Strategic supplier selection:the case of international food trading company

Abstract

The objective of the research project is to develop strategic supplier selection system for an international food trading company using the Analytic Hierarchy Process (AHP). The products involved are canned food for worldwide export. The decision makers consist of a president and two marketing managers. The chosen decision criteria listed by weight of important are ‘Export Capability’ (54%), ’Pricing Policy’ (28%), ‘Technological Catch-up’ (10%), ‘Ethical Practices’ (5%), and ‘Environmental Management’ (3%). The sub-criteria chosen are ‘Number of Food Safety Certificate’ (54%), ‘Net Selling Price’ (23%), ‘Automation in Production Process’ (8%), ‘Payment Terms’ (5%), ‘Worker’s Safety and Health’ (4%), ‘Adverse Weather Control‘ (2%), ‘Packaging Varieties‘ (2%), ‘Stop Child and forced labor’ (1%), and ‘Environmental Compliances’(1%).

According to the company existing choice of supplier using cheap price as the criterion for selection that supplier C for pineapple products, supplier F for sweet corn products, and supplier L for baby corn products. After the proposed strategic selection system is applied, the optimal suppliers for pineapple are found to be Supplier B (with a score of 33.6%) and Supplier D (32.8%), for sweet corn product are Supplier F (29.35%) and Supplier E (29.22%), and for baby corn product are Supplier I (32.33%) and Supplier K (26.55%).

It may be concluded from the present thesis research that strategic criteria involved with current business environments obtained substantial weight from expert’s opinion. This confirmed that Strategic Supplier Selection should obtain a lot of attention from business sector.