Multi-Tier Supplier Selection Using Total Cost of Ownership and Data Envelopment Analysis

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Author(s): Feras Saleh (Concordia University, Canada)
Copyright: 2020
Pages: 26
Source title: Handbook of Research on Interdisciplinary Approaches to Decision Making for Sustainable Supply Chains
Source Author(s)/Editor(s): Anjali Awasthi (Concordia University, Canada)and Katarzyna Grzybowska (Poznan University of Technology, Poland)
DOI: 10.4018/978-1-5225-9570-0.ch028

Keywords: Business & Management / Business Science Reference / Operations and Service Management / Supply Chain Management

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Abstract

Quality management across multiple tiers is vital to minimize cost of quality in global supply chains. In this chapter, the authors address the problem of supplier selection in multi-tier global supply chains with the purpose of overall quality management. A hybrid approach based on total cost of ownership (TCO) and network data envelopment analysis (DEA) is proposed. The TCO looks beyond the quoted cost to cover additional true costs related to the entire purchasing cycle. The cost categories included are quoted price, manufacturing costs, quality costs, design costs, logistics costs, after sales service, and social/environmental costs. Network DEA is used to rank the suppliers based on the TCO cost categories. The advantage of network DEA is its ability to investigate intermediate linkages between different stages of the supply chain. The results of network DEA are efficient suppliers and improvement targets for inefficient suppliers for improving overall quality in global supply chains. A numerical application is provided.

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Multi-Tier Supplier Selection Using Total Cost of Ownership and Data Envelopment Analysis

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