A Combined Approach for Sustainable Supplier Selection: A Case Study for a Manufacturing Firm

- Due to the increasing awareness of environmental and social issues, many researchers have paid much attention to the sustainable supplier selection. This paper addresses sustainable supplier selection problem. Although there are many studies on supplier selection, there is no study that takes into account the advantages of supplying two semi-parts from the same supplier. Supplying semi-parts from the same supplier which has similar production processes and which can transport simultaneously provides advantages to the firms in terms of price, transportation cost and resource consumption. In this study, suppliers were weighted by the AHP (Analytic Hierarchy Process) method. In addition, the contributions of supplying two semi-parts from the same supplier are determined by the AHP method. Mathematical model is used to determine the supplier for each semi-parts. The objective function of the mathematical model is maximizing total weights of the suppliers and contributions of the suppliying two semi- parts from the same supplier. The production capacities of suppliers were taken into account in the study. A case study is provided in a medical devices manufacturer to show the feasibility and effectiveness of the proposed methodology.


Introduction
Sustainable supply chain management (SSCM) has been considered as an integration and realization of economic, environmental and social objectives of a company in coordination of critical business processes to improve the company's longterm economic performance (Carter and Easton, 2011). Supplier is the one of the most critical factors for the success of Sustainable Supply Chains (SSC). Due to collaboration with economically, environmentally, and socially strong suppliers could improve the supply chain performance (Song et al., 2017). In the past, only economic criteria are used to evaluate suppliers. After SSCM's starting to attract increasing attention, researchers started to take into account social and environmental criteria while evaluating suppliers' performances. For sustainable supplier selection (SSS) researchers evaluate suppliers according to economic, social and environmental criteria.
A lot of study has been done for SSS problem. Bai and Sarkis (2010), proposed an approach that utilizes grey system and rough set theory. Lu et al. (2010), used fuzzy AHP for evaluating green suppliers' performances. Büyüközkan and Çifçi (2011), developed a novel approach based on fuzzy ANP within multi-person decision-making schema under incomplete preference relations. Amindoust et al. (2012), applied fuzzy logic and a new ranking method on the basis of fuzzy inference system for SSS problem. Govindan et al. (2013), used fuzzy set theory and fuzzy TOPSIS for SSS. Azadnia et al., (2014), proposed an integrated approach of rule-based weighted fuzzy method, fuzzy AHP and multiobjective mathematical model for SSS and order allocation. Jauhar and Pant (2017), proposed an efficient system for SSS by integrating together the traditional multi criteria performance evaluation tool DEA (Decision Envelopment Analysis) with DE (Diffirential Evaluation) algorithm and further with MODE (Multi-Objective Differential Evoluation) to overcome the inherit drawbacks of DEA. Luthra et al. (2017), proposed a framework to evaluate SSS by using an integrated AHP and VIKOR. Song et al. (2017), proposed a method integrates the merit of pairwise comparison method in determining relative importance, the strength of decision making trial and evaluation laboratory (DEMATEL). Lin et al. (2018), developed a decision model for decision-making in uncertain environments, one specifically tailored for managers in green supply chain management. Vahidi et al. (2018), suggested a hybrid SWOT -QFD (Quality Function Deployment) systematic framework for determining the sustainability criteria. Zhao and Guo (2014), proposed a hybrid fuzzy multi-attribute decision making approach (fuzzy entropy-TOTPSIS) for selecting the best green supplier. Jia et al. (2015), used TOPSIS for ranking potential suppliers among the pool of suppliers. Chung et al. (2016), proposed a green supplier selection and guidance mechanism by integrating the features of ANP and an IPA (importance performance analysis) to achieve sustainable management for green supply chains.
In this study, SSS problem is tackled by an integrated approach. First of all, suppliers are weighted by AHP. If two products are supplied from the same supplier, suppliers can provide cost reduction. Also, if the products are transported simultaneously, supplying semi-parts from the same supplier can also reduce the transportation cost. Taking the scale economy into consideration, supplying two semi-parts from the same supplier can lead to a decrease in resource consumption compared to the situation of supplying from different suppliers. As a result, if two products are supplied from the same supplier, there is a contribution. This contribution was also determined by AHP. Finally, supplier for each products is determined using mathematical model. The objective function of the mathematical model is maximizing the total contribution of supplying two semiparts from same supplier and total weights of the suppliers. Although there are many studies in the literature about supplier selection, there is no study that takes into consideration the contribution of supplying two semi-parts from the same supplier.
The paper is organized as follows: In Section 2, methodology is presented. In section 3 a case study for a medical devices manufacturer firm is presented. Finally, conclusions are given in Section 4.

