click on star to go back to Joseph Sarkis' HomepageThe purchasing function is central to the strategic operations of effective supply chain management. This centrality is mainly due to the significant impact of material costs on profits, increased investments in inter-organizational advanced manufacturing and information technologies, and a growing emphasis on the just-in-time operations philosophy. The critical business processes of the purchasing function include supplier selection, negotiation of supply contracts, monitoring supplier performance, and to act as an interface between an organization and its suppliers. Within these core business processes of purchasing, this paper narrows its scope to focus upon the supplier selection and performance monitoring processes, which assist in maintaining effective customer-supplier linkages. While price has been traditionally considered as the single most important factor in evaluating suppliers, recent value performance emphasis has expanded to include other important factors such as quality, delivery, flexibility, etc. Given this evolving business competitiveness environment, the contribution of this research is three-fold. First, it applies a new multi-criteria evaluation model for evaluation and selection of suppliers by considering various performance criteria. Second, a proposed application extension of this model serves as a monitoring and control mechanism for the performance of suppliers, thus supporting continuous process improvement to achieve efficient customer-supplier relationships. Third, the paper presents this technique as a new methodological extension to the data envelopment analysis research by improving the discriminatory power of the varying returns to scale model (Banker et al. 1984). The model and its application are demonstrated through an already published illustrative case example.
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