technology (SUST). His research and teaching interests cover the areas of
supply chain network design, logistics management, operations management
and operations research. He is very experienced in supply chains because he
worked as the team leader of the supply chain department of a manufacturing
organisation for a period of time.
Copyright 2009 Inderscience Enterprises Ltd.

Supplier selection and evaluation method using AHP

225

Kazi Badrul Ahsan is a Lecturer of Industrial Engineering and Management

(IEM) at KUET, Bangladesh. He has a BSc Engg. in Industrial and Production
Engineering from SUST. His research interests include logistics and supply
chain management, operations management, operations research, advanced
manufacturing processes and human factor engineering. He has expertise
knowledge in Industrial Engineering, as he worked as an Industrial Engineer in
a manufacturing organisation for a long period and is currently doing research
in the field of supply chain management.
Dr. Ke Xing is a Programme Director of the School of Advanced
Manufacturing and Mechanical Engineering, University of South Australia. His
main research interests are sustainable product and service development,
lean and green supply chains and applications of artificial intelligence for
system modelling and optimisation. His research expertise also includes life
cycle assessment and risk analysis. He also has five years of engineering and
management experience in the logistics and shipping industry. He has expertise
in engineering maintenance, system reliability, project life cycle costing,
operations management and logistics and supply chain management.

Introduction

Today, the competition between corporations grows fast. In this highly competitive
environment companies which design and manage their supply chains best will be more
profitable and hence stronger. Supplier is one of the most important components of
a supply chain. A corporation which develops good relationships with its suppliers
gain cost advantages through on-time and desired quality deliveries. Therefore supplier
evaluation has a strategic importance for the corporations. The results reached by using
the right performance criteria and evaluation method would produce robust solutions
towards improving the performance of suppliers. Dickson presented 23 supplier selection
criteria and assigned the rankings of these criteria (Dickson, 1996). It is never expected
that a supplier can be perfect, meeting all supplier selection criteria. For example, a
suppliers products may have a high quality, but cost of the products may not be the
lowest. On the other hand, another suppliers products cost may be the lowest, this is very
good for a company, but at the same time the delivery performance may be the worst. As
seen from the example, for making good decisions, supplier selection process must be
handled systematically.
Some recent supplier evaluation and selection studies in various industries are, Weber
(1996) on baby food manufacturing industry; Yahya and Kingsman (1999) on wooden
furniture industry; Liu et al. (2000) on agricultural and construction equipment industry;
Narasimhan et al. (2001) on Telecommunication industry; Cebi and Bayraktar (2003) on
food manufacturing industry. There are few studies comprising performance evaluation
in retail industry (Akdeniz and Turgutlu, 2007). But not too many works have been done
on apparel industry. This is a different track. Consumers tastes change dynamically. The
same t-shirt rotates almost no times. So each time the manufacturer need to change the
layout and requires new sourcing. So, supplier selection and evaluation and to keep the
relationship intact is an important part to deliver the product on time. The buyers are

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M. Marufuzzaman, K.B. Ahsan and K. Xing

looking for those manufacturers who can produce the goods with good qualities, with low
prices and can deliver the goods on shorter lead times. Shorter lead times, for example,
in the case of jeans which taken seven to ten minutes to sew, three to six weeks before
the order is shipped, could result in much lower indirect costs. However, shorter lead
times requires highly skilled and motivated workers, excellent working conditions, good
top management, a low accident rate, long term planning, a good relationship between
workers and management and finally proper support from every supplier is needed.
There are many methods used in supplier selection, such as, cluster analysis (De Boer
et al., 2001), case based reasoning systems (Choy et al., 2003), statistical methods (De
Boer et al., 2001), decision support systems (Choy et al., 2003; De Boer et al., 2001),
data development analysis (Talluri, 2002; Weber et al., 1998), total cost of ownership
models (De Boer et al., 2001; Degraeve et al., 2000), activity based costing (Roodhooft
and Konings, 1996), artificial intelligence (Choy et al., 2003; De Boer et al., 2001),
mathematical programming (Zhu, 2004; Talluri, 2002; Ghodspour and OBrien, 2001;
1998) etc. But inferring a result from the methods described above requires extensive
computation as well as time consuming. Also, the above methods are not efficient to
handle complex and unstructured situation. So, we need to use a better method like
Analytical Hierarchy Process (AHP) to break down a complex and unstructured situation
into component parts, then arranging those parts (or variables) into a hierarchical form
to deduce a decision, like selecting a supplier with multiple objectives. This method
has been successfully implemented in an apparel manufacturing industry and still the
effort continues.
The remainder of this article is organised as follows. Section 2 describes irregularities
in the conventional supplier selection process. Section 3 describes the basics of AHP and
its uniqueness as a decision-making model for selecting a supplier. Section 4 explains the
step wise proposed method by applying it to the example case and prove its validity.
Section 5 concludes the article with useful insights and describes the ongoing work.