AHP
AHP is a popular method for tackling multicriteria analysis problems involving qualitative data and has been applied successfully to many actual decision situations (Ayağ, 2007).
The steps of the AHP method are as follows (Saaty, 1981): Step 1: Define the problem and determine its goal.
Step 2: Structure the hierarchy from the top (the objectives from a decision-maker's viewpoint) through the intermediate levels (criteria on which subdequent levels depend) to the lowest level which usually contains the list of alternatives.
Step 3: Construct a set of pairwise comparison matrices (size n×n) for each of the lower levels with one matrix for each element in the level immediately above by using the relative scale measurement. The pairwise comparisons are done in terms of which element dominates the other.
Step 4: There are n(n-1) judgements required to develop the set of matrices in Step 3. Reciprocals are automatically assigned in each pairwise comparison.
Step 5: Hierarchical synthesis is now used to weight the eigenvectors by the weights of the criteria, and the sum is taken over all weighted eigenvector entries corresponding to those in the next lower level of the hierarchy.
Step 6: Having made all pairwise comparisons, the consistency is determined by using the eigenvalue λmax, to calculate the consistency index, CI, as follows Eq. (1) (Dağdeviren, 2008): where n is the matrix size. Judgement consistency can be checked by taking the consistency ratio (CR) of CI with the appropriate value, as follows Eq. (2) [5].

CR= (2)
The CR is acceptable, if it does not exceed 10%. RI is the average index for randomly generated weights (Saaty, 1989).

Criteria of AHP for calculating weights of the suppliers
For determining the criteria, a decision group is formed that consists of six experts (two academicians and four senior level managers from the case company). The inputs of the decision group and a literature analysis are used to select the criteria of SSS for sustainability in supply chain. AHP is used for determining the weights of suppliers. Table  1 summarizes the sustainable supplier selection criteria used by AHP. Price, quality and transportation cost are economical, resource consumption and environmental management system are environmental criteria and occupational health and safety system and information disclosure are social criteria. Implementation of AHP is given on Section 3. Inf. Disclosure (ID) Providing inf. to their customers and stakeholders regarding material used, carbon emissions and toxins released during production etc.

Criteria of AHP for calculating contribution of supplying two semi-parts from the same supplier
If semi-parts are purchased from the same supplier, suppliers can provide price reductions. For this reason, price is a criterion for calculating the contribution of supplying two semi-parts from the same supplier. In particular, the production of semi -parts with similar production processes by the same supplier may result in a reduction in the amount of raw materials and energy used. As a results semi -parts that uses the same machines affect resource consumption criteria positevely. In many firms, machines that are used for production is prepared before the production. This set up time is decreased, if similar products are produced successively. This situation effects the resource consumption positively. As a result, due to the economics of the scale, fixed costs for production of the same or similar types of products in the same supplier are decreasing. If semi-parts supplied from the same suppliers able to transport together can make advantages in terms of transportation cost.
In this study, semi-parts are classified according to their types. Alternatives are the dual combination of product types. The number of alternatives is equal to h(h+1)/2 (h: number of semi-parts types). Supplying the same types of semi-parts from the same supplier does not always provide higher contribution than the different types of semi-parts. For example, considering transportation cost, small semi-parts that can be transported together with large semi-parts can contribute more than the supplying same types of semi-parts from the same supplier. As a result, the contribution of supplying two semi-parts from the same supplier is calculted by AHP. Implementation of AHP is given on Section 3.

