An applied study on the method for supplier selection with PCA and ELECTRE

With globalization and the emergence of the extended enterprise of interdependent organizations, there has been a steady increase in good suppliers´ demands. This leads firms to give more importance to the purchasing function and its associated decisions. The process of supplier selection is very complex in the supply chain management, which includes both qualitative and quantitative factors, and belongs to the category of multi-criteria decision-making (MCDM). During recent years, how to determine suitable suppliers has become a key strategic consideration. In this paper, the methods of principal component analysis (PCA) and ELECTRE are mainly studied to select suppliers scientifically. First, evaluation indexes for supplier selection are constructed; second, epurating these quantitative and qualitative indexes is finished by the method of PCA; last, the suitable one can be selected from all those suppliers by the method of ELECTRE. This paper shows that the proposed process is very well suited as a decision-making combinatorial tool for supplier selection decisions.