Journal of Cleaner Production 17 (2009) 255264

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Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

Applying hazardous substance management to supplier selection

using analytic network process
Chia-Wei Hsu a,1, Allen H. Hu b, *
a
b

Institute of Engineering Technology, National Taipei University of Technology, 1, Sec. 3, Chung-Hsiao E. Road, Taipei 10643, Taiwan, ROC
Institute of Environmental Engineering & Management, National Taipei University of Technology, 1, Sec. 3, Chung-Hsiao E. Road, Taipei 10643, Taiwan, ROC

a r t i c l e i n f o

a b s t r a c t

Article history:
Received 12 September 2007
Received in revised form 19 May 2008
Accepted 22 May 2008
Available online 21 July 2008

With increased outsourcing and environmental consciousness, this paper presents an analytic network
process (ANP) approach to incorporate the issue of hazardous substance management (HSM) into supplier selection. In this study, identication of criteria of HSM competence is categorized into four dimensions, a multi-criteria decision model is proposed. ANP is then applied to supplier selection and is
characterized by interdependencies among decision structure components. An illustrative example in an
electronics company is presented to demonstrate how to select a most appropriate supplier in accordance with the requirements of hazardous substance for environmental regulations.
2008 Elsevier Ltd. All rights reserved.

Keywords:
Supplier selection
Analytic network process
Hazardous substance management
Green supply chain management

1. Introduction
Green supply chain management (GSCM) is generally understood to involve screening suppliers based on their environmental performance and doing business only with those that meet
certain environmental regulations or standards [1]. Given growing
environmental concerns during the past decade, a consensus is
emerging that environmental pollution issues accompanying industrial development should be addressed together with supply
chain management, thus contributing to GSCM [2]. Since the Waste
Electrical and Electronic Equipment (WEEE), Restriction of Hazardous Substances (RoHS) and Eco-design for Energy using Products (EuP) directives were passed by the European Union (EU),
GSCM has been adopted as a strategy by leading electronics industry companies, including Dell, HP, IBM, Motorola, Sony, Panasonic, NEC, Fujitsu, and Toshiba [3]. Apparently, large electronics
rms have exerted pressure on their suppliers to achieve better
environmental performance, increasing the motivation for cooperation between suppliers and customers to achieve environmental objectives [4]. Supplier selection in GSCM is clearly a critical
activity in purchasing management [1,5,6], because rm environmental sustainability and ecological performance can be demonstrated by its suppliers [7].

* Corresponding author. Tel.: 886 2 27712171x4151; fax: 886 2 27764702.

E-mail addresses: jcwhsu@gmail.com (C.-W. Hsu), allenhu@ntut.edu.tw (A.H.
Hu).
1
Tel.: 886 2 27712171x4151; fax: 886 2 27764702.
0959-6526/$ see front matter 2008 Elsevier Ltd. All rights reserved.
doi:10.1016/j.jclepro.2008.05.004

Despite the importance of hazardous substance for GSCM

practice in addressing the issue of the emerging worldwide environmental regulations, particularly the RoHS directive, it implies to
be an urgent need for developing a green supply chain-based operational methodology to systematically evaluate supplier competence in hazardous substance management (HSM). In 2001, more
than 1.3 million boxes of PlayStation2 game systems for Sony Corporation were blocked by Dutch government due to an exceeding
amount of the toxic element cadmium found in the cables of the
game controls, causing losses exceeding $130 million, while indirectly leading to the re-inspection of over 6000 factories and the
establishment of a new supplier management system [8]. Even the
best companies can be surprised by environmental issues because
supplier selection in GSCM gives little consideration to comprehensive and appropriate environmental criteria related to competence of HSM. RoHS directive is designed to minimize the negative
health effects of hazardous substances and prohibit the manufacture of various electronic products containing lead, cadmium,
hexavalent chromium, polybrominated biphenyls (PBBs) and polybrominated diphenyl ethers (PBDEs) [9]. Companies have encountered great challenges because of their concerns about the
hazardous substances contained in received parts/components. As
part of the compliance-RoHS program, many manufacturers are
asking their suppliers to conrm component compliance to ensure
compliance of the nished product [10]. The competency of HSM in
supplier selection is thus crucial since suppliers will be asked to
demonstrate that their products conform to the RoHS directive. A
growing number of electrical suppliers are adopting lead-free

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C.-W. Hsu, A.H. Hu / Journal of Cleaner Production 17 (2009) 255264

