A quality assurance‐oriented methodology for handling trade‐offs in supplier selection

Abstract

In an era of global sourcing, the firm’s success often hinges on the most appropriate selection of its suppliers. Supplier selection is sometimes very complicated, owing to a variety of uncontrollable and unpredictable factors which affect the decision. Describes a multiple attribute utility theory based on the use of data envelopment analysis (DEA), aimed at helping purchasing managers to formulate viable sourcing strategies in the changing market place. An application of the methodology using actual data retrieved from a firm operating in the bottling industry is illustrated. DEA has proved to be capable of handling multiple conflicting attributes inherent in supplier selection while simultaneously trading‐off key supplier selection criteria.