Mathematical Model
The mathematical model used to identify the appropriate supplier for each semi-parts is given below.

Sets
The objective function of the model is given in (1) which maximizes total suppliers' weights and contributions of the parts that is supplied from the same supplier. The capacity constraints of suppliers are imposed in (2). Constraint (3) guarantees that each item can be selected for only one supplier. (4) is sign constraint.

A Case Study for a Medical Devices Manufacturer Firm
The application was made in a company that manufactures medical devices. The company is experiencing various problems in its procurement process. It decided to work with sustainable suppliers. There have been 3 types of semi-parts that the suppliers must be determined. 5 alternative suppliers are available. The number of each types of semi-parts and capacity of the suppliers are given in Table 2 and Table 3.

Phase I: Compute weights of the alternative suppliers using AHP
Structural hierarchy of AHP is given in Figure 1.  Table 4. The critical ratio (CR) value is 0.08159. The results of comparison of the suppliers according to criteria are given on Table 5. The CR values are smaller than 0.1 for all criteria. The final result of AHP is given on Table  6. By using AHP suppliers are weighted and these weights are used as parameters of the mathemetical model.  As a conclusion, according to the result of AHP the best supplier is 5 with the weight of 0.2417. These weights are used as a parameter fort he mathematical model. By using mathematical model, the semi-parts are supplied from the supplier with the highest weight as much as possible.

Phase II: Compute the contribution of the products that is supplied from the same supplier
Criteria are price, resource consumption and transportation cost. Structural hierarchy of AHP is given in Figure 2. According to Fig 2, 1-1 shows the two semi-parts that the part type is 1. And also, 1-2 shows two semi-parts that the type of one is 1 and another is 2. Other alternatives can be considered in a similar way. Pairwise comparisons of criteria and importance weights of the criteria are given on Table 7. The critical ratio (CR) value is 0.04625. Table 7. Pairwise comparisons of criteria and importance weights of the criteria In terms of price criterion, the alternatives are compared and the following Table 8 is obtained. CR value of comparison of alternatives according to price criterion is 0.03806.

Figure 2. Hierarchy of AHP
The results of comparison of the suppliers according to criteria are given on Table 9. The CR values are smaller than 0.1 for all criteria. By using AHP contribution of supplying two semi-parts from the same supplier is determined and these contributions are used as parameters of the objective function of the mathemetical model. Mathematical model is used for determining the supplier for each semi -parts.
Parameters of the mathematical model are capacities of the suppliers according to product types, weights of the suppliers and contribution of supplying two semi-parts from the same supplier (qij). qij values were calculated by AHP.  Phase III: Determining the suppliers using mathematical model The first 22 semi-parts are in type1, semi parts numbered between 23 and 84 are in type 2, semi parts numbered between 85 and 169 are in type 3. qij values of the semi-parts are given on Figure 3. The values of Figure 3 are obtained by AHP.
Capacities of the suppliers and weights of the suppliers are given on Table 3 and Table 6 respectively.
The model is solved with GAMS/ DICOPT solver. The result of the problem is given on Figure 4.  According to the result, the capacities of suppliers are not exceeded. Each product is supplied from a supplier. And as possible as, semi-parts are supplied from the suppliers that has high values of weights and the semi parts that are provided high value of contribution in case of supplying from the same suppliers are supplied as possible as from the same supplier.

Conclusions
In this study, the problem of sustainable supplier selection has been examined. A combined approach is proposed for the problem. Alternative sustainable suppliers are weighted by AHP. Contribution of supplying two semi-parts from the same supplier is calculated also AHP. Mathematical model is used for determining the supplier for each semi -parts. The results of AHP are used as parameters of the objective function of the mathematical model. The objective function of the mathematical model is maximizing total weights of the suppliers and contribution of supplying two semi parts from the same supplier. The proposed approach is applied for manufacturer firm. As a result, optimal supplier is dertemined for each semi parts. The proposed approach might be also applied using fuzzy set theory in future research.