Irregularities in conventional supplier selection process

We have considered a well reputed apparel manufacturer as a case company where

we have implemented our proposed supplier selection model to see the validity of the
method. Before defining the problem we first depict a simplified supply chain network
of the case organisation (as shown in Figure 1). We have analysed through Pareto
diagram that, most of the problems faced by the organisation is due to poor print and
embroidery supplier delivery performance. So, we have implemented the model on this
area in the supply chain as shown by dotted line in Figure 1 to add maximum value in
the organisation.
As their immediate operation is sewing in manufacturing plant, due to their low
quality standards as well as inadequate delivery performance the organisation is suffering
to maintain a balanced flow of production. Consequently they can not able to deliver their
goods on time, and it is a common phenomenon to most of the apparel manufacturers.

Supplier selection and evaluation method using AHP

Figure 1

227

Simplified supply chain network of the apparel manufacturer

If no print

Flow of material
Flow of information

RM

Working area

Customer

Retailer

DC

Buyer

Manufacturer

Embroidery

Print

Manufacturer

Finishing

Dyeing

Knitting

RM 2

Spinning

RM 1

If no embroidery

RM

To overcome this problem we reviewed their current supplier selection mechanism,

which we defined as conventional supplier selection process as shown in Figure 2. The
selection processes of some similar industries were monitored closely and the scenario
found was almost same for all of them. From this selection process, it is clear that there
is no specific set of objectives or corresponding indicators by which a supplier can be
chosen. It is more like an intuitive process. Supplier selection procedure needs to be
well-defined and it should reflect the companys demand towards a supplier. As suppliers
are the primary sources of raw materials/inputs, their interruption in deliveries may cause
a great harm for the entire chain and consequently the profitability of the overall supply
chain will be reduced. So, a set of indicators and a proper evaluating and selecting
method is required for future being. As per the conventional supplier selection process,
the following disadvantages are come out:

It does not consider multiple objectives. Only a few criteria are observed and based
on these criteria, the decision which is made often proved wrong in the long run.

There is no specific proportion of the criteria so that it can be understood to what

extent any criterion is emphasised. As a result there may have a fair chance to get
omitted a potential supplier.

There is no subdivision of the criteria and so mutual comparisons among the

subdivisions are absent here which may help the evaluation process to become
more precise.

It does not collect sufficient data to evaluate a supplier. Very few data are collected
instead of a thorough investigation and so the accuracy of the result is very poor.

It does not perform any quantitative analysis to assess the value of the supplier in
most of the cases. For this reason it is extremely difficult to know the difference
between the selected one and the others.

There is no set of indicators which help to evaluate and determine the best supplier.
So, ratings of suppliers are made intuitively in actual practice.

