Gradual efficiency improvement through a sequence of targets

The goal in efficiency analysis is not only to evaluate a decision-making unit (DMU) performance, but also to find an efficient target which provides information on inputs reduction and outputs increment values that are necessary to remove inefficiencies for each inefficient DMU. In data envelopment analysis (DEA), the target unit is located on the efficient frontier and possibly far from the unit under assessment. Therefore, in practice performance improvement seems to be disappointing or even impossible to achieve in only one step for some inefficient DMUs. In this regard, finding intermediate targets is of great importance in benchmarking literature. In this article, we find a sequence of targets instead of a single target for each inefficient unit. In our method, the intermediate target at each step has three properties: (I) the intermediate targets and the unit under evaluation are all similar in size; (II) efficiency scores are ascending through the sequence of targets; (III) the target unit at each step is close to the special part of the efficient frontier as much as possible. These properties lead to finding a target that is more achievable in real applications

Service enterprise productivity in action: measuring service productivity

© 2018, Emerald Publishing Limited. Purpose: The purpose of this paper is to measure service productivity using the Service Enterprise Productivity in Action (SEPIA) model. The research operationalises only one of the five stakeholder groups, the customer interface which incorporates service complexity (SC), customer interactions, customer channel, customer loyalty (CL) (new) as inputs, and CL (referred and repeat) and willingness to pay as output measures. Design/methodology/approach: The research extends our understanding of existing service productivity models with the development of the SEPIA model. Data were collected from 14 organisations operating in the Australian travel and tourism industry, which was analysed using a data envelopment analysis input oriented variable return to scale method as applied to the SEPIA model customer interface. Findings: Four key findings from the research include: customer choice and their ability to pay is a determinant of service productivity; service productivity is a two stage process when measured; SC is not categorical; and quality business systems do impact service productivity. Research limitations/implications: A limitation of this research is that only one (customer) of the five key stakeholders, customer, employee, manager, supplier and shareholder, was operationalised in this research paper. Practical implications: The operationalisation of the SEPIA customer interface using transactional data and measuring non-financial, intangible factors of productivity provide managers with insights on what services to offer, when to invest in or promote the use of technology and whether to spend marketing effort on customer acquisition or customer retention. Originality/value: The SEPIA model positions service firms within a social and service value network and provides a range of customer measures that extend the current capital (K), labour (L), energy (E), materials (M) and service (S), KLEMS measure of productivity and can be used to show the impact customers have on service productivity

Effets des pratiques de récolte sur l'efficience grâce à une approche benchmarking/ Effects of spatial forest harvesting practices on efficiency through a benchmarking approach

