Evaluating Performance and Ranking Suppliers in Government Transaction: Case of Iran’s Government Procurement System SETAD

Document Type : Research/ Original/ Regular Article

Authors

1 M.Sc. in Industrial Engineering, Electronic Branch, Islamic Azad University, Tehran, Iran.

2 Associate Professor of Industrial Engineering, E-Business Research Group, Information Technology Research Institute, Iranian Research Institute for Information Science and Technology (IRANDOC), Tehran, Iran.

Abstract

Evaluating and ranking suppliers is a critical aspect of decision-making in public procurement, with significant potential to reduce costs and improve service quality. This study aims to assess the performance and rank suppliers within the context of public procurement in Iran, using the Governmental Electronic Procurement System (SETAD) as a case study. Initially, through a literature review and analysis of relevant tenders in the field of "consulting services for information technology projects," key evaluation criteria were identified. These criteria were then refined and finalized through expert panels involving stakeholders from the SETAD system. The final set of indicators includes: user engagement score, registered capital, operational history, certifications, project financial volume, and human resources. To assign weights to these criteria, two methods were employed: Fuzzy Analytic Hierarchy Process (FAHP) and Shannon Entropy. In the FAHP approach, experts completed pairwise comparison questionnaires to determine weights, while in the Shannon Entropy method, real procurement data from SETAD was used for weight calculation. The results of both methods were analyzed and compared, leading to the development of a supplier ranking procedure that can enhance selection processes and decision-making in public sector procurement.

