Title: Revealing differences of supplier performance with DEA cross-efficiency

Authors: Imre Dobos; Gyöngyi Vörösmarty

Addresses: Department of Economics, Budapest University of Technology and Economics, H1111 Budapest, Műegyetem rkp. 3., Hungary ' Department of Logistics and Supply Chain Management, Corvinus University of Budapest, H1093 Budapest, Fővám tér 8, Hungary

Abstract: DEA is a well-known tool for measuring the effectiveness of decision units. It is used to support a wide range of management decisions and is also widely used to support supplier assessment tasks such as selection, performance evaluation, or post-qualification. Ranking can be important when making certain purchasing decisions, e.g., when selecting the best performing supplier(s). However, ranking can hide differences in performance that may have a significant impact on the outcome of the supplier selection. Suppliers can be evaluated by two types of DEA efficiency indicators: self-appraisal and peer-appraisal (cross-efficiency). The aim of this paper is to introduce a new method that maximises cross-efficiency by leaving the self-appraisal indicator. It is shown that the average of cross-efficiencies can be characterised as an optimal cross-efficiency of suppliers. The new method helps to understand differences in supplier performance, which may be hidden in the ranking provided by the basic DEA method.

Keywords: supplier evaluation; data envelopment analysis; DEA; cross-efficiency; sustainability.

DOI: 10.1504/IJPM.2023.132588

International Journal of Procurement Management, 2023 Vol.18 No.1, pp.124 - 140

Received: 09 Feb 2022
Accepted: 02 Apr 2022
Published online: 30 Jul 2023 *

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