Sustainable collaboration between manufacturer and supplier has emerged as a crucial supply chain decision for increasing business efficiency. In this study, a theoretical framework is proposed that uses practice-based view to analyze key performance indicators (KPIs) for developing sustainable collaboration. Further, the current study proposes a novel three-phase supplier evaluation–selection model to assess the incumbent suppliers on basis of KPIs for showcasing the applicability of theoretical framework. The model uses best–worst method (BWM) in the first phase for generating weights of KPI, adopts the TODIM approach in the second phase for evaluation of suppliers, and develops a supplier classification grid in the third phase for analyzing the impact of each selection strategy to be adopted. The novelty of the study is in evaluation of suppliers based on the KPIs with consideration of desirability as well as the potentiality metric and in consideration of the selection strategies, namely, supplier retention, supplier development, and supplier switching. A case study of India's leading home appliances company is taken to demonstrate the application of the current study. The result of BWM reveals that in terms of supplier's potentiality, “quality” emerges as a strong KPI while KPI “information disclosure” gains more importance while considering supplier's desirability towards strengthening the sustainable relationship. The TODIM grid analysis result suggests that suppliers with high performance in both metrics clearly qualify as the best suppliers and must be retained, while the suppliers performing low in both areas must be switched. For suppliers with metric values in conflict with each other, a trade-off analysis is needed. Important research and managerial implications are drawn from the validation of the proposed framework, which can be useful for researchers and practitioners.
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© 2023 The Authors. Business Strategy and The Environment published by ERP Environment and John Wiley & Sons Ltd.