Outsourcing performance quality assessment using data envelopment analytics

The growth of vendor procurement and supply chain management simultaneously emerged as organizational outsourcing practices increased. Outsourcing, as an important strategic organizational practice, needs to be carefully examined from an organizational performance perspective to ensure satisfactory quality of services and goods from supply chains. This article provides a model for performance assessment of an outsourcer's processes in a supply chain comprised of several internal and external entities. Internal entities are entities in a supply chain that the outsourcer can manage and control. External entities are entities whose processes are not within the management sphere and control of the outsourcer, yet affect an outsourcer's performance. A slacks-based measure is incorporated into a hybrid network data envelopment analysis model to evaluate the outsourcer performance incorporating both entity types. A case study of a service supply chain in the banking industry comprised of a commercial bank, its sub-processes, and an external investment bank is used as an illustrative application of the model. Insights are presented and future research directions are identified.