A supplier performance evaluation framework using single and bi-objective DEA efficiency modelling approach: individual and cross-efficiency perspective

In view of complexities associated with supplier performance evaluation based on traditional business criterions (such as costs, quality levels, and delivery timelines) and emerging criterions (such as those related to environmental sustainability), we in this research evolve two different supplier efficiency measurement models that unify such criterions possessing characteristics of both desirable and undesirable outputs. The first model is a single-objective DEA efficiency assessment model wherein both types of outputs are integrated into a single composite efficiency measure. Using data from suppliers of Hyundai Steel Company, we determine composite efficiencies of each of these suppliers thus ranking them in terms of an overall efficiency score that would be useful as far as the first-cut supplier discrimination is concerned. However, due to the relative inability of evolved single-objective efficiency model to perform trade-offs amongst desirable and undesirable outputs and, owing to unidimensionality aspects, we evolve a goal programming based bi-objective efficiency model wherein trade-offs can be performed between both conventional and emerging dimensions criterions leading to different supplier evaluations for varied scenarios. We also integrate our evolved models with the cross-efficiency view of efficiency determination in order to enable the decision-makers to achieve peer-to-peer evaluation and maximum discrimination amongst suppliers.