Keywords

Main Subjects


Smiley face

[1] Electronic Commerce Act of the Islamic Republic of Iran, approved Jan. 7, 2004, Islamic Consultative Assembly (Majles), Tehran,Iran, [Online]. Available:
[2] S. Y. Chou and Y. H. Chang, "A decision support system for supplier selection based on a strategy-aligned fuzzy SMART approach," Expert Syst. Appl., vol. 34, pp. 2241–2253, 2008. [Online]. Available:
https://doi.org/10.1016/j.eswa.2007.05.028
[3] T. C. Kuo and W. T. Chen, “An integrated decision‑making method for supplier selection in the global supply chain,” Comput. Ind. Eng., vol. 47, no. 3, pp. 257–270, 2004.
[4] Civil Service Management Act of the Islamic Republic of Iran, Islamic Consultative Assembly (Majles), Tehran, Iran, Oct. 8, 2007. [Online]. Available:
[5] D. Güngör and M. Özdemir, “The multi‑criteria decision‑making problem in the supplier selection process,” Int. J. Adv. Manuf. Technol.,vol. 34,no. 1–2, pp. 143–152, 2007.
[6] S. Tayebi and K. Rahim,
“Supplier evaluation and selection in a supply chain using analytic network process and fuzzy Delphi method,” Int. J. Adv. Manuf. Technol.,vol. 47,no. 5–8, pp. 695–703, 2010.
[7] V. B. Schramm, L. P. B. Cabral, and F. Schramm, "Approaches for supporting sustainable supplier selection – A literature review," *J. Cleaner Prod.*, vol. 273, art. no. 123089, Nov. 2020. doi: 10.1016/j.jclepro.2020.123089
[8] L. Chen and C. F. Chien, "A hybrid approach for supplier selection and inventory management," Int. J. Prod. Res., vol. 42, no. 17, pp. 3567–3577, 2004. [Online].Available:
https://doi.org/10.1080/00207540310001653984
[9] M. Sonmez, “A review and critique of supplier selection process and practices,” Occasional Paper, no. 2006:1, Business School, Loughborough University, Loughborough, U.K., 2006.
https://hdl.handle.net/2134/2160
[10] Parliament of Iran, “Law on Holding Tenders,” Act No. 11218, 2005. [Online]. Available:
[11] G. W. Dickson, “An analysis of vendor selection systems and decisions,” J. Purch., vol. 2, pp. 5–17, 1966. [Online]. Available:
https://doi.org/10.1111/j.1745-493X.1966.tb00818.x
[12] W. A. Dempsey, “An analysis of vendor selection systems and decisions,” J. Purch., vol. 7, pp. 257–267, 1978.
[13] J. Bach, R. Carr, J. Parnaby, and A. M. Tobias, "Supplier development system," Int. J. Technol. Manag., vol. 2, no. 2, pp. 219–228, 1987. [Online]. Available:
https://doi.org/10.1504/IJTM.1987.036709
[14]. L.M. Ellram, “The supplier selection decision in strategic partnerships,” Int. J. Purch. Mater. Manag. ، vol. 26, no. 4, pp. 8–14, 1990. [Online]. Available:
https://doi.org/10.1111/j.1745-493X.1990.tb00515.x CoLab+1
[15] C. A. Weber, J. R. Current, and W. C. Benton, “Vendor selection criteria and methods,” Eur. J. Oper. Res., vol. 50, no. 1, pp. 2–18, 1991. [Online]. Available:
[16] T. W. Weber, J. R. Current, and A. Desai, “An optimization approach to determining the number of vendors to employ,” Supply Chain Manag.: Int. J., vol. 5, no. 2, pp. 90–98, 2000. [Online]. Available:
[17] W. Zhou and Z. Xu, “An Overview of the Fuzzy Data Envelopment Analysis Research and Its Successful Applications,” International Journal of Fuzzy Systems, vol. 22, no. 4, pp. 1037–1055, 2020.
[18] M. Ravanshadnia, M. Abbasi, and H. Saifouri, "Supplier ranking based on cooperation level using fuzzy multi-criteria decision making based on the algorithm of positive and negative ideal solutions," presented at the 13th Int. Conf. Mechanics, Structures, Industries and Civil Engineering (MMICONF13), Tehran, Iran, Mar. 6, 2023.
[19] S. Ravanshadnia, A. Mohammadi, and B. Rezaei, “Ranking of suppliers in the automotive industry using fuzzy AHP and ARAS methods,” Journal of Industrial Management, vol. 15, no. 3, pp. 210-228, 2023.
[20] M. Salimi, A. M. Amiri, and S. H. Mirghafoori, "A hybrid MCDM approach for supplier selection in the food industry using ANP and TOPSIS," Journal of Industrial Engineering and Management Studies, vol. 9, no. 2, pp. 45–67, 2023.
[21] S. Aminah, Y. Ditari, L. Kumaralalita, A. N. Hidayanto, K. Phusavat, and P. Anussornnitisarn, "E-procurement system success factors and their impact on transparency perceptions: Perspectives from the supplier side," Electronic Government, vol. 14, no. 2, pp. 177–199, 2018, doi: 10.1504/EG.2018.090929.
[22] A. Neupane, H. Soar, K. Vaidya, and J. Yong, "Role of Public E-Procurement Technology to Reduce Corruption in Government Procurement," Transforming Government: People, Process and Policy, vol. 8, no. 4, pp. 611–631, 2014.
[23] T. H. Pham, M. Ahammad, S. T. Hoang, and M. H. Hossain, "The Effect of E-Procurement on Transparency, Accountability and Procurement Performance: Evidence from the Public Sector," Journal of Public Procurement, vol. 19, no. 2, pp. 163–188, 2019.
[24] Y. Li and H. Shang, "Service Quality, Perceived Value, and Citizens' Continuous-Use Intention Regarding E-Government: Empirical Evidence from China," Information & Management, vol. 57, no. 3, Art. no. 103197, Apr. 2020, doi: 10.1016/j.im.2019.103197.
[25] K. Govindan, Aditi, A. Kaul, J. D. Darbari, and P. C. Jha, "Analysis of supplier evaluation and selection strategies for sustainable collaboration: A combined approach of best–worst method and TOmada de Decisao Interativa Multicriterio," Business Strategy and the Environment, vol. 32, no. 7, pp. 4426–4447, Oct. 2023, doi: 10.1002/bse.3374.
[26] M. Taleb, A. H. El-Mahgary, and A. F. Hassan, "Supplier performance evaluation using super-efficiency slack-based measure DEA model," Annals of Operations Research, vol. 309, pp. 381–402, 2022, doi: 10.1007/s10479-020-03854-5.
