Supplier selection criteria using analytical hierarchy process (AHP)-based approach: a study in refractory materials manufacturers

Abstract

PurposeRefractory materials are now used in all major industries that demand high-temperature resistance, including petrochemicals, steel, cement and aviation. Businesses must decrease operating costs, enhance product technology, sell well and manage corporate risks in decision-making, notably supplier selection, to be more competitive. The study aims to determine the key criteria and factors of supplier selection and to evaluate the importance of the key factor of the supplier selection criteria for the refractory materials manufacturers in Taiwan.Design/methodology/approachAnalytical hierarchy process (AHP) is used to rank these factors for the decision maker. The AHP method is suitable for verifying refractory supplier selection criteria and providing references. The weighted loss scores for each supplier are then determined using the relative importance as the weights. Supplier selection criteria are ranked using their aggregate weighted loss scores. The provider with the lowest loss score should be chosen.FindingsProduct quality is the most significant of the five criteria: product quality, production technology, logistics capacity, service capability and supplier background. Professionalism is the most significant aspect of product quality, whereas equipment and capacity are vital in manufacturing techniques. The studies also show that the delivery rate is essential for logistics and service capabilities.Practical implicationsThis research has important implications for refractory suppliers in promptly fine-tuning the production and service to enhance customer satisfaction, which is key to business sustainability.Originality/valueThe application of an AHP technique to a real-world industrial issue is what makes this research unique. This research addressed one of the most critical topics in supply chain operations by offering better judgement for supplier selection via the use of suitable quantitative methodologies.