technology [11], and the criteria involving the R&D competency of

lead-free soldering have become essential for supplier selection in
GSCM practice.
Nevertheless, to our knowledge, supplier selection specially
considered HSM competence is never found in previous literature.
In addition, most of early literature may be limited in exploring the
broad environmental criteria of either quantitative or qualitative
property with regard to environmental cost, production process,
product, and management system. Some typical supplier selection
models are illustrated below.
By incorporating green competence, environmental efciency,
green image, and life cycle cost into the supplier selection, the
framework proposed in Noci [12] appears designing green vendor
rating systems for the assessment of a suppliers environmental
performance. As later pointed out by Zhu and Geng [13], environmental consideration of supplier selection is a key competitive issue
for large and medium-sized enterprises, and thus it should be taken
into account to maintain the long-term relationships with these
suppliers. Similarly, considering the corresponding evaluation factors of environmental performances, Handeld et al. [14] proposed
an environmentally conscious purchasing decision to assist managers in understanding the trade-offs between environmental dimensions using analytic hierarchy process (AHP). In addition,
Humphreys et al. [15] proposed a knowledge-based system to
evaluate the supplier environmental performance, which is recognized into several categories of environmental costs, management
competencies, green image, green design, environmental management system, and environmental competencies. Presently, Rao [16]
pointed out that companies are embracing the concept of greening
of suppliers in the South East Asian region, aiming to provide an
insight of the extent of greening that has been implemented and the
underlying reasons for Asia companies to increasingly adopt. As
further pointed out by Wu et al. [17], environmental principles
applicable to green supplier evaluation has been proposed by using
the AHP and fuzzy logic. Their study considers the complete environmental impact of a product during its entire life cycle. However,
those previous studies may be still limited to the broad environmental criteria without considering HSM-specic issue on the operation of the corresponding supply chain management.
Supplier selection is a multi-criteria decision problem [1820], for
which the related literature has proposed several supplier selection
methodologies. Some familiar examples of systematic analysis for
supplier selection include analytic hierarchy process (AHP)
[18,21,22], fuzzy analytic hierarchy process (FAHP) [17,2325],

analytic network process (ANP) [26,27], case based reasoning systems [28,29] and multiple objective programming [3032]. The application of the mathematical programming model to supplier
selection may have problems in including qualitative criteria, particularly for supplier partnership policies [33]. Furthermore, the
computational complexities inherent in multiple objective programming frequently prohibit consideration of many crucial attributes for supplier selection [25]. Either the weighting model of the
AHP or the ANP can be used since it is more useful for treating
qualitative factors than other models such as mathematical programming models [34]. Both Bayazit [26] and Gencer and Gurpinar
[27] utilized ANP in supplier selection to provide good insights in
terms of systematic feedback and interdependencies. ANP can capture the interdependencies between the criteria under consideration,
thus allowing for more systemic analysis [35]. Additionally, ANP can
be used as a decision analysis tool to solve multi-criteria supplier
selection problems that contain interdependencies [26] and provide
systematic feedback [27]. ANP modeling thus better ts the problem
examined in this study, and offers the advantage of providing a systematic approach to supplier selection for GSCM practice.
In view of the signicance of incorporating the HSM into supplier selection as well as the limitation of previous studies, we
propose a HSM-based supplier selection model by using the ANP
methodology. This study has two objectives: rst, to recognize the
criteria of supplier selection and evaluate with respect to HSM
competency in GSCM; and second, to develop a framework of the
supplier selection processes in GSCM using the ANP approach to
facilitate appropriate supplier selection.
The remainder of this paper is organized as follows. Section 2
discusses selection criteria for suppliers in GSCM in terms of HSM
competency. Next, Section 3 debates the ANP approach. Section 4
then presents an illustrative case for appropriate supplier selection
using the ANP model. Finally, Section 5 presents conclusions and
limitations.
2. Environmental criteria to hazardous substance
management in supplier selection
Based on integrating the categories and criteria identied from
the literature sources, an environmental framework was designed
for incorporating environmental criteria regarding the competency
of HSM into supplier selection in GSCM. The 19 criteria were
determined and categorized into ve main clusters as follows (see
Table 1).

Table 1
Criteria of supplier selection to HSM
Dimension

Criterion

Reference

Procurement management (D1)

Requirement of green purchasing (D11)

R&D management (D2)

Green materials coding and recording (D12)

Inventory of substitute material (D13)
Supplier management (D14)
Capability of green design (D21)

Evans and Johnson [43]; Lamming and Hampson [5];

Yuang and Kielkiewicz-Yuang [6]; Zhu et al. [4]
Eveloy et al. [11]; Yang [62]
Eveloy et al. [11]; Handeld et al. [14]
Handeld et al. [14]; Yang [62]; Zhu and Geng [13]
Handeld et al. [14]; Humphrey et al. [15];
Yuang and Kielkiewicz-Yuang [6]; Zhu et al. [4]
Handeld et al. [14]; Yang [62]
Huang and Keskar [20]
Handeld et al. [14]; Zhu and Geng [13]
Yang [62]
Handeld et al. [14]; Yang [62]; Zsidisin and Siferd [39]
Yang [62]
Yang [62]
Evans and Johnson [42]
Cusack and Perr [10]; Eveloy et al. [11]; Evans and Johnson [42]; Yang [62]
Evans and Johnson [43]; Yang [62]
Huang and Keskar [20]; Yang [62]
Handeld et al. [14]; Humphreys et al. [15]; Zhu and Geng [13]
Buetow [40]
Eveloy et al. [11]; Evans and Johnson [43]

Process management (D3)

Incoming quality control (D4)

Management system (D5)

Inventory of hazardous substances (D22)

Legal-compliance competency (D23)
Management for hazardous substances (D31)
Prevention of mixed material (D32)
Process auditing (D33)
Pre-shipment inspection (D34)
Warehouse management (D35)
Standard for incoming quality control (D41)
Test equipment (D42)
Record of incoming quality control (D43)
Quality management system (D51)
Environmental management system (D52)
Hazardous substance management system (D53)
Information systems (D54)