[27] H. Liao and Z. Wen, "Capturing Attitudinal Characteristics of Decision Makers in Multi-Criterion Sorting Problems for Performance Evaluation of Sustainable and Circular Suppliers," Annals of Operations Research, vol. 355, no. 2, pp. 2397–2422, 2025, doi: 10.1007/s10479-023-05441-z.
[28] T. Şişman, S. Büyüksaatçi Kiriş, and D. Yilmaz, "Sustainable Supplier Evaluation in an Automotive Company Using Fuzzy Multi-Criteria Decision-Making Methods," International Journal of Information Technology & Decision Making, vol. 24, no. 2, pp. 535–581, Feb. 2025, doi: 10.1142/S0219622022500833.
[29] C. B. Casady, O. H. Petersen, and L. Brogaard, "Public Procurement Failure: The Role of Transaction Costs and Government Capacity in Procurement Cancellations," Public Management Review, vol. 26, no. 11, pp. 2425–2452, 2024, doi: 10.1080/14719037.2023.2231945.
[30] Y. Wang, X. Zhang, L. Chen, and Y. Li, "Supply chain financial risk prediction based on machine learning methods: Evidence from XGBoost," Expert Systems with Applications, vol. 213, p. 118920, 2023, doi: 10.1016/j.eswa.2022.118920.
[31] M. W. Arshad, Setiawansyah, Mesran, and Desyanti, "Combination of Multi-Attributive Ideal-Real Comparative Analysis and Rank Order Centroid in Supplier Performance Evaluation," KLIK: Kajian Ilmiah Informatika dan Komputer, vol. 4, no. 4, pp. 2330–2341, Feb. 2024, doi: 10.30865/klik.v4i4.1677.
[32] X. Tian and J. Li,
"Supplier selection and order allocation for a two‑stage supply chain system," Comput. Ind. Eng., vol. 66, no. 1, pp. 232–241, 2013.
[33] W. R. Soukup, “Supplier selection strategies,” J. Purch. Mater. Manag., vol. 23, no. 2, pp. 7–12, 1987.[Online].Available:
[34] S. Liu and C. Hai, "A model of supplier selection with improved hybrid fuzzy AHP method," Expert Syst. Appl., vol. 38, no. 3, pp. 2542–2548, 2011.
[35] C. H. Chen, "A Hybrid Multi-Criteria Decision-Making Approach Based on ANP-Entropy TOPSIS for Building Materials Supplier Selection," Entropy, vol. 23, no. 12, Art. no. 1597, Dec. 2021. doi: 10.3390/e23121597.
[36] E. E. Karsak and M. Dursun, "An integrated fuzzy MCDM approach for supplier evaluation and selection," Computers & Industrial Engineering, vol. 61, no. 1, pp. 82–88, Aug. 2011. doi: 10.1016/j.cie.2011.02.011.
[37] C. M. Pereira and M. S. Carvalho, “A multi‑criteria decision‑making approach to supplier selection:
An application to the automotive industry,” Eur. J. Oper. Res., vol. 209, no. 3, pp. 707–718, 2011.
[38]T. L. Saaty, The Analytic Hierarchy Process: Planning, Priority Setting, Resource Allocation, New York, NY, USA:
McGraw-Hill, 1980. ISBN 0070543712.
[39] T. L. Saaty, “Decision Making with the Analytic Hierarchy Process,” Int. J. Services Sciences, vol. 1, no. 1, pp. 83–98, 2008.[Online].Available:
[40] J. J. Buckley, "Fuzzy hierarchical analysis," Fuzzy Sets Syst., vol. 17, no. 3, pp. 233–247, 1985. [Online]. Available:
https://doi.org/10.1016/0165-0114(85)90090-9
[41] M. D. Jadhav and R. Shankar, “Supplier selection using a fuzzy‑AHP‑based decision‑making approach,” Comput. Ind. Eng.,vol. 62,no. 2,pp. 513–524, 2012.
[42] R. Ramanathan, “Application of analytical hierarchy process in multi‑criteria decision‑making:
A review of the literature,” Eur. J. Oper. Res., vol. 169, no. 1, pp. 1–29, 2006. [Online].Available:
[43] C. E. Shannon and W. Weaver, The Mathematical Theory of Communication, Urbana, IL, USA:
Univ. Illinois Press, 1974.
[44] A. Shemshadi, H. Shirazi, M. Toreihi, and M. J. Tarokh, "A fuzzy VIKOR method for supplier selection based on entropy measure for objective weighting," Expert Systems with Applications, vol. 38, no. 10, pp. 12160–12167, Sep. 2011. doi: 10.1016/j.eswa.2011.03.027.
[45] Liu, B., Chen, T., Yang, H., & Segerstedt, A. (2023). Supplier evaluation and selection in a sustainable supply chain based on fuzzy-BWM, entropy method and grey relational TOPSIS. Journal of Intelligent & Fuzzy Systems, 44(6).
[46] S. A. Khan, A. K. Sheikh, and M. A. Saeed, "A novel hybrid fuzzy AHP-TOPSIS method for supplier selection in textile industry: A case study from Pakistan," *Int. J. Comput. Sci. Netw. Secur.*, vol. 20, no. 4, pp. 92–98, Apr. 2020.
[47] M. A. Vonderembse and M. Tracey, “The impact of supplier selection criteria and supplier involvement on manufacturing performance,” J. Supply Chain Manag., vol. 35, no. 3, pp. 33‑39, 1999.[Online].Available:
https://doi.org/10.1111/j.1745‑493X.1999.tb00060.x
[48] D. Kannan and K. C. Tan, "Supplier selection and assessment:
Their impact on business performance," Int. J. Oper. Prod. Manag., vol. 25, no. 1, pp. 76–88, 2005.
[49] W. K. Loh and K. L. Choy, “The use of multi‑criteria decision analysis in the supplier selection process,” Int. J. Adv. Manuf. Technol., vol. 16, no. 10, pp. 1293–1301, 2000.
[50] H. Min, “Selecting international suppliers: An analytical hierarchy process approach,” Int. J. Phys. Distrib. Logist. Manag., vol. 24, no. 5, pp. 24–33,1994.[Online].Available:
[51] L. De Boer, E. Labro, and P. Morlacchi, “A review of methods supporting supplier selection,” Eur. J. Purch. Supply Manag. (abbr.), vol. 7, no. 2, pp. 75–89, 2001. [Online]. Available:
[52] T. . C. E. Cheng and L. Lin, "A decision support system for supplier selection in the purchasing process," Comput. Oper. Res., vol. 29, no. 12, pp. 1815–1834, 2002. [Online]. Available:
Volume 28, Issue 90 - Serial Number 90
Serial number 90. Spring 2026
June 2026
Pages 67-86
  • Receive Date: 31 August 2025
  • Revise Date: 28 October 2025
  • Accept Date: 31 December 2025
  • Publish Date: 15 June 2026