Strategic Supplier Selection in Payment Industry: A Multi-Criteria Solution for Insufficient and Interrelated Data Sources

Abstract

Our goal is to address the complicated problem of strategic supplier selection with interrelated and insufficient data. To achieve this goal, we proposed our Strategic Supplier Selection Methodology (SSSM). First, SSSM formulates the enterprise strategies and evaluation criteria. Then, we developed a novel method called Grey Principal Component Analysis-Data Envelopment Analysis (GPCA-DEA) to evaluate suppliers in SSSM. GPCA-DEA overcomes the major disadvantages and limitations of former methodologies (e.g., DEA) while dealing with insufficient and interrelated data. Finally, SSSM applies Multiple Attribute Decision-Making (MADM) methods to select suppliers based on the ranking score. The application of SSSM is illustrated in the payment industry to select Payment Initiation Service Providers (PISP). For the first time, we considered the payment industry-specific criteria in compliance with the latest regulation (PSD2). The Spearman rank correlation statistical test showed that our method (GPCA-DEA used in SSSM) yields more reliable results than a former version of DEA.