Application of TOPSIS Method to Green Supplier Selection for a Thai OTOP Producer

In recent years, the level of consciousness and awareness of environmental problems is increasingly concerned by society, businesses and governments globally. In order to decrease hazardous environment effects, a number of organizations have been forced to improve and diminish the harmful impact of business activities in terms of production, consumption and purchasing behavior which may affect the environment. Despite environmental concern, several consumers are also willing to pay more for environmental benefits. Supplier selection is one of the most crucial parts in the decision-making process by which the companies classify, assess and select the suppliers of their required raw materials. The appropriate supplier selection will lead to environmental performance which affect the quality of final product. Thus, this paper presents an approach for evaluating and ranking suppliers with respect to traditional and environmental criteria.  Such problem is regarded as multi-criteria decision making (MCMD) in nature that both qualitative and quantitative criteria have to be considered. In this study, TOPSIS method was applied to rank the green suppliers. An illustrate example in herbal cosmetics and personal care products from a Thai OTOP producer, is conducted to demonstrate how to select the most suitable supplier. A set of criteria were identified from literature review and then confirmed by the case company. The decision was made on the basis of observation of three suppliers with ten criteria. The proposed model helps the case company in finding the suitable supplier according to the operating conditions and market performance of those potential suppliers. The findings of this study could contribute a noteworthy tool to help a small enterprise in the supplier evaluation more precisely and reduce the subjective bias to some extent.

Keywords: green supplier selection; multi criteria decision making (MCMD); technique for order of preference by similarity to ideal solution (TOPSIS); Thai OTOP producer

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