Evaluation of Suppliers Efficiency in a Project Management Environment using Data Envelopment Analysis (DEA)

Abstract

Supplier performance evaluation and selection plays a vital role in the establishing an effective project delivery in an organization. More also, selecting the right supplier for an assignment, as well as evaluating this supplier's performance while the contract is being implemented, plays an important role in ensuring a good project outcome. The evaluation of a supplier is important for an enterprise to survive in a competitive market in a global project environment. One of the techniques that can be used for supplier performance evaluation and selection is data envelopment analysis (DEA). In this paper, the study examined the benefit of data envelopment analysis in evaluating the performance of decision making units (DMUs). DEA is a mathematical programming tool applied in performance measurement. The problem identified is establishing business support units, a case study is presented to exhibit the efficiency of the model for supplier selection problem in a project environment. The case study research design method was used in which quantitative data were collected and analysed to demonstrate that the model can measure effectiveness, efficiency and productivity in a project environment. It shows that the model decision makers to deal with economic, social and environmental factors when selecting suppliers for the project. The article concludes that in any project environment, there is need to establish methods used to assess supply chain performance so that companies can improve performance from all sides, such as product quality and company resources. So, it is expected that the supplier will get more profit and overall supplier’s performance will increase as well.