A Note on “A Methodology for Supply Base Optimization”

Supply base optimization is a critical issue facing firms that are striving to achieve an efficient sourcing strategy. While several decision models have effectively been utilized for evaluating and selecting potential suppliers, methodologies for supply base optimization have not received significant attention in the literature. The main contribution of this paper is the development of a quantitative methodology for supply base optimization. This involves reconfiguring the buying firm's supply base by evaluating and selecting potential suppliers with respect to the strengths of existing suppliers and excluding underperforming suppliers from the firm's supply base. We compare our methodology, which is anchored in data envelopment analysis (DEA), with traditional and advanced DEA models for supplier evaluation in highlighting its relative advantages. We test our models on an actual dataset of suppliers from a large, multinational, telecommunications company.