A methodology for measuring supplier performance and supplier selection

A two-stage approach combining analytic hierarchy process (AHP) and data envelopment analysis (DEA) is applied in this paper for solving supplier evaluation and selection problems with multiple criteria. Parameters obtained by analytical hierarchical process reflect the strength of potential suppliers in certain period of time. Using reference parameters as inputs, and current parameters as outputs in DEA model, the management efficiency of each potential supplier is calculated. Management efficiency is helpful for selecting right suppliers and motivating suppliers to keep on improving their management work and performance.