Suppliers selection and development using DEA: a case study

Supplier management is one of the key components of supply chain management, as companies have realised that to truly deliver superior customer value they must focus on the entire value chain. As such, companies control only a small part of that. A healthy buyer supplier relationship is then one of the most potent components of superior value delivery and delighting customers. Good supplier management starts with the selection of most effective and efficient suppliers from a given pool. The selection criteria could include price, quality and delivery performance among others. However, companies often grapple with the question of selecting the right supplier. We have presented one approach to tackle this problem using Data Envelopment Analysis (DEA) that uses an ideal target for each selection criteria and then identifies the best supplier available. We have empirically illustrated this approach using the case of an Indian company.