Supplier Evaluation and Rationalization via Data Envelopment Analysis: An Empirical Examination

Abstract

SUMMARY Strategic evaluation of supplier performance assists firms in improving their operations across a variety of dimensions. Specifically, it aids in supplier process improvement, which in turn enhances firm performance, allows for optimal allocation of resources for supplier development programs, and assists managers in restructuring their supplier network based on performance. In order to address these issues, this article proposes a methodology for effective supplier performance evaluation based on data envelopment analysis (DEA), a multi‐factor productivity analysis technique. The efficiencies derived from the DEA model are utilized in conjunction with managerial performance ratings in identifying supplier clusters, which are categorized into high performers and efficient (HE), high performers and inefficient (HI), low performers and efficient (LE), and low performers and inefficient (LI). Effective benchmarks from the HE cluster are identified for improving the operations of suppliers in the HI, LE, and LI clusters. Finally, managerial insights and implications from the study are discussed.

Metodologias para seleção de fornecedores: uma revisão da literatura

“…Método de apoio à decisão multicritério Brien (1998), Degraeve e Roodhooft (1999), Jayaraman et al (1999), Dohel (2003, Wanga et al (2004), Crama et al (2004), Liaoa e Rittscher (2007), Ting e Cho (2008), Chen et al (2011), Fazlollahtabar et al (2011), Jolai et al (2011), Liao e Kao (2011, Ozkok e Tiryaki (2011), Songhori et al (2011) Data envelopment analysis (DEA) Weber (1996), Liu et al (2000), Narasimhan et al (2001), Talluria et al (2006), Saen (2007), Ramanathan (2007), Chen (2011), Songhori et al (2011 Métodos estatísticos Petroni e Braglia (2000), Talluri e Narasimhan (2003), Ernst (2007) Ponderação linear Humphreysa et al (2007), Chen (2008), Ng (2008) Inteligência artificial Choya et al (2003), Che e Wang (2008),Yeh e Chuang (2010) Aksoy e Öztürk (2011) Total cost of ownership (TCO) Degraeve e Roodhooft (1999), Ramanathan (2007) Data mining Haery et al (2008) um crescimento no número de publicações ao longo dos anos, com destaque para os cinco últimos anos, período no qual foram publicados quase 65% dos trabalhos investigados. Pressupõe-se que o ressurgimento desse interesse tenha sido motivado pela complexidade do processo decisório aliada à importância da decisão no atual ambiente de negócios.…”

Multi-criteria decision-making tools for material selection of natural fibre composites: A review

“…DEA was used to identify the best combination of vendor specification on the performance parameter to select twenty-seven industrial robots. This method widely used in supplier selection in many industry such as automotive [72], telecommunication [73] and manufacturing firm [74]. Based on article reviewed by Ho et al [75], almost 18% article was used DEA as a tool for supplier selection.…”

The Impact of Online Reverse Auction Design on Buyer–Supplier Relationships

“…The current research examines design predictor variables similar to those in Millet and colleagues' (2004) study, but my perspective differs in important ways. The final bid prices generated in online auctions are important and can affect buyer-supplier relationships directly, but they fail to capture key aspects of interorganizational performance, such as quality, reliability, long-term supplier viability (Forker, Ruch, and Hershauer 1999;Narasimhan, Talluri, and Mendez 2001), and market conditions. Economic outcomes also fail to account for beliefs, evaluations, and expectations that are the critical building blocks of the buyer-supplier relationship.…”