Manuscript finale_lboro_repository.pdf (1.29 MB)
Supplier's total cost of ownership evaluation: a data envelopment analysis approach
journal contribution
posted on 2015-11-12, 12:15 authored by Franco Visani, Paolo Barbieri, F. Marta L. Di Lascio, Anna RaffoniAnna Raffoni, Daniele VigoSupplier Total Cost of Ownership (TCO) is a widely-known approach for determining the overall cost generated by a supplier relationship, but its adoption is still limited. The complex calculations involved - and in particular the activity-based costing procedure for computing the cost of managing the relationship - pose a major obstacle to widespread TCO implementation. The purpose of this work is to formulate a Data Envelopment Analysis application (denoted 'TCO-based DEA') that can act as a proxy for TCO, and to test its ability to approximate the results of TCO with less effort. The study is based on the analysis of two categories of suppliers (74 in total) of a medium-sized Italian mechanical engineering company. The results show that TCO-based DEA is able to significantly approximate the outcomes of TCO, for both the efficiency indexes and rankings of suppliers, whilst requiring substantially less effort to perform the analysis. To our knowledge, this is the first study to develop a DEA-based tool for approximating TCO and to test it in a real-world setting. The research shows significant potential within the supply chain management field. In particular, TCO-based DEA can be used for analysing suppliers' performance, rationalising and reducing the supplier base, assisting the negotiation process.
History
School
- Business and Economics
Department
- Business
Published in
Omega (United Kingdom)Volume
61Pages
141 - 154Citation
VISANI, F. ...et al., 2016. Supplier's total cost of ownership evaluation: a data envelopment analysis approach. Omega, 61, pp.141-154.Publisher
© Elsevier LtdVersion
- AM (Accepted Manuscript)
Publisher statement
This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/Acceptance date
2015-08-02Publication date
2015-08-12Notes
This paper was accepted for publication in the journal Omega and the definitive published version is available at http://dx.doi.org/10.1016/j.omega.2015.08.001ISSN
0305-0483Publisher version
Language
- en