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M. Marufuzzaman, K.B. Ahsan and K. Xing

Figure 2

Conventional supplier selection process

Step 1: Calling for Public Tender
Step 2: Initial screening, survey on factory and monitor actual status

Step 3: Interview of Executives of Supplier Company and negotiation with some basic
elements; such as cost, quality, and service level.
Step 4: Rate the topmost supplier without any proper selection method and visit them again.
Step 5: Finally select the supplier

But the proposed supplier selection model as shown in Figure 3 eradicates the drawbacks
of the conventional supplier selection process. The process starts by determining the
key supplier selection and evaluating indicators. Then, sufficient data is collected against
these indicators. By using AHP, the weighted values of each supplier are computed. The
proposed selection process ends by validating the results and thus selecting the best
supplier in an authentic and standard way. This selection process considers significant
evaluating indicators and each contributes to determine the best supplier. Besides, this
process always compares one against another and these comparisons make the total
selecting process more methodical than the conventional process.
Figure 3

Proposed supplier selection model

Step 1: Calling for Public Tender
Step 2: Determination of key supplier selecting and evaluation indicators
Step 3: By using AHP method compute weighted value of each suppliers
Step 4: Validation of the result and finally select the best supplier

Decision analysis model for supplier selection

3.1 Analytical Hierarchy Process (AHP) method

Since 1977, Saaty (1980) proposed AHP as a decision aid to help solve unstructured
problems in economics, social and management sciences. AHP has been applied in a
variety of contexts: from a simple everyday problem of selecting a school to the complex
problems of designing alternative future outcomes of a developing country, evaluating
political candidacy, allocating energy resources and so on. The AHP enables the decision

Supplier selection and evaluation method using AHP

229

makers to structure a complex problem in the form of a simple hierarchy and to evaluate
quantitative and qualitative factors in the systematic manner under multiple criteria
environment in confliction.
The application of the AHP to the complex problem usually involves four
major steps:
1

break down the complex problem into a number of small constituent elements and
then structure the elements in a hierarchical form

make a series of pair wise comparisons among the elements according to a

ratio scale

use the eigen value method to estimate the relative weights of the elements

aggregate these relative weights and synthesises them for the final measurement of
given decision alternatives.

Saaty (1980) proposed carrying out paired comparisons between the different elements
because the human brain is perfectly designed to make comparisons between two
elements, hence proposing the scale in Table 1.
Table 1

Fundamental scale for paired comparison

Intensity of
importance

Definition

Explanation

Equal importance

Two activities contribute equal to

the objective.

Moderate importance

Experience and favour slightly favour one

activity over another.

Strong importance

Experience and favour strongly favour

one activity over another.

Very strong or
demonstrated importance

One activity is favoured very strongly

over another, its dominance demonstrated
in practice.

Extreme importance

The evidence favouring one activity over

another is of the highest possible order
of affirmation.

2,4,6,8

For compromise between the

above values

Sometimes one need to interpolate a

compromise judgement numerically
because there is no adequate word to
describe it.

Reciprocals of
the above

If activity i has one of the above non

zero numbers assigned to it when
compared with activity j, then j has
the reciprocal value when compared
with i.

A comparison mandate by choosing the

smallest element as the unit of estimate
the larger one as a multiple of that unit.

Source: Saaty (1980)

Using the scale in Table 1 the squared matrix Ann (Equation 1) is built using:
A = [aij] .....
1 i, j n

......

......

.....

(1)

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M. Marufuzzaman, K.B. Ahsan and K. Xing

where, aij represents the comparison between element i and element j.

This matrix must have the following properties (Saaty, 1986):

Reciprocity: If aij = x then aji = 1/x, with 1/9 x 9.

Homogeneity: If the elements i and j are considered to be equally important then:

aij = aji = 1 and aii = 1 for all i.

Consistency: aik * akj = aij is satisfied for all 1 i, j, k n.

