Using efficiency frontiers to visualise suppliers’ performance capabilities: moving beyond supplier rationalisation

Abstract

ABSTRACT This paper offers a framework for analysis to benefit buying firms as they evaluate current and prospective suppliers, and to assist supplying organisations in becoming more competitive. It explores the notion of performance improvement frontiers for suppliers, in the context of developing suppliers rather than rationalising or pruning them. Dual-efficiency (strengths and weaknesses) frontiers are constructed using inverted efficiency techniques. Unilateral and bilateral approaches to the construction of these frontiers are examined. It is found that certain information content of bilaterally determined DEA assurance ranges can serve as a compromise between the buyer’s ideal performance priorities and a supplier’s capability-based priorities. For this reason, it represents a reasonable and jointly determined set of performance expectations for buyers to recommend to the supplier set. For the suppliers themselves, the bilateral ranges contribute a prioritised behavioural focus to develop or improve their capabilities on specific performance attributes.