Determination of Procurement Risk Coefficient Based on Principal Components Analysis

Procurement is an important work in supply chain management. Various factors will cause a great deal of procurement risk, which will result that procurement staff can not complete the target expectedly. Effective identification and measure to the procurement risk are important, which are the basis of effective risk management and risk prevention. This paper reviews the domestic and foreign literatures about procurement risk and its quantification, and takes the actual procurement of business into account. On the basis of the two previous works, this paper considers the following indices, such as purchase price, satisfaction rate of orders, delivery time, the rate of qualified products, the rate of right shipments and so on, which will impact the effects of procurement and supply. Secondly these indices and their statistical data are analyzed by PCA to obtain fewer indices, which are independent and reflect the most information carried by all indices. And then define the procurement risk coefficients from the angle of suppliers and commodities. Finally the procurement risk coefficients are calculated using SPSS 15.0 in a case.