Supplier Environmental Performance Evaluation Using AHP

Supplier evaluation is an essential purchasing functions, and prerequisite for effective supply chain management. Traditional supplier selection criteria include price, quality, delivery, and service. Recent customer requirements, competitive pressures, legislation and resource conservation and sustainability opportunities have motivated companies to give their environmental performance a higher priority. However, many organizations still consider operating environmentally means higher costs, just like what they once thought about quality improvement. This paper explores how cost savings and new opportunities can be gained through implementing environmental initiatives in supply chain management using an AHP-based model for supplier evaluation. In order to identify supplier environmental performance indicators and facilitate continuous improvement in this area, a supplier evaluation and benchmarking model is proposed. The model framework is based on the logical extension of the ISO 14031-Environmental Performance Evaluation (EPE) guidelines, taking a Deming's Plan-Do-Check-Act (PDCA) approach to bring continuous improvements. An AHP-based routine is used to conduct the suppliers evaluation and benchmarking process.