63Selection of Raw Material Suppliers.....(Jakfat Haekal; Herawan Setio)      

SELECTION OF RAW MATERIAL SUPPLIERS USING ANALYTICAL 
HIERARCHY PROCESS IN FOOD AND BEVERAGE COMPANY,

SOUTH JAKARTA

Jakfat Haekal1; Herawan Setio2

1,2Magister Industrial Engineering Department, Faculty of Engineering, Mercu Buana University
Jl. Menteng Raya No. 29, DKI Jakarta 10340, Indonesia
1jakfat.haekal@gmail.com; 2herawan.setio@gmail.com

Received: 14th November 2016/ Revised: 24th February 2017/ Accepted: 10th March 2017

Abstract - The purpose of this research was to see 
the selection of raw material suppliers as an assessment of 
supplier performance. Data were obtained from the results of  
assessment of the experts in food and beverage company in 
South Jakarta. The rate selection of suppliers was based on 
several criteria. There was the suitability in some products 
with the demand for tolerance of 10% about mismatch 
delivery, 10% of the accuracy of the product delivery, 5% of 
products quality, 5% of product prices, 5% of the easiness of 
information or data, and 10% of the problem-solving action. 
The results show that 40% of suppliers get a warning letter 
regarding their performance from January to June 2016, 
20% of suppliers have already gotten a reprimand directly 
from the company, 20% of suppliers have been deactivated 
from the list of suppliers, because they cannot meet the 
target value which equals to 4,05, only 20% of the supplier 
can maintain its performance.

Keywords: Analytical Hierarchy Process, selection criteria, 
raw material supplier

I. INTRODUCTION

The increasing development of current food and 
beverage industry requires entrepreneurs in this industry to 
innovate and develop new systems with a target of fulfilling 
the needs and desires of customers. According to the Ministry 
of Industry of the Republic of Indonesia (2016), in the first 
quarter of 2016, growth in the food and beverage industry 
has reached 7,55 percent or higher compared to the period 
in 2015 which was 7,54 percent. In fact, the performance of 
the food and beverage industry outpaced the growth of non-
oil industry in the first quarter of 2016 about 4,46 percent. 
This shows that the performance of the food and beverage 
industry in the country has a positive achievement by 
providing a large contribution to the Indonesian economy. 
Amelia et al. (2012) explained that the food and beverage 
industry subsector was a part of the manufacturing sector. In 
addition to providing a great contribution to the economic 
development, this sector also has a great contribution in 
employment.

The contribution to economic development in the 
manufacturing sector in four consecutive years from 2005 to 
2008 is 12,4%, 14%, 14,5, and 15,4%. This is a challenge for 
the entrepreneurs in the food industry to pay more attention 
to the quality of the materials used and the price offered to 
compete to be the best for customers. An important thing 
to support the company’s performance is the right supplier 

selections. Supplier as a provider of material should meet 
the qualifications to improve the company competitiveness. 
Food and beverage company in South Jakarta is one of the 
companies participating in the development of food and 
beverage industry. This company is a large company with 
1200 employees.

Food and beverage company in South Jakarta has 
several suppliers regarding the raw material of Japanese 
food. It is managed by multiple criteria including the 
suitability of the amount of product demanded, punctual 
delivery of products, product quality, product prices, 
easiness of information/data, and problem-solving. 
However, through the observation, discussions, interviews, 
and direct observation, the researchers find that there are 
often problems like rejection of their goods, the unmatched 
number of the products with the order, the delay in the 
delivery of raw materials, the slow response in dealing with 
complaints from the customers, and the absence of expired 
date, Purchase on Date (POD), and halal certificate on the 
product. The initial way to maintain the quality of the product 
is selecting the competent supplier. Supplier selection needs 
to be done to get a supplier that really can meet the needs 
of companies consistently and qualifiedly. Moreover, the 
steps used in the selection of suppliers are using one of the 
Analytic Hierarchy Process (AHP) methods. 

AHP is developed by a mathematician, Thomas L. 
Saaty. This method is a framework to take decisions 
effectively on complex problems by simplifying and 
accelerating the decision-making process. It is dividing the 
problem into parts, arranging parts or these variables in a 
hierarchical arrangement, giving a numerical value as the 
consideration of the subjective importance of each variable, 
synthesizing these considerations to set the variables which 
have the highest priority, and doing it for the outcome of 
the situation. Saaty and Peniwati (2008) explained that the 
AHP was one method that could be used in determining the 
decisions. The result of AHP process was the priorities of 
the alternatives. These priorities can be used to determine 
the best alternative.  