For the property of reciprocate; only n (n-1)/2 comparisons are needed in order to build a
matrix with dimensions of n n.
The last case or axiom of consistency occurs infrequently due to the innate
subjectivity of the decision maker. This subjectivity seeks to objectify the procedure of
the paired comparison matrix to the greatest extent possible since the main decision
maker must compared the different elements several times in succession, as opposed to
just once, in order to build the matrix. This will show any existing inconsistency can be
measured by calculating the Consistency Ratio (CR) of the matrix A and if it does not
exceed a certain percentage in relation to the rank of the matrix it is considered valid.
If the maximum inconsistency ratio is exceeded in a matrix, the weightings must
be revised or its consistency must be increased by goal programming (Gonzlez-Panchn
and Romero, 2004).
In conjunction with the above paired comparison matrices from the criteria and
alternatives in relation to each of the criteria are built and in all cases their eigenvectors
are calculated. The eigenvectors for the criteria matrix will be defined as Vc and indicates
the weight or relative importance of each of the criteria used in evaluating the set of
alternatives under consideration.
The eigenvectors of the alternatives matrix for a certain criterion will be identified as
Vai (column vector) and indicate the weight or relative importance of the alternatives for
criterion i. The same number of eigenvectors Vai (Va1, Va2, ...., Van) are given that there
are criteria (n), with the number of elements of each eigenvectors; equal to the number of
alternatives (m). The set Vai will make up the matrix of alternatives Va.
Now, the matrix is multiplied by the alternatives by the criteria matrix (Equation 2):
Va * Vc = w ........... .................

(2)

where, Va = [Va1, Va2, ...., Van]

dim (Va) = m n.
The result is a matrix w whose components express the relative weight of each
alternative. This weighting allows the alternatives with greater or lesser interest to be
classified and to quantify the level of interest for each alternative in relation to the others
using all the available criteria and their importance.
The AHP was originally a multi criteria decision-making method finalising at this
step since its results allowed the best alternative to be found in relation to the criteria used
(Hwang et al., 2005).
As AHP is a multi criteria decision-making tool and our main objective is to select
the best supplier among the different suppliers considering different aspects, we chose
this method to fulfil our desire.

Supplier selection and evaluation method using AHP

231

Implementation steps of proposed supplier selection process

In this section the steps those should be followed in supplier selection are briefly
described. These are the basic steps of our proposed method and can be used as a
guideline for the selection of appropriate supplier with more or less modifications.
Step 1

Calling for public tender

This is the first step of the proposed process in selecting a new supplier from
different available suppliers. In this step, firms are invited publicly to tender
against the requirements of the company as in the traditional process. To make
this process open for all, the company may publish their invitation in any mass
media so that no supplier becomes uninformed. The demands of the company
should be clearly stated in the advertisement so that the supplier may understand
everything easily without any confusion. As the main target is to select the best
supplier among different alternatives, the calling approach should be in such a
way that only the better suppliers are encouraged to apply. Consequently, the
initial screening will not be that much time-consuming and cumbersome. To
ensure the fairness of the selection process, the applicants may also know the
selection procedures and the steps included. They should conceive that if they
want to compete, they have to be fit for the job. Every supplier will be given
equal priority without being biased.

Step 2

Determination of key supplier selecting and evaluating indicators

As supplier selection is a vital process for every organisation, it is very much
important to define clearly the basis on which this selection process will be
performed. To select a suitable supplier we have to first evaluate and then to
decide which supplier will be selected. To perform this, we defined some
evaluation criteria (Gencer and Gurpinar, 2007) which are termed here as key
indicators and also their subdivisions, termed as sub-indicators. In fact, the key
indicators reflect the objective functions and the sub-indicators are the main
elements of these key indicators.

Print and embroidery suppliers play a significant role to run the production system of
an apparel manufacturing company smoothly. Surveying and analysing different
companies, we proposed seven key indicators, listed in Table 2, which are the basis for
selecting a print and embroidery supplier. The first key indicator, which comprises
three sub-indicators, mainly focuses on the geographical location of the factory, their
experiences in this field and also the medium of communication they are availing. For
example, if the supplier has a suitable location and well communication capability
but less experience to do such job, the company will always feel a risk to have the
print or embroidery contracted to this supplier. The second key indicator represents
the competency of the supplier to meet the goal considering the organisational structure,
manpower and also their background. A large manpower shows not only how big
the supplier is but also indicates their capability to control. The fourth and fifth key
indicators are very important as they are concerned with the manufacturing capability
and the quality systems. Among the different sub-indicators of the fourth key indicator,
multi-item production capacity and capability indicates their ability to manufacture
variety of products. Every sub-indicator of the quality system also influences the total
quality of the supplier. For example, training indicates the suppliers dedication to

