Vendor Rating for an Entrepreneur Development Programme: A Case Study Using the Analytic Hierarchy Process Method

Abstract

With collaborative purchasing programs where one of the aims is to develop suppliers, vendor rating is important not only in supplier selection and in deciding how to allocate business but also to determine where scarce development effort is best applied. A case study into vendor rating for a government sponsored Entrepreneur Development program in Malaysia is described. Current methods for vendor rating are reviewed and found wanting. A new approach is illustrated based on the use of Saaty's Analytic Hierarchy process method, which was developed to assist in multi-criteria decision problems. The new method overcomes the difficulties associated with the categorical and simple linear weighted average criteria ranking methods. It provides a more systematic way of deriving the weights to be used and for scoring the performance of vendors.