Using data envelopment analysis for supplier evaluation with environmental considerations

With the proliferation of outsourcing in global market place, supplier selection has become a key strategic consideration in forming a competitive supply chain. Supplier selection has been recognized as a multi-criteria decision making problem in which suppliers are evaluated according to multiple criteria such as price, quality, delivery and service simultaneously. Facing with excessive pressures from government and customers, increasing number of companies are beginning to consider environmental issues in the procurement and supplier selection process to practice the sustainable development. It is therefore necessary to measure a supplier's environmental performance. This paper aims to find out what kind of environmental criteria can be applied to assess suppliers overall performances. The multi-criteria decision making approach data envelopment analysis (DEA) is applied to help companies to evaluate suppliers' various environmental performance and other capabilities simultaneously.