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18/03/2021 03:55:32 PM

Supplier Selection

In recent decades, the environmental problem is one of the most serious global issues. And people are now growing awareness of the importance of keeping the Earth healthy as the key for sustainable development which not only influence the people’s lives but also affect the business. Sustainability is becoming the new normal and the number of companies adopting Corporate Social Responsibilities (CSR) strategies is on the rise. As new studies come out, it gets hard to deny, apart from the social and environmental benefits, the economic advantages of developing sustainability practices within businesses. 

Sustainability is a growing concern in companies and it’s changing the way business is done, which is characterized as the quality of not harming the environment or depleting natural resources. Thus, promoting long-term ecological equilibrium. According to [2], 90 percent of companies’ impacts on the environment come from supply chains; therefore; the sustainability in this sector has captured the great concerns of corporates and researchers. Environmental impacts from supply chainsmay include radioactive waste, water pollution, biodiversity destruction, deforestation, long-termecosystem damage, hazardous air emissions as well as greenhouse gas and energy consumption.

For many different reasons, from consumer’s demand to cost savings or risk avoidance, the number of companies in many different areas that developed the CSR and sustainability strategies is growing. Being friendly to the environment has become the key of sustainable development since not only customer but also investors, shareholders and stakeholders paid attention to the environmental issue, which demands the organizations to become environmentally responsible. However, in many industries, the challenges to sustainability are external and dependant on suppliers. Therefore, selection and sub-grouping of suppliers plays an important role in supply chain management, contributing to the success of production and business organizations. The right selection of green suppliers benefits the corporates well in reducing the cost of inputs, improving quality of products and competitiveness while it also benefits the environment by reducing the carbon footprint.  

As mentioned above, in many industries, the challenges to sustainability lines in suppliers. Therefore, there are companies that started applying sustainability scores in selecting suppliers. This is the clever way to distinguish and select the right suppliers with similar quality and cost. It’s possible to estimate how eco-friendly supplier are either by asking supplier for life-cycle assessments or conducting survey to find out their practices. 

Supplier selection has a vital effect on the productivity of the global supply chain. Research’s findings indicate that the supplier selection process tends to be the most important aspect of deciding the supply chain’s performance. Additionally, it is also one of the most critical things that organizations need to integrate into their strategic processes. Since companies are more reliant on suppliers, the direct and indirect effects of poor choice of supplier may become more important. Selecting supplier is not the simple process, on contrary, it is a very complex process which requires for many different criteria. In the past, business makers decided the supplier based almost solely on price and quantity; however; the modern researchers agree that the combination of factors should be in line not only with economic and technological requirements but also with the ecological efficiency and the stray of a business. In order to choose the right green suppliers, there are many economic and environmental criteria that need to be considered during the evaluation process. Global criteria should be used to accurately determine the selection of suppliers and organizations should consider the environmental awareness of supplier and require their suppliers to reduce their environmental impacts. 

Various techniques are available for supplier selection based on categorical methods, data envelopment analysis (DEA), linear weighted models, statistical models, etc. Recently, multiple-criteria decision making model (MCDM) has been popular applied in supply chain for selecting supplier thanks to its ability to compare tangible and intangible criteria [4]. The main drawback of this approach is that the criteria are often arbitrary in the context of linguistic variables. To solve this problem, the MCDM using fuzzy is applied. 

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