L'exploitation forestière dans le premier maillon de la chaîne d'approvisionnement en bois et est l’activité responsable de l'extraction et du transport du bois de la forêt vers les autres industries. La planification se fait par le biais de la gestion forestière qui, au Québec, a une approche écosystémique. Les stratégies de gestion forestière qui sont appliquées s'inspirent donc des perturbations naturelles qui se produisent dans chaque type de forêt, y compris l'organisation spatiale des récoltes et la pratique de la récolte qui suit un gradient nord-sud. Les perturbations naturelles les plus fréquentes dans le sud sont caractérisées par de petites brèches créées par les chablis et les chutes d'arbres. Le principal agent de perturbation au nord est le feu qui couvre de grandes surfaces du territoire. L'objectif de cette étude est de comparer les stratégies d'aménagement forestier actuelles axées sur l'organisation spatiale de la récolte effectuée dans les différentes unités d'aménagement forestier (latitudes) de l'ouest du Québec, en se basant sur une méthode de mesure de l'efficacité appelée Data Envelopement Analysis (DEA), et en mettant l'accent sur l’efficacité. Les stratégies d'aménagement forestier ont été décrites en termes de variables spatiales telles que la superficie, la forme des sites de récolte et la dispersion des peuplements récoltés, de variables non spatiales telles que les pratiques de récolte (coupe partielle ou coupe à blanc) et le volume récolté par espèce, et d'autres variables associées au secteur forestier telles que les kilomètres de routes construites, entre autres. L’efficacité du régime de gestion sera évaluée en fonction du coût de l'approvisionnement en bois ($/m3). Plus précisément, 1) nous documentons et sélectionnons des variables non spatiales et d'autres variables associées (intrants) qui affectent l’efficience (par exemple, le coût d'approvisionnement en bois); 2) nous identifions les variables spatiales (par exemple, l'indice de forme, la taille des parcelles, la juxtaposition) sur la base des empreintes spatiales des pratiques forestières sur un an dans un gradient nord-sud; et 3) nous identifions les variables qui affectent l’efficience dans le cadre du gradient. Les résultats montrent 3 valeurs d'efficacité calculées pour 50 sites de récolte dans l'est du Canada. La valeur d'efficacité globale ou agrégée est de 72 Forest harvesting in the first link of the wood supply chain, which is the sector that is responsible for extraction and transportation of wood from the forest for processing by other industries. Planning of this activity in the Province of Quebec is conducted through forest management that uses an ecosystem-based approach. Forest management strategies that are applied are therefore inspired by natural disturbances that occur in each type of forest including the spatial organization of harvests and the harvesting practice that follows a north-to-south latitudinal gradient. Natural disturbance that is more frequent in the south is characterized by small-sized gaps created by windthrows and by tree falls. The principal agent of disturbance in the north are fires, which cover large areas of the territory. The objective of this study is to compare the forest management strategies in the different forest management units (latitudes) in western Quebec, focus on the spatial organization of the harvest activity through the efficiency, based on a benchmarking method of efficiency measure called Data Envelopment Analysis (DEA). The forest management strategies were described in terms of spatial variables such as the size area, shape of harvested sites and dispersion of harvested stands, and non-spatial variables of forest management such as harvest practices (partial cut or clear-cutting) and volume harvested per species, and other variables associated with the forest sector such as constructed kilometres of roads, among others. The efficiency of the management regime will be evaluated according to the wood procurement cost ($/m3). Specifically, 1) we document and select non-spatial variables and other associated variables (input) that affect efficiency (e.g., wood procurement cost and profit margin) 2) Identify spatial variables (e.g., shape index, patch size, juxtaposition) based on spatial footprints of forest practices over one year within a north-south gradient, and 3) Identify variables that affect the performance within the gradient. The results show 3 efficiency values calculated for 50 harvested sites in eastern Canada. The overall or aggregate efficiency is 72% with a high variation of ±23%, for the pure technical efficiency is 89% (± 9%) and for the scale efficiency it is 79% (±19%). It was proved that spatial variables are important to determine the efficiency of harvesting wood at a low cost, among the variables evaluated those related to the forest roads (distance to the mills and kilometres constructed roads) and the dispersion (proximity index) of the harvested sites showed to be the most important. From our results, we show both efficient and inefficient sites in the latitudinal gradient, harvesting sites do not present a single pattern depending on the latitude in which they are found as suggested by ecosystem forest management. When the efficiency was dividing according to the different latitudes, there is a tendency of higher efficiency values in the south but with more variation on the commercial value of the wood, the higher road density of the zone, and the taxes. Finally, the method allows the identification of reduction targets in each of the variables so that inefficient units could reach an efficient level. Globally, a reduction of an average of 2.8 km for road construction could increase efficiency by 37%, a reduction of 41 km to the mill by 29%, and a reduction of the dispersion (proximity index) by 21%

A Sensitivity Analysis of ELECTRE Based Stepwise Benchmarking for Policy: the Case of EU Digital Agenda

Research question: This paper introduces a new parameter for evaluating the sensitivity of development paths in ELECTRE (ELimination Et Choix Traduisant la Realité) based stepwise benchmarking model. Motivation: The aim of the research was to devise a 'path sensitivity coefficient' which measures the sensitivity of a development path depending on parameters set by decision-maker (DM). The need for such measure comes from the fact that the hierarchical pre-order of benchmarking units are affected by the DM's subjective decisions on the threshold for declaring outranking relations among them. This consequently may disrupt the sequence of intermediate benchmarks - transitional targets to be followed on the route to the ultimate policy goals. The proposed approach is an extension of a stepwise benchmarking procedure devised by Petrovic et al. (2014) which evaluates development paths based on their gradualism. Idea: In this paper, we propose to characterize development paths by considering both gradualism and sensitivity to outranking thresholds. The standpoint of our research is that in order to make a reliable final choice the DM should be aware that the most gradual path is not necessary the most stable one. Tools: The proposed 'path sensitivity coefficient' combines four level of uncertainty coming from two threshold values set by DM. The coefficient has a relative nature, it points to the “distance” from the theoretically ideal solution - a path fully indifferent to threshold values. An approach to merge coefficients associated with gradualism and stability is also introduced. Data: To illustrate the proposed approach we applied it in the field of digital transformation of EU countries. We exploited indicators and data from Digital Agenda Scoreboard regarding specific policy goals to be achieved until 2020. Findings: The findings imply that the decision on the most gradual development path should be reconsidered in regards to the influence of model parameters. The final choice depends whether DM’s prefers the smoothness of the path or the overall stability in terms of underlying partial preorder.  Contribution: This work contributes to the existing ELECTRE-based stepwise benchmarking by reducing the uncertainty coming from subjective parameterization and allows the DM to be more confident in the final path selection

