An Integrated Triple Bottom Line AHP-TOPSIS Framework For CBAM-Compliant Sustainable Supplier Selection in Indian Manufacturing Smes

Abstract

Supplier selection is a strategically critical multi-criteria decision in supply chain management, with procurement costs accounting for 60-70% of total product cost in manufacturing organizations. Most existing Multi-Criteria Decision Making (MCDM) frameworks rely on traditional economic criteria and neglect green sustainability dimensions, particularly in the context of Indian Small and Medium Enterprises (SMEs) which contribute ~30% of India's GDP and employ over 120 million people.

This study proposes a standardized integrated AHP-TOPSIS framework incorporating four traditional criteria, five environmental sustainability criteria, and two social sustainability criteria. The Analytic Hierarchy Process (AHP) derives criteria weights from structured expert judgments elicited from twenty supply chain and procurement professionals across Indian manufacturing SMEs (CR = 0.055, where CR = CI/RI with RI = 1.51 for n = 11 criteria). TOPSIS ranks five supplier alternatives by closeness to the Positive Ideal Solution.

Environmental criteria collectively accounted for 36% of total criterion weight approaching parity with traditional economic criteria (50.9%) with Green Manufacturing Practices (weight = 0.138) ranking above the traditionally dominant Delivery Performance, demonstrating a substantial shift in procurement priorities toward sustainability. Supplier S3 achieved the highest closeness coefficient (CC = 0.847). Sensitivity analysis across twenty perturbation scenarios confirmed full ranking stability (Spearman rs = 1.00 in all cases), a result attributable to the pronounced inter-supplier performance differentiation in the dataset, as discussed in Section 4.4.

Grounded in Triple Bottom Line, Stakeholder, and Institutional theories, this study contributes a replicable, Excel-implementable green supplier selection tool for Indian manufacturing SMEs, addressing an identified gap in the GSCM literature and supporting EU CBAM compliance readiness. The framework’s robustness is assessed through weight-perturbation sensitivity analysis; cross-methodological validation (e.g., VIKOR, PROMETHEE) is acknowledged as a recommended direction for future research.