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M. Marufuzzaman, K.B. Ahsan and K. Xing

develop their employees to do their jobs efficiently. Service facility is another important
key indicator which includes four sub-indicators. One of them is green purchasing which
means the suppliers purchasing procedures maintaining the green environment
throughout the entire supply chain. Last but not least is upstream supplier name, i.e., the
names of the suppliers from which the concerned supplier acquires raw materials. If these
suppliers have good reputation and experience, and also maintain proper quality and
service levels in delivering the necessary inputs, consequently the ultimate output of the
concerned supplier will be more likely of high quality. That is why the supplier should be
caring in selecting their own suppliers.
Table 2

Key indicators of proposed selection model

Evaluation factors
1 General information of
the supplier
2 Organisation profile of
the supplier
3 Financial status of
the supplier
4 Manufacturing capability
and inventory system of
the supplier

5 Quality system of
the supplier

6 Service facility

7 Supplier name

Weighted value
1 Facility location

0.595

2 Number of working years in this sector

0.129

3 Communication capability

0.277

1 Organisation structure

0.715

2 Number of personnel

0.187

3 Education status of the personnel

0.098

1 Last year turnover

0.490

2 Exporting status

0.198

3 Appropriateness to the material price to the market price

0.312

1 Machine capacity and capability

0.366

2 Manufacturing technology

0.234

3 Manufacturing planning capability

0.135

4 Multi-item production capacity and capability

0.100

5 Handling and packaging capability

0.096

6 Storage capacity and inventory management

0.070

1 Quality system certificate of the supplier

0.180

2 Quality system documentation of the supplier

0.180

3 Archive of quality records

0.054

4 Process control capability

0.102

5 Corrective and preventive action system

0.106

6 Audit mechanism

0.145

7 Non conforming material control system

0.088

8 Receiving inspection

0.115

9 Training

0.030

1 Lead time

0.342

2 On time delivery

0.381

3 Mode of transportation

0.108

4 Green purchasing

0.169

1 First alternative supplier

0.648

2 Second alternative supplier

0.230

3 N-th alternative supplier

0.122

The proposed decision model of supplier selection was constructed for 31 sub-indicators
under seven key indicators which are shown in Table 2.

Supplier selection and evaluation method using AHP

233

In the application, the control hierarchy has been shown in Figure 3. To solve by
AHP, we have defined the seven main key indicators as objective functions, which are
used to find out the desired output. They are:
Objective 1 General Information (GI) of supplier
Objective 2 Organisation Profile (OP) of the supplier
Objective 3 Financial Status (FS) of the supplier
Objective 4 Manufacturing Capability (MC) and inventory system of the supplier
Objective 5 Quality System (QS) of the supplier
Objective 6 Service Facility (SF)
Objective 7 Supplier Name (SN).
Step 3

By using AHP method compute weighted value of each suppliers

In this step, first by using AHP the weighted values of each sub-indicator are
computed to measure the relative weight put the manufacturer against each
sub-indicator, as shown in Table 2. As for example, under key indicator GI of
the supplier, the manufacturer put facility location as 0.595 compared to number
of working years in this sector as 0.129 and communication capability as 0.277,
which betoken that each of the sub-indicators do not have equal priorities to
the manufacturer. Then, it is necessary to collect detailed data against each
sub-indicator among available suppliers which are also shown in Table 3.

