Applying ANP for raw material supply in Iranian paper industry

The aim of this paper is to develop a strategic plan for selecting the best options for the supply of raw material to feed paper producing plants. The decision-making is examined within the framework of benefits, opportunities, costs, and risks (BOCR). A hierarchy is used to prioritize the BOCR, using the Analytic Hierarchy Process (AHP) ratings approach. A control hierarchy is then created and prioritized using the Analytic Network Process (ANP) to evaluate the "control criteria" of the system. There are a total of nineteen control criteria in the system and each controls a decision network evaluated using the ANP. The final synthesis of the system shows external procurement is the best choice. Introduction There is a tremendous demand for various types of paper in Iran, and Iranian plants cannot produce sufficient output to satisfy this demand. The most important obstacle that domestic paper manufacturers are facing is inadequate raw material supply. As the research by Azizi et al. (2003) shows, the supply of raw material for wood and paper industries is a very important 3 success factor, and there is a serious deficiency in the industry concerning the lack of proper planning of raw material supply. In this paper, we apply AHP (Saaty, 1999) and ANP (Saaty, 2001a) as the tools for selecting the best choice in the field of raw material supply for paper producing plants in Iran. The main objective is to develop guidelines for strategic planning, based on the appropriate decisions made by adopting this approach. Development of reliable and stable suppliers needs long range planning; it is not wise to consider only short term planning which is mostly established on the basis of price and availability. In long range or strategic planning we need to consider various criteria influencing the decision. There are several alternatives for supply of raw material to paper manufacturers, including use of external resources, internal resources and a combination of both. Domestic raw materials for paper manufacturing come from different sources: forest resources; non forest resources such as poplar trees; bagasse (agricultural wastes) and waste paper. Some raw materials, such as poplar, birch trees, softwood species and long fiber pulp, are also imported from foreign sources, although at the moment importation is not significant. By way of background, Table 1 shows the situation of manufacturers raw material. Currently managers make only operational or short-term decisions. Essentially, they purchase raw materials which are available in the market, leaving them unable, in many cases, to procure enough raw material to meet production goals, particularly in the longer term. Table I: Situation of paper rrralcing factories in Iran active and inactive paper in Iran with respect to utilized Factory Annual nonnnal Kinds of Kinds ofutilized Portion capacity(lOOO product ra'W Inaterial froIn Ton) overall capacity (%) Wood and 175 Printing ,writing Internal (forest wood 24.6 paper and newsprint + poplar) , External mazandaran paper (long fiber pulp) Iran wood and 150 Printing, writing Internal (forest wood 21.1 paper and packing + poplar + waste paper paper, External (long fiber pulp) Pars 105 Printing and Internal(Bagasse+10 14.7 writing paper ng fiber pulp) Kaveh 35 Printing ,writing, Internal (waste 4.9 packing paper paper) and card board Latif 15 Printing, writing Internal (waste 2.1 and packing paper) paper Papirous 15 Packing paper Internal (waste 2.1 paper) Nowzohoor 5 Hygienic paper External (pulp) 0.8 Kahrizak 38 Packing paper Internal (waste 5.3 paper) Karoon 70 Printing and Internal (Bagasse) 9.8 writing paper External (long fiber pulp) Harir 15 Hygienic paper Internal (Bagasse 2.1 Khoozestan pulp) Shargh 9 Packing paper Internal (waste 1.3 Packing paper paper) making Damavand 15 Packing paper Internal (waste 2.1 packing paper paper) making Miscellaneous 15 Packing paper Internal (waste 2.1 packing paper paper) making Gharb paper 50 --Internal (forest wood and poplar) 7 Total 712 100 Overall actual 300 42 product capacity (Source: Commercial researches and studies organization and PPI, 1994)