C.-W. Hsu, A.H. Hu / Journal of Cleaner Production 17 (2009) 255264

2.1. Procurement management (D1)

2.1.1. Requirement of green purchasing (D11)
The rm requires suppliers to formulate the requirements for
green purchasing as a management approach to ensure the products they supply comply with various environmental regulations
and consumer requirements. This is because RoHS-like regulations
exist throughout the worlddRoHS-EU, RoHS-Korea, RoHS-China,
and RoHS-California (AB 48)dcreating difculties in HSM for
GSCM. Environmental standards in purchasing thus provide a basis
for constructive dialogue with suppliers involving a joint commitment to quality improvement, and should in turn motivate suppliers to the activity of their own suppliers [5].
2.1.2. Green materials coding and recording (D12)
Companies utilize materials coding and recording to separate
RoHS and non-RoHS materials in storage, aiming to avoid material
mixing. This management system helps on immediately identifying
problematic events when a product is found to contain excessive
amounts of hazardous substances. Eveloy et al. [11] recommended
that all lead-free materials, components and boards should be
assigned new part numbers to distinguish them from lead-based
ones.
2.1.3. Inventory of substitute material (D13)
Environmental regulations have gradually increased the number of controlled items for hazardous substances. Furthermore,
customers usually request suppliers to adopt green materials by
a specied deadline to ensure a currently used non-RoHS compliant
material is replaced by a green material of the same functions and
specications. For example, non-RoHS compliant components
should be replaced with RoHS compliant alternatives selected
based on availability, manufacturability, reliability, and cost considerations [11]. As a result, supplier could guarantee that green
products can be supplied in accordance with environmental regulation via the inventory of substitute material.
2.1.4. Suppliers management (D14)
Globalization allows working with a lot of different suppliers to
get raw materials and preliminary products (horizontal supplier
structure), and each rst tier supplier often depends on a multilevel
supplier chain for their own production (vertical supplier structure)
[36]. Thus, potential risks may arise from this huge suppliers
structure which involved in complex tasks with respect to HSM.
Risks in the green supply chain can be substantially mitigated by
supplier management, including requesting suppliers to submit
product testing report, compliance statement, declaration documents, and on-site auditing.
2.2. R&D management (D2)
2.2.1. Capability of green design (D21)
One of the most important criteria in supplier selection is the
capability of green design, which can promote product-oriented
green supply chain implementation. Probably the strongest testament to the greening of international markets is the expanding
number of companies seriously addressing environmental concerns as part of their product development process [37]. Enterprises facing strong environmental and trade pressures that can
ride the crest of the green products wave can carve out a niche for
themselves as green producers rather than simply reacting to EU
directives and green supply requirements.
2.2.2. Inventory of hazardous substance (D22)
Regulations regarding hazardous substances differ between
countries, and the permitted concentration differs based on the

257

materials used. Additionally, manufacturers cannot ensure that

their products are RoHS compliant due to the uncertainty of the
regulation which exemptions of regulated products are increasing
continuously [11]. Therefore, company performing inventory of
hazardous substance is contributed to the R&D personnel for preventing products from containing excessive levels of restricted
substances. Consequently, it is essential to monitor regulation updates and customer requests regarding hazardous substances,
while simultaneously gathering from suppliers the relevant test
information or material safety data sheet (MSDS) on restricted
substances in products, and consolidating high risk materials or
components.
2.2.3. Legal-compliance competency (D23)
Currently numerous doubts and uncertainties exist regarding
the regulation of HSM, such as the methods used to calculate
concentrations of hazardous substances, denitions of homogenous material, changing exemption clauses, standardized testing
methods and so on. As a result, Suppliers thus have to periodically
track and update information on regulations and exemption clauses. Additionally, suppliers must setup schedules and programs for
hazardous substance control, and determine SOP for environmental
regulations and green purchasing customer requests.
2.3. Process management (D3)
2.3.1. Management for hazardous substances (D31)
To manage the use of hazardous substances in production,
companies should carry out preventive management for restricted
chemicals. All approaches should be fully documented and regularly inspected in order to track and monitor mistakes and defects
systematically.
2.3.2. Prevention of mixed material (D32)
Production procedure standards should be established for
RoHS-compliance and non-RoHS-compliance materials to ensure
that staff understands the operating methods required for different
product types. Additionally, green materials should be double
checked before entering the production line to avoid material
mixing. For example, Smetana et al. [38] suggested that component
manufacturers need to operate a single line for lead-free products
in order to avoid material mixing problem.
2.3.3. Process auditing (D33)
An environmental auditing is one approach for ensuring that
a suppliers processes are not contradictory to the purchasing rms
environmental posture [38]. Management staff generally makes
a checklist or questionnaire to assess actual production conditions
when performing on-site auditing of process conditions, parameter-setup document (document SOP and records) management,
product change notice (PCN), disqualied product management
and tracking and quality management system for production.
2.3.4. Pre-shipment inspection (D34)
Prior to shipping products are inspected in terms of quality and
environmental specications in accordance with the requirements
in different regulations and customer rms. Such inspection can
prevent negligence during production resulting in products containing excess hazardous substances. Companies thus can mitigate
product risk by following strict regulations during product inspection, requesting conrmation from customers, and controlling
pre-shipment inspection standards and disqualied products.
2.3.5. Warehouse management (D35)
A good quality warehouse management plan can prevent material mixing and maintain product quality. The on-site operation

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C.-W. Hsu, A.H. Hu / Journal of Cleaner Production 17 (2009) 255264

management model thus includes identication of green products,

isolation of disqualied goods and return material authorization
(RMA), and employs new encoding methods to monitor component
storage.

organization has installed a management system that documents

all the environmental aspects and impacts, and identies a pollution prevention process that organization can be continuously
improved over time [41,42].