AHP is one of the tools used in decision-making by 
Adhi (2010). He concluded that the decision was a choice 
of strategy of an action. Then, decision-making is a form 
of management activity by selecting actions from some 
alternatives that have been previously formulated to solve a 
problem or a conflict in management. According to Turban 
et al. (2011), the output of the AHP process might be used as 
a tool to support decision making. AHP is a precise method 
for solving complex problems. In AHP, an issue is resolved 
within an organized framework so that it can make effective 



64 ComTech, Vol. 8 No. 2 June 2017, 63-68

decisions. In short, the complex problem can be simple in 
the decision-making process.

Moreover, Taufik et al. (2014) stated that the 
application of the selection of raw material supplier was 
based on ready mix integration of AHP and Technique 
for Order of Preference by Similarity to Ideal Solution 
(TOPSIS). From this research, it could be concluded that 
after calculating the performance of suppliers using the 
method of AHP and TOPSIS, the suppliers of raw materials 
in Merak Jaya Concrete with the best performance was CV 
Makmur Jaya Abadi for sand, PT Royal Inti Mandiri Abadi 
with  the product, Semen Tiga Roda, Merak Jaya CV for 
stone, and PT BASS or PT BASF for chemical concrete. 

Then, Putri (2012) stated that the supplier selection 
by using a model of Quality, Quantity, Cost, and Delivery 
(QQCD) produced four Supplier Performance Indicators 
(SPI). Criteria quality had the highest weight. It was 
followed by delivery quantity, while the last was the cost 
or price. 

Similarly, Probowati (2013) showed that the supplier 
selection would determine the price of each product on the 
retail business. The retail business included business related 
to the sale of goods and services provided directly to the 
consumer. This business was an intermediary for a business 
of producers and consumers.

On contrast, Nurhasanah and Tamam (2011) stated 
that there was no significant difference in the selection of the 
best supplier by using Analytical Hierarchy Process (AHP) 
and Fuzzy Analytical Hierarchy Process (Fuzzy AHP). 
Thus, the process of selecting the best suppliers can use one 
of two methods. In addition, Puspitasari (2016) added that 
the ANP method was a method that was able to represent 
the level of interest of various parties by considering the 
interdependence of criteria and sub-criteria. The application 
of this method had been applied to the PT Kimia Farma Plant 
Semarang in selecting the best suppliers. It found that the 
quality of suppliers was the highest criteria that should be 
considered in choosing the supplier. Meanwhile, the other 
criteria were the environment of the supplier, suppliers’ 
shipping, suppliers’ service, suppliers’ relationships and 
communication with consumers. 

Meanwhile, Kurniawati et al. (2013) stated that 
the criteria influencing supplier selection were the best 
performance of supplier in the past, price, communication 
systems, and the professionalism. The other important 
criteria considered in choosing suppliers were order delivery 
time, consistency of product quality, price, and the ability 
of suppliers to fulfill the deliveries. The supplier selection 
based on proper criteria in accordance with the needs in the 
period of interest and effectiveness was going to gradually 
reduce production costs, and increase productivity and 
customer satisfaction. The criteria of evaluation regarding 
the best supplier had to be reliable in continuity. 

Viarani and Zadry (2016) stated that the new plant of 
Indarung VI Project by PT Semen Padang did planning, and 
the selection of goods and services to fulfill the needs as the 
best supplier which was capable of providing good quality 
of goods and services. Then, AHP was a systematic method 
and did not require a long time to show the priority weight 
of criteria and the best suppliers.

Similarly, Iriani and Herawan (2012) explained that 
the ANP method was able to fix the weaknesses of AHP. 
ANP method accommodated the linkages or alternative 
criteria. For linkage to the ANP method, there were two 
types of linkages. They were in a set of elements (inner 
dependence), and between the different elements (outer 

dependence). The existence of these linkages caused ANP 
method to be more complex than AHP. The results of the 
research found an alternative supplier who would supply the 
raw material (yarn) in Nedy Home Industry.

Moreover, there is research by Merry et al. (2014) 
concerning of supplier selections with AHP and TOPSIS.
It was a case study on retail companies. The researchers 
concluded that AHP and TOPSIS could help PT Hero 
Supermarket Tbk in selecting fruit suppliers according to 
key criteria and other criteria that could be a consideration 
in determining the supplier.

The recent research is by Ngatawai and Setyaningisih 
(2011). The researchers concluded that based on the data 
processing and analysis that had been done, the supplier 
“A” was the best supplier. It was because their values in 
the final calculation of AHP was high with a value of 0,240.

