Vendors´ efficiency measurement; using data envelopment analysis

A key issue in logistics management in organization is the measurement of the vendors´ efficiency which ensures to achieve the most suitable services. In today´s competitive marketplace, many companies have moved from a single vendor to a multi-vendor platform. Many conceptual and analytical models have also been developed for addressing the vendor selection problem. It has been recognized that a lot of factors influence the vendors´ efficiency so a suitable approach is needed to consider all the factors in order to select the most efficient vendors. Thus, this paper presents a new approach for evaluating vendors in order to select the most proper one in a procurement situation. The approach uses data envelopment analysis to evaluate the vendors´ efficiency. The criteria considered in this model are service quality, price, delivery and rate of rejected parts. An empirical study is implemented in a pipe manufacturing company in Isfahan to prove the presented approach. Findings prove that the vendors which present the best services are not necessarily the most efficient one. This research also provides an appropriate framework for organization to examine the vendors´ efficiency and choose some effective ways to improve vendors´ efficiency.