Suppliers Evaluation Based on Vendor Performance Indicator (VPI) and Analytical Hierarchy Process (AHP)

Abstract

Evaluation of supplier performance is an important factor in the supply chain process because it can be one of the company’s strategies to increase customer satisfaction. In selecting suppliers, most companies only focus on the sole consideration of price and raw material availability. This approach makes the supplier selection suboptimal, resulting in non-conformance to order specifications and delivery delays. This study conducted a supplier performance evaluation to provide an assessment of suppliers, enabling the company to identify the strengths and weaknesses of each supplier using the Vendor Performance Indicator (VPI) framework Quality, Cost, Delivery, Flexibility, and Responsiveness, which consists of a total of 13 sub-criteria and employs the Analytical Hierarchy Process (AHP). Based on results, the weighted values for suppliers I, K, L, M, and J were 0.285, 0.275, 0.185, 0.142, and 0.112, respectively. Based on the result, it is recommended that the company adopts a periodic to effectively monitor supplier performance, for better supplier selection and enhanced operational efficiency.