Darmanto et al. (2012) defined the problem, 
determined the desired solution, and created a hierarchical 
structure begun with a common goal. It was followed by 
criteria and alternatives to make a selection after comparison 
of the matrix illustrating the relative contribution or influence 
of each element compared to the objectives and criteria was 
above it. The comparison was based on the selection of 
decision makers to judge the importance of the elements after 
it normalized the data by dividing the value of each element 
in the matrix paired with a total value of each column and 
calculating eigenvalues vector tested for consistency. If it 
were not consistent, the data retrieval (preferences) would 
be repeated. Eigenvalues vector was the maximum value 
obtained in eigenvector. After the calculations repeated the 
step 3, 4 and 5 for all levels of hierarchy, the calculation 
of eigenvector was for each pairwise comparison matrix. 
Eigenvalues vector was the weight of each element. Then, 
the last test was the consistency hierarchy.

 
II. METHODS

According to Sugiyono (2011), quantitative research 
is obtaining data in the form of numbers or qualitative 
data numbering. There are several steps in conducting 
this research. The first step is a preliminary survey of the 
condition and situation of the problem contained in the 
company. In addition, the researchers also study the literature 
relating to the issues examined like a concept of Supply 
Chain Management (SCM), procurement management, and 
others which are used for future data processing. The second 
step is to identify emerging issues in the research object. 
The third step is the formulation of the problem. After 
identifying the problem, the researchers formulate the issue 
about the focus of discussion in this research. The fourth 
step is determining the research purposes by considering the 
problem formulation before. The fifth step is data collection 
by collecting primary and secondary data. Primary data is 
obtained from the questionnaire by respondents according 
to the needs of secondary data, the condition of supplier 
owned by enterprise or supporting data to strengthen the 
weighting and justification of the questionnaire. The sixth 
step is a data processor. The data processing is to define 
existing problems and lower it into the assessment criteria. 
Each criterion is given a classification assessment with 
a value between 5-9. The value 5 is the lowest value, and 
the value 9 is the highest value. Moreover, the coverage is 
determined by the weight of the company as a target in the 
process of assessment to the final calculation of available 
supplier selection. Currently, the company does not have 
a standard of supplier selection. From interviews with the 



65Selection of Raw Material Suppliers.....(Jakfat Haekal; Herawan Setio)      

manager of purchasing, the researchers generate the value 
of decisions. Value collected from each of the assessment 
criteria is multiplied by the weight (target value), then the 
total value is used as a measure for the company’s decision 
to the supplier. The last step is to perform the analysis and 
discussion. In this stage, it is to analyze the data processing 
that has been conducted in the previous stage. In this stage, 
the high accuracy is needed to avoid mistakes in reading the 
data. Then, the analysis and discussion of data processing 
are conducted.

III. RESULTS AND DISCUSSIONS

The raw material purchasing process conducted 
in food and beverage company in South Jakarta begins 
with knowing the needs of raw material in the outlet and 
sending the form of a request to the purchasing department 
in accordance with the needs. The purchasing department 
inputs the request into a system in the form of purchase orders 
that will be sent to the supplier. Purchasing department also 
compares the price before selecting the preferred suppliers 
if the ordered item has more than one supplier. After 
purchasing department gives the order to suppliers, it must 
ensure that Purchasing Order (PO) has been received by the 
supplier and the item must be sent to the right outlet. If there 
are problems in the process of delivery to the outlet, the 
supplier must inform the purchasing department to inform 
about the delivery problem. Moreover, the outlet should 
also inform about the arrival of the goods to the purchasing 
department. If the item sent does not fit, the outlet must 
reject the goods and inform the purchasing department. 
Then, purchasing department will find the solutions. 

The object of this research is the evaluation of 
suppliers conducted by food and beverage company in 
South Jakarta twice a year (January to June and July to 
December). If the supplier gets a reprimand directly with a 
warning letter from the purchasing department, the supplier 
will be evaluated in the second period. Moreover, if there is 
no better change, the supplier will be taken out from the list 
of suppliers in food and beverage company in South Jakarta. 
Table 1 shows the list of suppliers in food and beverage 
company in South Jakarta.

Table 1 The Supplier in Food and Beverage 
Company in South Jakarta

Supplier Code Supplier Name
S1 KWR
S2 BDO
S3 ECR
S4 NWL
S5 TWF
S6 SMX
S7 NMK
S8 MUA
S9 LCS
S10 AJS

The criteria used by food and beverage company in 
South Jakarta are the suitability of the number of products 
shipped from the supplier. This assesses the performance 
of suppliers regarding order fulfillment based on the 
demand. The other criterion is the accuracy of delivery from 
suppliers. It will assess the suppliers’ accuracy regarding 
delivery in accordance with the schedule determined by the 

purchasing department. Next, there is also product quality. 
This criterion compares the conformity of the specifications 
expected by the food and beverage company in South 
Jakarta and supplier. Next, the price is about the price of 
the same item with a different supplier. In addition, there is 
easiness in obtaining information such as the composition of 
the product, the specification of the product, flow process, 
halal certificate, the expiration date, production code, and 
the distributors. Last, it is about problem-solving. This is 
related to the reliability of suppliers in solving the problems 
arisen during the transaction of purchase and delivery. The 
stages of the determination of the weight of each criterion 
are shown in Table 2.

