Due to the rapid change of global business environment, the growth of China’s steel industry and the inflow of cheap products, domestic steel industry is faced on downward trend. The change of business paradigms from a quantitative growth to a qualitative product is needed in this steel industry. In this environment, it is very important for domestic steel distribution companies to secure their competitiveness by selecting good supply companies through a efficient procurement strategy and effective method. This study tried to find out the success factors of steel distribution industry based on survey research from experts. Weighted values of each factors were found by using AHP (analytic hierarchy process) analysis. The weighted values were applied to DEA(data envelopment analysis) model and eventually the best steel supply company were selected. This paper used 29 domestic steel distribution firms for case example and 5 steps of decision process to select good vendors were suggested.This study used quality, price, delivery and finance as a selection criteria. Using this four criterions, nine variable were suggested. Which were product diversity, base price, discount, payment position, average delivery date, urgency order responsibility and financial condition. These variables were used as a output variable of DEA. Sales and facilities were used as an input variable. Pairwise comparison was conducted using these variables. The weighted value calculated by AHP pairwise comparison were used for DEA analysis. Through the analysis of DEA efficiency process, good DMU (decision making unit) were recommended as a steel supply company. The domestic case example was used to show the effectiveness of this study.