Green vendor evaluation and selection using AHP and Taguchi loss functions in production outsourcing in mining industry

The fast growing demand of minerals due to increasing level of consumption has got the mining industries focus on developing and developed countries. Generally mining and mineral operation is an excellent contributor to economic growth and development in each country. Presently in many countries, the mining sector intends to augment their production operation with private participation due to the challenges that they are facing like, cost reduction, improving capital project management, employee management, environmental impacts, enhancing corporate social responsibility, global economy crisis, etc. The benefits of outsourcing are not only reduced cost in operations but also increased productivity and efficiency, accessing the relevant technical experts, implementation of the latest technologies like green technologies for green mining and ultimately increase in profit. Moreover, the mining industries receive significant global attention due to the nature of their environmental and social responsibilities, and it is necessary for the mining sector to turn their operation towards green practices. The proper vendor selection for production outsourcing may bring the solution to the challenges faced by the mining industries. The vendor selection in mining industries depends on varieties of conflicting tangible and intangible criteria and this paper deals with the suitable vendor selection for the production process in the green mining industries based on economic and environmental benefits and risk factors. This paper proposes a model frame work with case study through the combined approach of analytic hierarchy process (AHP) and Taguchi loss functions. The proposed method is used to measure the loss due to the outsourcing vendor performance for the pertinent benefit and risk factors and identify the best vendor to perform an outsourcing function in the mining industry production.