The weights are determined by the company as a 
target in the process of assessment in the final calculation 
of selection of the available supplier. The range of values or 
weights is shown in Table 3.

Next, currently, the company does not have a standard 
supplier reception. From interviews with the manager of 
purchasing, and by generating design decisions, it can see 
the range of the suppliers’ rank. Table 4 shows the range.

The supplier will be the best supplier if the supplier 
has the credibility and the level of mismatch in criteria 
assessed by 5% of the target company. The decision to 
maintain the suppliers’ existence in this company is if the 
supplier can meet 10% of tolerance of the inconsistency in 
the criteria assessed. However, if the supplier makes 20% 
of the deviation of inconsistency in the criteria, the supplier 
will get a warning letter from the company. If the supplier 
has 35% of mismatch deviation of the target value, the 
purchasing staff will ask for corrective action from supplier. 
If in 3 times of the evaluation, the supplies does not show 
improvement, then the goods or services supplied will be 
discontinued. The supplier will be excluded from the list of 
suppliers in food and beverage company in South Jakarta if 
the supplier repeats the same mistake during the period of 
the warning.Table 5 shows the results of the calculation of 
the supplier’s performance regarding supplier S1 and S2.

From the calculation in Table 5, it can be concluded 
that the supplier S1 and S2 will get a warning directly from 
the company for its performance. Moreover, the result of 
supplier S3 and S4 is in Table 6.

From the calculation in Table 6, it can be seen that 
supplier S3 is taken out as a supplier in food and beverage 
company in South Jakarta. It is because the calculation is 
below the value of the company. Meanwhile, supplier S4  
receives a warning letter. It has a decline in the performance. 
Moreover, the warning letter serves as a consideration in the 
company’s next monitoring of the supplier ratings. Then, 
Table 7 shows the result of S5, S6, and S7.

Table 7 describes that the food and beverage 
company in South Jakarta will holds supplier S5 because 
the supplier has a good performance and can work well with 
the company. On the contrary, supplier S6 is be taken out 
as a supplier because it cannot fulfill the target value of the 
company. Meanwhile, supplier S7 gets a warning letter as it 
has a decline in the performance. The warning letter is also 
for consideration in the company’s next monitoring of the 
supplier ratings. Next, the results of supplier S8, S9, and 
S10 are in Table 8.

Table 8, concludes that the food and beverage 
company in South Jakarta holds supplier S8 because it has 
a good performance and can work well with the company. 
However, supplier S9 and S10 receive a warning letter as it 
has a decline in the performance. The warning letter is the 
consideration for company in next monitoring.



66 ComTech, Vol. 8 No. 2 June 2017, 63-68

Table 2 Range of QualificationValues

No Criteria Appraisal Range of Values
1 Suitability of Product Numbers 0%-5% of mismatches of the number of products shipped

6%-15% of mismatches of the number of products shipped
16%-25% of mismatches of the number of products shipped
26%-35% of mismatches of the number of products shipped
>  36% of mismatches of the number of products shipped

9
8
7
6
5

2 Precision of Delivery 0%-5%  of delays in product delivery
6%-15% of delays in product delivery
16%-25% of delays in product delivery
26%-35% of delays in product delivery
>  36% of delays in product delivery

9
8
7
6
5

3 Quality 0%-5%  of tolerance regarding suitability of products shipped 
during the selection period
6%-15% of tolerance regarding suitability of products shipped 
during the selection period
16%-25% of tolerance regarding suitability of products shipped 
during the selection period
26%-35% of tolerance regarding suitability of products shipped 
during the selection period
>  36% of tolerance regarding suitability of products shipped 
during the selection period

9

8

7

6

5

4 Price very competitive
competitive
Competitive enough
Not Competitive
Bad Competitive

9
8
7
6
5

5 Easiness in Information Data Very Easy
Easy
Easy Enough
Not Easy
Difficult

9
8
7
6
5

6 Problem Solving Very Fast Response
Perceptive
Quite Response
No Response
Indifferent

9
8
7
6
5

Table 3 The Range of Weight

No Criteria Company Policy Target
1 Suitability of Product Numbers 10% 0,9
2 Precision of Delivery 10% 0,9
3 Quality 5% 0,45
4 Price 5% 0,45
5 Easiness in Information Data 5% 0,45
6 Problem Solving 10% 0,9