Table 3

Detailed data collected against each sub-indicators among available suppliers

Evaluation factors

Supplier A

Supplier B

Supplier C

Facility location

Approximately 17 km

Approximately 25 km

Approximately 15 km

Number of working years in

this sector

10 year

8.5 year

8 year

Communication capability

Through EDI

Through EDI

Through EDI

Organisation structure

Well structured and

responsibilities are
clearly defined

Well structured and

responsibilities are
clearly defined

Well structured and

responsibilities are
clearly defined

Number of personnel

186

198

213

Education status of
the personnel

Graduate 13

Graduate 16

Graduate 15

Last year turnover

$1.6million

$1.45 million

$1.2 million

Exporting status

450 000 pcs/year

540 000 pcs/year

400 000 pcs/year

Appropriateness to the material

price to the market price

Proximity

Proximity

Proximity

Machine capacity and capability

600 000 pcs/year

720 000 pcs/year

540 000 pcs/year

Manufacturing technology

Both auto and

semi-auto

Both auto and

semi-auto

Both auto and

semi-auto

Manufacturing planning
capability

Moderate

Moderate

Well planned

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M. Marufuzzaman, K.B. Ahsan and K. Xing

Table 3

Detailed data collected against each sub-indicators among available

suppliers (continued)

Evaluation factors

Supplier A

Supplier B

Supplier C

Multi-item production capacity

and capability

6 types

8 types

8 types

Handling and packaging capacity

and capability

Fair

Fair

Good

Storage capacity and

inventory management

Approximately
12 000 pcs, FIFO

Approximately
13 500 pcs, FIFO

Approximately
10 000 pcs, FIFO

Quality system certificate of

the supplier

ISO 9001

Quality system documentation of

the supplier

Organised

Moderate

Poor

Archive of quality records

Good

Poor

Poor

Process control capability

Properly maintained

Moderate

Moderate

Corrective and preventive

action plan

Good

Fair

Fair

Audit mechanism

Good

Moderate

Moderate

Non conforming material

control system

Good

Moderate

Moderate

Receiving inspection

Properly maintained

Properly maintained

Properly maintained

Training

On the job and off the

job facility

On the job facility

On the job facility

Lead time

Approximately
8 days

Approximately
7 days

Approximately
7 days

On time delivery

78%

81%

82%

Mode of transportation

Self pick up

Self pick up

Self pick up
Moderately followed

Green purchasing

Strictly followed

Moderately followed

First alternative supplier

Grade A

Grade B

Grade B

Second alternative supplier

Grade A

Grade A

Grade B

N-th alternative supplier

Grade B

Grade C

Grade B

Now, using AHP we will determine the weights put by the manufacturer against each key
indicator. So, we begin by writing down a 7 7 matrix which is known as pair wise
comparison matrix A. The entry in row i and column j of A (aij) indicates how much
more important objective i is than objective j. Then,
QS
QS 1
SF 0.5
MC 0.33

A = GI 0.2
OP 0.125

FS 0.125
SN 0.111

SF

MC

GI

OP

FS

SN

9
8
8

7 .
5

0.125 0.125 0.167 0.33 1

3
0.125 0.125 0.143 0.2 0.33 1

2
1
0.5
0.25
0.167

3
2
1
0.25
0.143

5
4
4
1
0.2

8
6
7
5
1

8
8
8
6
3

Supplier selection and evaluation method using AHP

235

Now, divide each entry in column i of A by the sum of the entries in column i. This
yields a new matrix Anorm (for normalised) in which the sum of the entries in each column
is 1.
QS