2.4. Incoming quality control (D4)

2.5.3. Hazardous substance management system (D53)

Since the implementations of regulations restricting hazardous
substances, especially RoHS directive, companies have invested
heavily in improving hazardous substance management. After realizing that numerous certainties still exist in current management
methods, the International Electrotechnical Commission (IEC)
setup the Hazardous Substance Process Management (HSPM)
standard, namely IECQ QC 080000 HSPM. Obtaining this certication can help companies mitigate risks associated with hazardous
substances.

2.4.1. Standard for incoming quality control (D41)

Before making an order a company should obtain sample and
product test reports from the supplier. However, it may still be
necessary to double check the test sample, the quality of products
that are to be mass produced, and the consistency of the materials
to guard against product material abnormality arising from the
discrepancy between the mass production owchart and the R&D
procedure. Inspection of incoming materials and parts should be
performed to ensure its conformance of the procured items to
quality and reliability requirements applicable to lead-free technology or products [11]. Standards for incoming quality control thus
should be implemented to ensure the materials comply with the
regulations.
2.4.2. Test equipment (D42)
Chemical analysis of the procured materials, parts and subassemblies may be necessary to ensure compliance with legislative
requirements [11]. Currently all products must be tested on hazardous substances by a certied third-party laboratory to obtain
complete and detailed information, a costly process. On the other
hand, when a company possesses an X-ray spectroscopy (such as
EDS) or XRF spectroscopy machine or sets up an in-house laboratory to test for the presence of hazardous substances in products, it
can ensure that its products are environmentally-friendly and
enhance customer faith. Cusack and Perrett [10] pointed out
that RoHS-compliance is doubtful and thus the performance of
random analysis of high risk components and materials was
recommended.
2.4.3. Record of incoming quality control (D43)
Incoming parts/components are sampled for quality control
with the aim of ensuring the product specications to comply with
the required quality and environmental requirements. The test
records scrutinize the coding format of each material order, and
also scan histories including sampling frequency, methods, results
and returns. Companies can rapidly control and track parts/components that contain exceeding concentration of hazardous substance that violates environmental regulations. Manufacturers are
thus required to maintain a record of supplier compliance documentation that can be shown to enforcement authorities during
inspections [11].
2.5. Management system (D5)
2.5.1. Quality management system (D51)
The certication of quality management system in GSCM practice is crucial in incorporating HSM into supplier selection. Buetow
[40] pointed out that companies acquire quality management
system certication as an advantage to have a huge leg up on becoming QC 080000 management system of hazardous substance
process management (HSPM) system requirements.
2.5.2. Environmental management system (D52)
The most common GSCM practices involve organizations
assessing supplier environmental performance, requiring suppliers
to undertake measures ensuring product environmental quality,
and evaluating the costs associated with waste in their operating
systems [14]. Suppliers who obtain environmental management
system (EMS) certication, such as ISO14001 or EMAS, implies that

2.5.4. Information systems (D54)

Effectively managing green supply chain involves collecting and
incorporating relevant information on each department within
a company, information on products and components, and reports
and documents provided by suppliers. Achieving this objective
requires developing an information management system capable of
automatically assessing information integration and effectiveness.
Evans and Johnson [43] argued that companies must establish
a database for information received from suppliers so they can use
it to determine compliance. Additionally, it is essential to create
a powerful and user-friendly platform to enhance information circulation and precision. For example, AMD Corporation is currently
implementing an enterprise resource planning (ERP) system that
will help to centralize procurement information worldwide and
ensure all suppliers in high risk business areas are captured [44].
3. The analytic network process
ANP is the general form of the AHP which has been used in
multi-criteria decision-making (MCDM) to release restrictions associated with hierarchical structure [45]. AHP can integrate qualitative information and quantitative values [46] and handle MCDM
problems [47]. Nevertheless, AHP suffers the disadvantages of not
sufciently considering interdependencies [48] and not allowing
for integrated dynamic modeling of the environment [46]. As a result, Saaty [49] introduced a super matrix approach for dealing with
the interdependencies among clusters. This approach is what today
is referred to as the ANP method. The advantages of ANP include
the ability to incorporate dependencies and feedback using a hierarchical decision network and representing and analyzing interactions, and synthesizing their mutual effects by a single logical
procedure [50]. ANP is currently widely applied in different decision-making processes, such as supplier selection [26,27], alternative fuels for residential heating [51], selection of logistics service
providers [52], multidimensional data in multidimensional scaling
[45], strategic analysis of logistics and supply chain management
[46], enterprise partner selection for vocational education [53], nancial crisis forecasting [54], logistics strategy selection [46], and
product mix planning in semiconductor fabricator [48]. The ANP
methodology and its application to case companies in a multi-criteria decision-making environment are illustrated in the following
section.
4. An illustrative example for a ODM manufacturer in
electronics industry
GSCM is a signicant issue for the Taiwanese electronics industry as recent studies have shown that most of the worlds
manufacturing will be relocated to Asia within the next two decades [55]. Therefore, GSCM has become an operational initiative

