Vendor Selection in the Cosmetic Industry using Analytics Hierarchy Process (A Case Study of Saejiva Company)

The Indonesian fragrance industry, under the cosmetic industry, is growing, with an increasing income per capita in the perfume category, despite a dip in 2020. The global natural fragrance market, growing at an estimated 9% CAGR from 2023 to 2032, shows a strong preference for essential oil-based fragrances. Essential oils, derived from natural plant parts, are costly to produce due to large-scale machinery, skilled labor, and environmental factors. Companies often outsource these aspects to reduce costs and focus on core competencies like marketing and sales. Saejiva, a natural fragrance brand, currently faces challenges in vendor selection, experiencing issues with inefficiency, delays, and poor product quality from previous vendors, has the effect of reducing potential profits and necessitating a reevaluation of their vendor choices. This study uses the Analytical Hierarchy Process (AHP) to help Saejiva select a new vendor by prioritizing criteria that meet the company’s requirements and recommending the best vendor. Data was collected through literature reviews to identify relevant criteria, Focus Group Discussions (FGD) to find essential criteria for the company, and AHP questionnaires. Saejiva’s C-level executives acted as experts in the FGDs and AHP questionnaires to determine criteria priorities and vendor alternatives. The results showed the importance levels of criteria as follows: capability (0.3668), quality (0.1848), cost (0.1382), service (0.1068), capacity (0.0654), delivery (0.0606), warranty (0.0525), and performance history (0.0249). The importance levels of vendor alternatives were SKI (3.1994), AVF (2.7415), and SHB (2.0591). Thus, the best vendor recommended for Saejiva is SKI as the next vendor.