A norm

SF

QS 0.418
SF 0.209
MC 0.138

= GI 0.084
OP 0.052

FS 0.052
SN 0.046

MC

GI

OP

FS

SN

0.219
0.195
0.195

0.170 .
0.122

0.029 0.019 0.115 0.012 0.029 0.073

0.029 0.018 0.009 0.007 0.009 0.024
0.479
0.239
0.119
0.059
0.040

0.452
0.301
0.151
0.037
0.021

0.345
0.276
0.276
0.068
0.014

0.291
0.218
0.254
0.182
0.036

0.233
0.233
0.233
0.175
0.087

The above matrix considers Table 1 to measure pair wise comparison. As for example,
the manufacturer does not want to show any compassion about quality, hence they ranked
Quality Function (QF) as top among other objective functions. If we consider row 1
we see, quality system is slightly favourable over SF and MC, hence ranked as 2 and 3
in the row. Again, QS is strongly favoured over GI and is extremely favoured over
organisation profile of the supplier OP, financial status of the supplier FS and SN, which
is reflected by their points shown in row 1 in the pair wise comparison matrix.
Estimate Wi as the average of the entries in row i of Anorm. This yield:
WQS = 0.348; WSF = 0.239; WMC = 0.195; WGI = 0.111; WOP = 0.053; WFS = 0.032;
WSN = 0.020.
We have checked the degree of consistency and found that the pair wise comparison
matrix does not exhibit any serious inconsistencies. Now, we will find out the scores of
each objective by making proper comparisons among the suppliers. For example, in QS
the weighted values can be calculated as:
Supplier A
Supplier A
A = Supplier B
Supplier C

Supplier B Supplier C

0.5

0.33

0.5

Then
Supplier A
A norm

Supplier A
= Supplier B
Supplier C

Finally we get:
(Supplier A)QS = 0.539
(Supplier B)QS = 0.297
(Supplier C)QS = 0.164.

Supplier B

Supplier C

0.546

0.571

0.5

0.273
0.182

0.286
0.143

0.333
0.167

M. Marufuzzaman, K.B. Ahsan and K. Xing

Select a Supplier

Hierarchy 1
Criteria

Hierarchy 2
Criteria

General Information of
the Supplier: 0.111

Facility Location: 0.595

Number of working years in this sector:
0.129
Communication Capability: 0.277

Organization Profile of
the Supplier: 0.053

Organization structure: 0.715

Number of Personnel: 0.187
Education status of the personnel: 0.098

Financial Status of the

Supplier: 0.032

Last year turnover: 0.490

Exporting Status: 0.198
Appropriateness of the material price to the
market price: 0.312

Manufacturing
capability and
Inventory system of
the supplier: 0.195

Machine capacity and capability: 0.366

Manufacturing Technology: 0.234
Manufacturing Planning capability: 0.135
Multi-item production capacity and
capability: 0.100
Handling and Packaging capability: 0.096
Storage capacity and inventory
management: 0.070

Service Facility: 0.239

Lead time: 0.342

On time delivery: 0.381
Mode of Transportation: 0.169
Green Purchasing: 0.108

Supplier Name: 0.020

First alternative supplier: 0.648

Second alternative supplier: 0.230
N-th alternative supplier: 0.122

Quality System of the

Supplier: 0.348

Quality system certificate of the supplier:

0.180
Quality system documentation of the
supplier: 0.180
Archive of quality records: 0.054
Process control capability: 0.102
Corrective and preventive action plan:
0.106
Audit mechanism: 0.145
Non conforming material control system:
0.088
Receiving inspection: 0.115
Training: 0.030

Alternatives

Supplier A

Decision

AHP structure of example problem

Supplier B

Figure 4

Supplier C

236

Supplier selection and evaluation method using AHP

237

In the same way, we can calculate the weighted values of other key indicators and the
results have been summarised in a Table 4 as shown below.
Table 4

The weighted value of each supplier candidate for sub-indicators

Objectives

Supplier A

Supplier B

Supplier C

Quality system

0.539

0.297

0.164

Service facility

0.200

0.400

0.400

Manufacturing capability

0.122

0.320

0.557

General information

0.429

0.141

0.429

Organisation profile

0.200

0.400

0.400

Financial status

0.429

0.429

0.142

Supplier name

0.500

0.250

0.250

Step 4

Validation of the result and finally select the best supplier

As we have already solved the algorithm and all the results on hand, we can rate
the suppliers as below.