 Total 4,05

Table 4 The Range of Value

Number Range of Value Result
1 4,00-4,05 of Total Value Best Supplier
2 3,80-3,99 of Total Value Hold Supplier
3 3,59-3,79 of Total Value Treatment
4 3,23-3,58 of Total Value Warning
5 < 3,22 of Total Value be taken out



67Selection of Raw Material Suppliers.....(Jakfat Haekal; Herawan Setio)      

Table 5 The Result of S1 and S2

No Criteria
Vendor

S1 (a) Weight (b) Total (axb) S2 (a) Weight (b) Total (axb)
1 Suitability of Product Numbers 9 10% 0,9 9 10% 0,9
2 Precision of Delivery 9 10% 0,9 7 10% 0,7
3 Quality 9 5% 0,45 8 5% 0,4
4 Price 8 5% 0,4 9 5% 0,45
5 Easiness in Information Data 7 5% 0,35 7 5% 0,35
6 Problem Solving 7 10% 0,7 8 10% 0,8

Grand Total 3,7 3,6
Result Treatment Treatment

Table 6 The Result of S3 and S4

No Criteria
Vendor

S3 (a) Weight (b) Total (axb) S4 (a) Weight (b) Total (axb)
1 Suitability of Product Numbers 9 10% 0,9 8 10% 0,8
2 Precision of Delivery 6 10% 0,6 7 10% 0,7
3 Quality 7 5% 0,35 8 5% 0,4
4 Price 7 5% 0,35 8 5% 0,4
5 Easiness in Information Data 6 5% 0,3 6 5% 0,3
6 Problem Solving 6 10% 0,6 7 10% 0,7

Grand Total 3,1 3,3
Result Treatment Treatment

Table 7 The Result of S5, S6, and S7

No Criteria
Vendor

S5 
(a)

Weight 
(b)

Total 
(axb)

S6
(a)

Weight
(b)

Total 
(axb)

S7
(a)

Weight
(b)

Total 
(axb)

1 Suitability of Product Numbers 9 10% 0.9 8 10% 0,8 9 10% 0,9
2 Precision of Delivery 9 10% 0.9 7 10% 0,7 8 10% 0,8
3 Quality 8 5% 0.4 8 5% 0,4 7 5% 0,35
4 Price 7 5% 0.35 7 5% 0,35 6 5% 0,3
5 Easiness in Information Data 9 5% 0.45 6 5% 0,3 6 5% 0,3
6 Problem Solving 9 10% 0.9 6 10% 0,6 6 10% 0,6

Grand Total 3,9 3,15 3,25
Result Hold Taken Out Warning

Table 8 The Result of S8, S9, and S10

No Criteria
S8
(a)

Weight
(b)

Total 
(axb)

S9
(a)

Weight
(b)

Total 
(axb)

S10
(a)

Weight
(b)

Total 
(axb)

1 Suitability of Product Numbers 9 10% 0,9 8 10% 0,8 7 10% 0,7
2 Precision of Delivery 9 10% 0,9 7 10% 0,7 6 10% 0,6
3 Quality 9 5% 0,45 8 5% 0,4 7 5% 0,35
4 Price 9 5% 0,45 7 5% 0,35 6 5% 0,3
5 Easiness in Information Data 7 5% 0,35 6 5% 0,3 6 5% 0,3
6 Problem Solving 9 10% 0,9 7 10% 0,7 6 10% 0,6

Grand Total 3,95 3,25 2,85
Result Survive Supplier Warning Letter Warning Letter



68 ComTech, Vol. 8 No. 2 June 2017, 63-68

IV. CONCLUSIONS

Table 9 Summary of the Results 
of the Suppliers’ Performance

No Decision Making Supplier Percentage

1 Best Supplier 2 20,00%
2 Hold Supplier 2 20,00%
3 Treatment 4 40,00%
4 Warning 2 20,00%

Total 10 100,00%

There are several conclusions according to Table 
9. First, 40% of suppliers in food and beverage company 
in South Jakarta get a warning letter about their the 
performance during January to June 2016. Second, 20% 
of suppliers already get a reprimand directly from food 
and beverage company in South Jakarta. Third, 20% of 
suppliers have been deactivated from the list of suppliers in 
food and beverage company in South Jakarta. It is because 
they cannot fulfill the target value of food and beverage 
company in South Jakarta which equals to 4,05. Last, only 
20% of the suppliers can maintain its performance.

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