C.-W. Hsu, A.H. Hu / Journal of Cleaner Production 17 (2009) 255264

for numerous organizations, including those in Asia and South Asia,

thus are adopting GSCM to address environmental issues [56].
Taiwan is one of the most industrialized countries in the AsiaPacic region and has larger numbers of electrical and electronics
manufacturers involved in Original Equipment Manufacturing
(OEM) and Original Design Manufacturing (ODM). In 2004, Taiwan
was the leading provider of notebook PCs, liquid crystal display
(LCD) monitors and chip foundry services, achieving 72, 68 and 70%
market shares worth $22 billion, $14 billion, and $8.9 billion, respectively [57]. And these electronics industries are subject to
customer requests for green products and green manufacturing
that comply with emerging environmental directives, particularly
the RoHS directive.
Notably, the main risks and pressures OEMs faced from their
suppliers are related to hazardous substances in GSCM practice.
Therefore, OEMs must select appropriate suppliers who are capable
of delivering high quality and hazardous substance free raw materials as required. Supplier selection for OEMs thus requires rapid
adjustment of GSCM practices to comply with environmental regulations and mitigate risk. Ellram et al. [58] also demonstrated that
partnering with the right suppliers is crucial to OEMs success.
The application of the ANP model presented in this study is
assessed for the case of a Taiwanese OEM electronics company. The
company is a Taiwanese assembly manufacturer of computer
products, which has $300 million capitalization and has been operating for more than 25 years since 1982. The core businesses of
this company include client system, wireless communications, and
digital appliance products. It has 28,000 employees worldwide and
products overseas operations cover US, UK, Germany, Belgium, Japan, and China.
This company is interested in incorporating green initiatives
into supplier evaluation and selection for GSCM practice. In relation
to the increased environmental regulations, the case study company wanted to implement a systematic method of selecting appropriate suppliers based on competency in HSM. The proposed
decision model for supplier selection in GSCM was implemented

259

for 19 criteria under ve main criteria clusters. The relative importance of criteria for supplier selection is determined based on
expert opinion as determined by sampling the companys GSCM
team. The expert group consists of ve people from the case
company who are responsible for the planning of green initiatives,
evaluating the suppliers performance and maintaining the list of
the approved suppliers with respect to the capability of management of hazardous substance. The case experience provided assistance in understanding how to establish the decision model for
supplier selection and selecting appropriate suppliers in GSCM. The
application and analysis of ANP methodology is presented in the
following steps.
4.1. Step 1: model construction and problem formation
The rst step in ANP method implementation is to construct the
decision structure of the supplier selection problem and to identify
the relevant criteria and alternatives developed based on the literature. This model has four levels (see Fig. 1). The second level
consists of ve main criteria clusters or dimensions, they are procurement management (D1), R&D management (D2); process
management (D3), incoming quality control (D4), and management
system (D5). There are 19 criteria under the above-mentioned ve
dimensions. The fourth level is the alternatives they are Supplier A,
Supplier B, and Supplier C in the illustrated case.
4.2. Step 2: pair-wise comparison of dimensions
During this step, the decision-maker is asked to respond to the
relative weighting of each dimension via a pair-wise comparison
matrix. A scale of 19 is used to compare the two components in
this comparison. A score of 1 indicates that the two components
have equal importance whereas a score of 9 indicates the overwhelming dominance of the considered component (row component) over the comparison component (column component). If the
impact of one component is weaker than that of its comparison

Supplier selection

Dimensions

Criteria

Procurement
Management (D1)

R&D
Management (D2)

Requirement of
green
purchasing (D11)

Capability of
green design
(D21)

Management for
hazardous
substances (D31)

Green materials
coding and
recording (D12)

Inventory of
hazardous
substances (D22)

Prevention of
mixed material
(D32)

Inventory of
substitute
material (D13)

Legal-complian
ce competency
(D23)

Process auditing
(D33)

Supplier
Management
(D14)

Alternatives

Process
Management (D3)

Pre-shipment
inspection (D34)

Incoming Quality
Control (D4)

Standard for
incoming
quality control
(D41)

Quality
management
system (D51)

Test equipment
(D42)

Environmental
management
system (D52)

Record of
incoming
quality control
(D43)

Hazardous
substance
management
system (D53)
Information
Systems (D54)

Warehouse
management
(D35)

Supplier A

Management
System (D5)

Supplier B

Fig. 1. ANP-based model for selecting supplier to HSM.

Supplier C

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C.-W. Hsu, A.H. Hu / Journal of Cleaner Production 17 (2009) 255264