Health care performance management : insights from applications of data envelopment analysis

The comprehensive measurement of efficiency and performance in the Health Service in the UK has become one of the most important managerial developments of recent years. The reasons for this development were examined, particularly in relation to the difficulties involved with performance assessment in such a context. The most widely utilised techniques were evaluated from the perspective of the Health Care Manager and a number of serious limitations were identified. In response to these limitations, the technique of Data Envelopment Analysis was evaluated as an alternative. It has been proposed as an appropriate and useful tool for the assessment of efficiency, although the literature on DEA showed limited practical application to public sector services in the UK. The many facets of the technique were investigated and literature on its application to hospital data was reviewed. A two-stage application procedure for the DEA technique was developed in response to this evaluation, to be used in the measurement hospital efficiency. The procedure was based on a deep theoretical understanding of the DEA methodology. The most important elements of the process were related to selection of the initial sample, the identification of the variables to be included in the DEA model and the definition of the weight restrictions to be incorporated. Input from Health Care Managers was used to guide the application and data from a sample of acute hospitals in Scotland was utilised in the analysis. The application procedure showed how the practicalities of the DEA technique could be enhanced, in particular through the inclusion of weight restrictions. This led to the development of efficiency strategies for the inefficient hospitals, which could be related to the policy objectives or managerial structure of the hospitals in the sample. It was concluded that there were many potential benefits of the DEA approach to efficiency assessment and the two-stage application procedure defined here, which could be seen to fulfil many of the requirements of the Health Care Manager. It was determined that combining theoretical and practical issues can enhance the applicability of the DEA methodology

The Impact of Port Technical Efficiency on Mediterranean Container Port Competitiveness

Port efficiency is a significant element that stimulates port competitiveness and enhances regional development. With increasing international maritime traffic and changing technology in the maritime transport sector, containerisation and enhanced logistic activities, infrastructure might be one of the main determining factors of port competition (Merk & Dang, 2012). Due to the increasing container traffic and the high quality of service required by the shipping lines, Mediterranean container ports are being compelled to enhance port efficiency to improve comparative advantages that will increase cargo traffic and satisfy the customers’ requirements. The Mediterranean Sea is a link point between Europe, Africa and Asia. This research aims to examine the impact of ports' technical efficiency on the improvement of Mediterranean container ports’ competitiveness. The research analyses the competitiveness and the relative efficiency of the top 22 container ports in the Mediterranean basin using a cross-section, panel data and window analysis application of data envelopment analysis (DEA) for the period between 1998 and 2012. The selected 15 year period enables the analysis of Mediterranean container port market dynamics and the benchmarking of the technical efficiency of the selected ports for three consecutive market cycles. This research can be classified as quantitative analytical research. The research follows the concept of the Industrial Organization (IO) and the Structuralism (Harvard school) methodology that analyses the market Structures, Conduct and Performance (SCP) of market players. The study conducts a simultaneous three-stage procedure: in the first stage, the competitiveness of the main container ports in the Mediterranean is analysed through the study of market structure and conduct. Market structure is assessed through measuring and analysing market concentration by using four different methods. These methods are: the K-Firm concentration ratio (K-CR), Hirshman-Herfindahl Index (HHI), the Gini coefficient (GC) and the generalized entropy index. Boston Consultant Group (BCG) matrix is also used to visualize the dynamics between ports in the defined market and assess the ports' competitive position. Market conduct is analysed using shift-share analysis (SSA) to get a thorough understanding of the issue of port traffic development. In the second stage, market performance is analysed through the use of the non-parametric models of Data Envelopment Analysis (DEA) which estimates the relative efficiency scores and ranking seaports according to their efficiency. Five DEA models are adopted for comparative purpose, the DEA- CCR, DEA-BCC, the Super-Efficiency (A&P, 1993), the sensitivity analysis and slack variable analysis models. In the third stage, to examine the impact of port efficiency on port competitiveness, a number of hypotheses are examined through the use of parametric correlation coefficients (Spearman’s rank order) and Simar and Wilson (2007) procedure to bootstrap the DEA scores with a truncated regression. Using this approach enables more reliable evidence compared to previous studies analysing the efficiency of seaports. The main findings demonstrate that the recent deconcentration tendency of the Mediterranean container port market is due to the increased number of market players which will in turn reshape the market structure, change the container port hierarchy and intensify the competition between ports as the market shifts from oligopoly to pure competition. The research findings also reveal the existence of inefficiency pertaining to the management of container ports in the region, since the total technical efficiency is found to be below 50% on average. This relatively limited technical efficiency of the Mediterranean container ports indicates the need for appropriate capital investments for ports’ infra/superstructure. In particular, those ports whose efficiency is not favoured by some factors such as size, geographical position and socio-economic conditions of the region in which they are located, must adopt suitable reform strategies to promptly improve their efficiency and competitive position. What differentiates this work from previous studies on the subject is that both cross-sectional and panel data have been collected and analysed at the level of individual container ports in the Mediterranean. The study is based on a wide range of methodologies, both parametric and non-parametric, that have ensured the validity of the empirical examination that has been undertaken and the results obtained. The research analysed the Mediterranean container ports competitiveness, benchmarked and ranked their efficiency by considering the Mediterranean in its totality, including South Europe, Middle East and North Africa. The study puts forward a way to assess container port efficiency based on simple, yet validated and meaningful physical efficiency measures

