The study focuses on the vendor selection process in a manufacturing organization. In present days, manufacturing organizations use their supply chain to complete their production as per schedule and meet the delivery in time. Every manufacturing organization has their own way of selecting their vendors. The researchers have worked in this direction to find out an effective vendor selection process and suggested to consider different factors for selecting a vendor. An attempt has been made in this study to critically analyze the Analytic Hierarchy Process (AHP) as a developed decision-making tool that can be used to select the most suitable vendor. The AHP has been used while conducting this study to ascertain the weightage of selected decision criteria. A vendor selection model has been developed which can be used in real-life situations to take better decision based on most accepted determinants of vendor selection.

Today’s dynamic manufacturing environment is characterized by dramatic and often unanticipated changes. In this difficult and challenging milieu, the manufacturing enterprise must develop and implement new and innovative strategies for competitive success. Companies need to make quick decisions and should work as a whole to make strategic decisions and to gain competitive advantage. Analytic Hierarchy Process (AHP) (Saaty, 1980) is one of the very popular decision-making methods used to solve complicated problems that include multiple criteria. AHP allows decision makers to model the complicated problems in a hierarchical structure having the main target, criteria, sub-criteria and alternatives and the relationships among these. The most important characteristics of AHP is combining knowledge, experience, individual opinions and foresights in a logical way.

Vendors have always been an integral part of a company’s management policy. Furthermore, when firms are allocating more resources to their core competencies and encouraging the outsourcing of non-core activities, they have more reliance and dependence on suppliers. It is increasingly important that companies have strong relationship with their suppliers to stay ahead of competition. The establishment, development and maintenance of the relationship between exchange partners are crucial to achieving success. In the current international competitive environment, many manufacturers are focusing on supplier management as a means for achieving sustainable competitive advantage. Supplier management may be defined as organizing the optimal flow of high-quality of material or components to manufacturing companies in time from a suitable set of innovative suppliers. It is crucial for several reasons. Suppliers can have significant influence on a manufacturer’s performance through their contribution to cost reduction, new product design and enabling the constant improvement of quality. Consequently, studies of supply chain management are now increasingly concentrating on the relationships involved between organizations and the suppliers rather than the traditional physical flow of materials and products. The supplier selection and evaluation processes draw even more concern from scholars and practitioners. Many scholars have argued about what criteria should be considered when selecting and evaluating suppliers and the importance of each criterion in the process. Along with the development of supply chain management philosophy, a range of criteria evolved, but three core items are still to be used, viz., cost, quality and delivery performance.

Operations Management Journal, Vendor Selection Model, Manufacturing Company, Analytic Hierarchy Process (AHP), Profile of the Organizations, Bajaj Auto Limited, Honda Cars India Ltd., Analytical Research Approach.