Table 2
Pair-wise comparison of dimensions
Dimension

D1

D2

D3

D4

D5

e-vector

D1
D2
D3
D4
D5

1.0000
1.1832
1.3229
1.5811
1.2910

0.8452
1.0000
1.4142
1.1547
0.7746

0.7559
0.7071
1.0000
0.7746
0.8165

0.6325
0.8660
1.2910
1.0000
0.5000

0.7746
1.2910
1.2247
2.0000
1.0000

0.1553
0.1920
0.2445
0.2425
0.1657

component, it will be scored from 1 to 1/9, with 1 indicating indifference and 1/9 indicating overwhelming dominance of the
column component over the row component. To make a reverse
comparison between already compared components, a reciprocal
value is automatically assigned within the matrix, so that in a matrix aijaji 1. This is complied with the method recommended by
Saaty [47]. In the formation of a pair-wise comparison matrix,
group decision-making may be applied to avoid decision-maker
bias toward particular providers. The authors thus adopted the
geometric mean of the individual judgments based on the recommendations of Dyer and Forman [59].
After the pair-wise comparison matrices are developed, a vector
of priorities (i.e. Eigen-vector or Eigenvector) in each matrix is
calculated and is then normalized to sum to 1.0 or 100%. This study
utilized a two-stage algorithm to calculate the e-vector, which rst
adds the value in each column of the matrix, and then separates
each entry in each column by the total of that column; the normalized matrix is acquired through meaningful comparison among
components. Subsequently, row sums are calculated and normalized to get the e-vectors of these relative importance weights as
shown in Table 2. And these e-vectors are used as Pj in Table 8 to
calculate the desirability indices for alternatives.
In this case, the process management (D3) criterion was found
to have the highest priority (0.2445) in selecting supplier, followed
by incoming quality control (D4) (0.2425), R&D management (D2)
(0.1920), management system (D5) (0.1670), and procurement
management (D1) (0.1657). Both process management and incoming quality control are considered to be the most important
dimensions in selecting an appropriate supplier in terms of HSM.
4.3. Step 3: pair-wise comparisons between dimensions/criteria
In this step, the decision-maker is asked to respond to a number
of pair-wise comparisons in which two components are compared
at a time in terms of an upper lever control criteria. The pair-wise
comparisons of the components at each level are performed regarding their relative inuence toward the control criterion. Pairwise comparison is thus performed between the applicable criteria
within a given dimension cluster. In this model, ve such pair-wise
comparison matrices are formed and the e-vectors acquired from
. One such pair-wise
these matrices are imported from Table 8 asAD
kja
comparison matrix for procurement management dimension is
listed in Table 3. For the pair-wise matrix, the question asked to the
decision-maker is, what is the relative impact on procurement
management by criterion a when compared to criterion b.
In Table 3, the relative importance of requirement of green
purchasing (D11) when compared to green materials coding and
Table 3
Pair-wise comparison for procurement management dimension

D11
D12
D13
D14

D11

D12

D13

D14

e-vector

1.0000
0.3333
1.1180
0.7071

3.0000
1.0000
1.8708
2.8284

0.8944
0.5345
1.0000
0.7746

1.4142
0.3536
1.2910
1.0000

0.3223
0.1186
0.2998
0.2593

Table 4
Pair-wise comparison for requirement of green purchasing under procurement
management dimension

D12
D13
D14

D12

D13

D14

e-vector

1.0000
1.5811
3.1623

0.6325
1.0000
1.7321

0.3162
0.5774
1.0000

0.1764
0.2925
0.5311

recording (D12) with respect to procurement management dimension is three. Table 3 also reveals that the criterion requirement of green purchasing (D11) has the maximum inuence
(0.3223) and green materials coding and recording (D12) has the
minimum inuence (0.1186) on the procurement management dimension. It implies that requirement of green purchasing (D11) has
the most inuence on the dimension of procurement management,
with a priority in selecting best supplier, which is followed by inventory of substitute materials (D13) (0.2998).
4.4. Step 4: pair-wise comparisons for criteria
This step involves performing pair-wise comparisons to consider the interdependencies among the criteria (third level). There
are 19 such pair-wise comparison matrices in this stage. Table 4 lists
one such comparison which represents the result of the procurement management dimension with requirement of green
purchasing as the control criterion over other criteria. The decision-maker is asked to answer the question for evaluating the
interdependencies related to when considering requirement of
green purchasing with respect to increasing procurement management, what is the relative impact of criterion a compared to
criterion b. Table 4 reveals that supplier management (D14) has
the strongest impact (0.5311) on the procurement management
dimension, with requirement of green purchasing (D11) as the
control criterion over others. Furthermore, green materials coding
and recording (D12) has the weakest impact (0.1764). It shows that
supplier management has the most inuence on the requirement of
green purchasing for the dimension of procurement management.
The e-vector from these matrices is thus used to form super matrices. The e-vector from Table 4 has been used in the 19 column of
the super matrix in Table 6.
4.5. Step 5: evaluation of alternatives
The nal set of pair-wise comparisons is made for the relative
impact of each of the alternatives on the criteria inuencing the
dimensions. The number of such pair-wise comparison matrices is
determined based on the number of criteria included in each dimension. The present case involves three alternatives (Supplier A,
B, and C) and 19 criteria, hence 19 such pair-wise comparison
matrices were constructed in this step.
Table 5 lists one example of such a pair-wise comparison matrix,
in which the impacts of alternatives are evaluated based on the
criterion requirements of green purchasing (D11). In comparing the
three suppliers, we asked which supplier is more preferable with
respect to determining the best alternative under the requirements

Table 5
Pair-wise comparison of importance of requirements of green purchasing on the
alternatives