Table 5

Score calculation and determination of overall score

Supplier
name

Score calculation

Overall
score

Supplier A

0.348 * 0.539 + 0.239 * 0.20 + 0.195 * 0.122 + 0.111 * 0.429 + 0.053

* 0.200 + 0.429 * 0.032 + 0.020 * 0.50

0.341

Supplier B

0.348 * 0.297 + 0.239 * 0.4 + 0.195 * 0.32 + 0.111 * 0.141 + 0.053

* 0.4 + 0.429 * 0.032 + 0.02 * 0.25

0.316

Supplier C

0.164 * 0.348 + 0.239 * 0.40 + 0.195 * 0.557 + 0.111 * 0.429 + 0.40

* 0.053 + 0.142 * 0.032 + 0.02 * 0.25

0.339

Discussion

From the above calculations it is clear that supplier A should be selected as it has the
highest score. It was a tough decision to pick a supplier from the available three strong
candidates. And, it is reflected in their overall scores. In the case organisation, they
ranked QS top compared to other key indicators. From Table 4 we can see that supplier
As quality service score is 0.917 whereas supplier Bs and Cs are 0.820 and 0.702
respectively. It is also reflected in the overall score. So, the proposed supplier selection
model using AHP is a valid model.
To select a supplier through AHP requires extensive analysis and to do so we need to
consider a good number of factors. Basically, the selection process varies as per the
evaluation criteria selected by the manufacturer. As for example, the manufacturer wish
to select a supplier who accentuate more on quality, proximity to the firm, has a well raw
supplier reputation of the supplier rather than its manufacturing capability and which is
usually seen in selecting supplier A. Supplier B and supplier C has equal good service

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M. Marufuzzaman, K.B. Ahsan and K. Xing

facility (0.400 and 0.400) as well as manufacturing capability (0.320 and 0.557) as
compared to supplier A (0.200 and 0.122). But the manufacturer wishes to choose the
factory which is the best quality provider supported by the environments to maintain it.

Conclusion

In this paper, we have proposed a supplier selection model using a multi criteria
decision-making method which includes identifying key indicators, sub-indicators and
detailed step-by-step analysis. We use AHP method for the purpose of multi attribute
characteristics of supplier selection problems. The proposed model of supplier selection
was implemented in an apparel manufacturing firm. There were 1706 employees in
the company; 42 of them are engineers, 122 of them are officers and executives and
remaining 1542 are operators, technicians and helpers. The activities like supplier
selection, evaluating the supplier performance and selecting the best supplier among
alternatives are performed by the merchandising department. They review the candidate
suppliers according to the evaluation criteria and after this evaluation; they select the best
supplier as per the method mentioned in this paper. It was proved right for the company
considering their previous supplier selection process.
This selection process helps the manager to select a supplier from a dynamic
environment. Basically, a fashion market is totally different considering other markets,
because consumer tastes changes from time to time. Then it makes changes in the
construction of garments as well. So, the manufacturer needs to select a supplier with
diversified production facility while meeting the quality standards too. And, this is best
can be done by using this proposed supplier selection process.
The paired comparisons were made by taking the experts opinions in the companys
merchandising team. Also all the calculations were performed by using MS Excel.
Evaluating the supplier from both objective and subjective criteria will gain flexibility
to the design process. If we consider all the functional departments of a supplier, we will
get close relationships among the departments with one another. And hence we can easily
say that the success of a supplier to get selected by a company is fully dependant on the
combined effort of all the departments as they can influence the selection criteria as well
as the key indicators.
Another important finding is that the proposed model is more reflecting the relation
of how the selection criteria affect the selected suppliers and at the same time what is
more important for the suppliers among the selection criteria.
The proposed system has some limitations. One of the major drawbacks of using
AHP in selecting a supplier is the number of objective functions and their relevant
evaluation factors. It required sufficient time for a manager to collect necessary data.
Then they need to make a comparison among the available suppliers and put weighted
values against them. Sometimes, it differs from one manager to another and hence the
overall scores will be affected by that. So, to circumvent the drawbacks we are now
developing a computer program for the proposed model which can be used by the
organisation to take their decision in a user friendly environment. To do so we are also
considering fuzzy AHP and Analytical Network Process (ANP) to make the decision
making more effective.

Supplier selection and evaluation method using AHP

239

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