A combined application of structural equation modeling (SEM) and analytic hierarchy process (AHP) in supplier selection

Purpose – The purpose of this paper is to develop a new composite model using structural equation modelling (SEM) and analytic hierarchy process (AHP) for the selection of suppliers. Design/methodology/approach – In this paper the authors have made an attempt to arrive at the supplier selection score using SEM and AHP. An attempt has been made to develop a new composite model using SEM and AHP technique, based on the survey of 151 respondents. Attributes' weightage are found out using cluster analysis. Findings – Based on the output from the composite model, cluster analysis has been carried out to find out the strengths and weakness of each supplier on the influencing factors. Based on these findings, the supplier can improve on factors where they lag and can maintain the factors where they excel. Originality/value – In this paper the authors have made an attempt to arrive at the supplier selection score using SEM and AHP.