Supplier A
Supplier B
Supplier C

Supplier A

Supplier B

Supplier C

e-vector

1.0000
0.2236
0.3333

4.4721
1.0000
3.4641

3.0000
0.2887
1.0000

0.6141
0.1076
0.2783

C.-W. Hsu, A.H. Hu / Journal of Cleaner Production 17 (2009) 255264

261

Table 6
Super matrix M before convergence
D2

D1

D1 D11
D12
D13
D14
D2 D21
D22
D23
D3 D31
D32
D33
D34
D35
D4 D41
D42
D43
D5 D51
D52
D53
D54

D11

D12

D13

D14

0
0.1764
0.2925
0.5311

0.3944
0
0.3447
0.2609

0.4808
0.3445
0
0.1747

0.5902
0.2304
0.1794
0

D21

D3
D22

D23

D4

D31

D32

D33

D34

D35

0
0.4478
0.2448
0.1286
0.1787

0.3466
0
0.3119
0.0911
0.2504

0.3682
0.4203
0
0.0779
0.1336

0.3139
0.1925
0.1369
0
0.3567

0.4003
0.2038
0.1553
0.2406
0

D41

D5
D42

D43

D51

D52

D53

D54

0
0.3333
0.3333
0.3333

0.2403
0
0.3237
0.4359

0.1955
0.3792
0
0.4253

0.1522
0.3153
0.5325
0

0
0.5858 0.5505
0.2612 0
0.4495
0.7388 0.4142 0

0
0.7388 0.7101
0.5505 0
0.2899
0.4495 0.2612 0

of the green purchasing criterion. Supplier A appears superior to

the other two alternatives. The e-vector from Table 5 reveals the
relative importance of the criteria on the alternatives, which will be
used in the second row of columns 6, 7, and 8 of the desirability
indices in Table 8.
4.6. Step 6: super matrix formation
The super matrix permits a resolution of the interdependencies
that exist among the components of a system. It is a partitioned
matrix where each sub-matrix is composed of a set of relationships
between and within the levels, as represented by the decisionmaker model. The super matrix M, as shown in Table 6, presents the
results of the relative importance measure for each of the criteria
for each dimension of the best supplier. The components of super
matrix have been imported from the pair-wise comparison matrices of interdependencies (Table 4). Since there are 19 such pairwise comparisons matrices, one for each interdependent criterion,
the super matrix contains 19 non-zero columns. Each of the nonzero values in a column expresses the relative importance weight

associated with the interdependent pair-wise comparison

matrices.
In the next step, the super matrix M is made to converge to
acquire a long-term stable set of weights, as listed in Table 7. For
convergence to occur, the super matrix needs to be column stochastic, which means the sum of each column of the super matrix
must be one. Raising the super matrix M to the power 2k1, where k
is an arbitrarily large number, achieves the convergence of the interdependent relationship. In this case, the convergence is reached
at M63.
4.7. Step 7: selection of the best alternative
The selection of the best supplier is determined based on the
value of the normalized desirability indices. The desirability indices, Di for alternative i is dened as

Di

J
X

I
Pj AD
kj Akj Sikj

j1

Table 7
Super matrix M after convergence
D2

D1

D1 D11
D12
D13
D14
D2 D21
D22
D23
D3 D31
D32
D33
D34
D35
D4 D41
D42
D43
D5 D51
D52
D53
D54

D11

D12

D13

D14

0.3330
0.1922
0.2109
0.2638

0.3330
0.1922
0.2109
0.2638

0.3330
0.1922
0.2109
0.2638

0.3330
0.1922
0.2109
0.2638

D21

D3
D22

D23

D4

D31

D32

D33

D34

D35

0.2646
0.2556
0.1877
0.1146
0.1772

0.2646
0.2556
0.1877
0.1146
0.1772

0.2646
0.2556
0.1877
0.1146
0.1772

0.2646
0.2556
0.1877
0.1146
0.1772

0.2646
0.2556
0.1877
0.1146
0.1772

D41

D5
D42

D43

D51

D52

D53

D54

0.1626
0.2560
0.2913
0.2897

0.1626
0.2560
0.2913
0.2897

0.1626
0.2560
0.2913
0.2897

0.1626
0.2560
0.2913
0.2897

0.3610 0.3610 0.3610

0.2632 0.2632 0.2632
0.3758 0.3758 0.3758

0.4204 0.4204 0.4204

0.3097 0.3097 0.3097
0.2699 0.2699 0.2699

262

C.-W. Hsu, A.H. Hu / Journal of Cleaner Production 17 (2009) 255264

Table 8
Desirability indices
Dimensions
D1

Pj

Enablers

0.1553
D11
0.1553
D12
0.1553
D13
0.1553
D14
0.1920
D21
D2
0.1920
D22
0.1920
D23
0.2445
D31
D3
0.2445
D32
0.2445
D33
0.2445
D34
0.2445
D35
0.2425
D41
D4
0.2425
D42
0.2425
D43
0.1657
D51
D5
0.1657
D52
0.1657
D53
0.1657
D54
Desirability indices Di
Normalized desirability indices DiN

AD
kj

AIkj

S1kj

S2kj

S3kj

Supplier A

Supplier B

Supplier C

0.3223
0.1186
0.2998
0.2593
0.3070
0.1655
0.5275
0.4078
0.3315
0.1167
0.0558
0.0882
0.3364
0.4140
0.2496
0.2469
0.1457
0.2071
0.4003

0.3330
0.1922
0.2109
0.2638
0.3610
0.2632
0.3758
0.2646
0.2556
0.1877
0.1146
0.1772
0.4204
0.3097
0.2699
0.1626
0.2560
0.2913
0.2897

0.6141
0.1402
0.1333
0.6582
0.5249
0.6144
0.6144
0.1739
0.1565
0.1801
0.5691
0.1827
0.5336
0.3813
0.1696
0.1419
0.1827
0.3633
0.5214

0.1076
0.5751
0.4933
0.1122
0.2296
0.1661
0.2195
0.4368
0.4557
0.3049
0.1643
0.4692
0.2332
0.3888
0.4152
0.5490
0.4692
0.4075
0.2823

0.2783
0.2847
0.3734
0.2296
0.2455
0.2195
0.1661
0.3893
0.3878
0.5150
0.2666
0.3481
0.2332
0.2299
0.4152
0.3091
0.3481
0.2292
0.1963