Benchmarking the performance of UK electricity distribution network operators: a study of quality, efficiency and productivity using data envelopment analysis

The aim of this thesis is twofold. The first is to develop a comprehensive methodology for assessing performance and then to apply it to the UK electricity distribution network operators (DNOs) to analyse the impact of the regulatory reforms and privatisation introduced in 1990-91 on their quality, efficiency and productivity developments. The models and methods developed will not only be useful in the electricity distribution context but also to other organisations that need to assess and monitor both their efficiency and quality. These objectives are realised through the use of the Data Envelopment Analysis (DEA) method, the main subject area of this thesis. This method has recently become very popular in the empirical literature due to the minimal assumptions underlying it, the case of handling multiple inputs and outputs, and its usefulness in the measurement of productivity. Performance measurement needs to keep pace with the changes in the industry. With the developments in energy and regulatory policy, and the enactment of the Utilities Act 2000, the focus of regulation has broadened from a narrow economic focus towards a wider one of protecting the interests of consumers. The latter includes not only price but also quality of service. Given this broadening focus, it is essential that performance measurement takes into account these aspects. This thesis incorporates new dimensions into efficiency and productivity measurement of electricity distribution network operators by taking into account the quality characteristics of electricity distribution operations. The dimensions of quality of service in electricity distribution were defined in this study, namely the quality of supply dimension and the quality of customer service dimension. Plausible measures of service quality were suggested. In order to provide a more balanced performance assessment, the new DEA model that incorporates the quantity as well as the quality of the services that distribution network operators provide their customers was used. In this study, only the quality of supply dimension was used in the analysis. (The quality of customer service dimension was omitted due to lack of data). Besides this, in order to achieve a more comprehensive assessment, both the operating and capital costs of distribution operations were included as inputs. The technological realities of the electricity distribution production process were captured in this study by taking into account the production trade-offs that exist between inputs and outputs. When trade-offs occur, the reduction in one factor can lead to increases in another, thereby reducing the overall reduction. The reflection of production trade-offs provides more reliable results than can be utilised in management and policy making. The production trade-offs were accounted by developing an enhanced DEA model using weight restrictions that are constructed on the basis of production trade-offs. The enhanced DEA model thus was referred to as the ‘weight-restricted’ model. This model developed was used to evaluate the DNOs efficiencies in 1999/00. A new productivity index called the ‘weight-restricted’ Malmquist productivity index was also developed in order to evaluate the quality and productivity changes of the DNOs since 1990/91. This new index is similar in spirit to the Malmquist productivity index but it reflects production trade-offs and service quality rather than just quantities per se. In this regard, the index is more appropriate to evaluate the DNOs. The index was decomposed in this study into its root components of efficiency change and technological change

A Health Outcomes Resource Standard (HORSt) for Australian State Public Health Funding Distributions

Australia is a federation with a mixed private-public system. Public hospitals and community health care are the responsibility of states and territories. Private fee-for-service clinicians and pharmaceuticals is subsidised by the Commonwealth government via the Medicare Benefit Schedule (MBS) and Pharmaceutical Benefits Scheme (PBS). As with other countries, issues of efficiency and equity are key considerations, with equity issues in Australia confounded by large geographical area and population distribution