An AHP framework of supplier evaluation with reference to high-value and critical items: a case study

This study developed a simple two-stage decision framework for evaluating suppliers of high-value and critical items with reference to a heavy engineering organisation by employing the Analytic Hierarchy Process (AHP). The first stage involved examining the qualifying criteria of the items on quality, while the second stage was concerned with identifying all other relevant attributes, including quality concerning high-value and critical items applicable to the organisation under study, and with finding out the relative importance of the same. The attributes were organised in a two-tier hierarchy showing four major criteria in the first tier and 17 subcriteria in the second tier. This enabled us to employ AHP to find out the relative importance of each individual subcriterion through pair-wise comparison between all major criteria and subcriteria by eliciting opinions from three experts. The findings indicated the quality/reliability of the items to be the most important criterion, followed by price and then technological capability of the suppliers. A group of five suppliers was evaluated on all 17 subcriteria with regard to their performance and the overall performance of the suppliers was compared on the factor scores obtained by each supplier.