0.0102
0.0005
0.0013
0.0070
0.0112
0.0051
0.0234
0.0046
0.0032
0.0010
0.0009
0.0007
0.0183
0.0119
0.0028
0.0009
0.0011
0.0036
0.0100
0.1177
0.4060

0.0018
0.0020
0.0048
0.0012
0.0049
0.0014
0.0084
0.0115
0.0094
0.0016
0.0003
0.0018
0.0080
0.0121
0.0068
0.0037
0.0029
0.0041
0.0054
0.0921
0.3177

0.0046
0.0010
0.0037
0.0024
0.0052
0.0018
0.0063
0.0103
0.0080
0.0028
0.0004
0.0013
0.0080
0.0071
0.0068
0.0021
0.0022
0.0023
0.0038
0.0801
0.2763

where Pj denotes the relative importance weight of the dimension

represents the relative importance weight of
of best supplier, AD
kj
best supplier enabler k of the dimension of best supplier j for the
dependency (D) relationships between component levels, AIkj is the
stabilized relative importance weight (determined by the super
matrix) for supplier attribute enabler k of the dimension of supplier
j for the interdependency (I) relationships within the supplier attitude enablers component level, Sikj denotes the relative impact of
best supplier alternative i on best supplier attribute enabler k of the
dimension of best supplier j, J represents the index set for the dimension of best supplier alternative.
Table 8 lists the desirability indices (Di) and their normalized
values (DiN) for selecting the best supplier. These indices are based
on the relative weights obtained from the pair-wise comparison of
alternatives, dimensions, and weights of enablers from the converged super matrix. In Table 8, the values of the second column
indicate the relative importance of the dimensions imported from
Table 2. Furthermore, the values in the fourth column denote the
relative importance of enablers through their respective dimensions which are also imported from Table 3. Moreover, the
values in the fth column of Table 8 are the stable independent
weights of enablers acquired via a converged super matrix (Table 7).
Additionally, the next three columns (the sixth, seventh, and
eighth) contain the pair-wise comparison matrices, which show the
relative impact of each of the alternatives on the enablers. The nal
three columns represent the weighted values of the alternatives
 AIkj  Sikj ) for each of the enablers. An illustrative
(Pj  AD
kj
example, the value of Supplier A corresponding to the requirements
of green purchasing is 0.0102 (0.1553  0.3223  0.3330  0.6141).
Summing these values for each of the alternatives provides the
value of desirability indices, Di, and their normalized desirability
indices, DiN, are shown in the last two row of Table 8. Supplier A
(0.4060) thus received the highest ranking, implying that it was the
best supplier.

5. Conclusion
The GSCM based conceptual framework and operational model
to incorporate HSM into supplier selection have been presented. By
identifying the related criteria of HSM activities for the proposed
framework, an ANP methodology was applied to an electronics
company.

Compared with the previous investigations, the proposed method

may have following contributions. First, a new model for selecting
suppliers with emphasis on HSM issues has been developed. Such
a framework has never being found in the previous literature. And
from the illustrated example this model shows its potential advantage in selecting suitable suppliers in terms of HSM. Second, ANP
methodology was applied in supplier selection and it is rarely found
from the previous studies. ANP can capture both quantitative and
qualitative criteria and reect more realistic results among decision
attributes and alternatives owing to the existence of interdependent
relationships in the real supplier selection and evaluation environment. Therefore, ANP modeling can serve as a new method and offer
insights to managers in selecting suppliers systematically.
If a company wants to incorporate HSM into supplier selection and
evaluation in GSCM practice, the company can adopt the presented
model, which includes all the criteria for understanding the competence of its suppliers and prioritizing the suppliers. In addition, the
results of weights determined in the case study can also be adopted as
a reference. Moreover, if the company is not that familiar with ANP
technique the weights can be easily determined by an expert group
who are responsible for tasks associated with management of hazardous substances in the company. Otherwise, the weights of criteria
can be re-determined by an expert group and ANP technique.
Traditionally, supplier selection in supply chain management
(SCM) was based on supplier ability to meet quality requirements, delivery schedule, price, and service. However, in
modern management, numerous other factors must also be
considered with the aim of developing a long-term supplier relationship [60]. Without appropriate consideration of suppliers
ability to accomplish with environmental regulations, company
may be risky and lead to supply chain disrupted. Studies have
shown that companies suffering supply chain disruptions experienced 3340% lower stock returns relative to their industry
benchmarks [61]. It is observed from Sony PS2 event, which
suffered great impact from suppliers because of the shortage of
supplier selection with respect to HSM in GSCM. Sony Corporation thus launched a new supplier management approach, Green
Partner System, which involves requesting its suppliers to obtain
the Sony certication for guaranteeing that their products are
hazardous substance free (HSF). Consequently, supplier selection
in GSCM has become a key process that companies must consider, and selection criteria need to go along with following environmental changes.

C.-W. Hsu, A.H. Hu / Journal of Cleaner Production 17 (2009) 255264

Although the results obtained from this study are satisfactory,

this case study can still be improved. The outcome of the ANP
model conducted in this study is determined by managers of the
case company exclusively; and since HSM includes different tasks
and thus the criteria involved in supplier selection are complex;
a cross-functional team is required to participate in supplier selection for future research.
Acknowledgements
The authors would like to thank the National Science Council of
Taiwan, for nancially supporting this research under grant NSC
95-2815-C-027-001-E.
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