A strategy-based framework for supplier selection: a grey PCA-DEA approach

Supplier selection is one of the key competencies in the sourcing function. Considering the important role of suppliers in the strategy framework of supply chains, it is surprising that the sourcing function has not been subject to more focused research on the development of adequate decision support tools. The relatively simplified ranking systems that often have been presented on an ad hoc basis offer only partial information on the decision. This research attempts to develop a unified and integrated structure for supplier selection practices across a supply chain on the basis of strategic planning. Our evaluation is conducted by means of a multi-attribute efficiency analysis models and a multivariate statistical method, a so-called principal component analysis - data envelopment analysis (PCA-DEA) approach, to support supplier relationship management under uncertainty. The main contribution of this paper is to address the gap in the supply chain management (SCM) literature by proposing a strategy-based method for supplier selection problems when data are interrelated and interdependent. The proposed method in this study is applied to a real-world case study in agri-food industry to demonstrate the advantages and applicability of the proposed framework.