Transmuting performance on manufacturing dimensions into business performance: An exploratory analysis of efficiency using DEA

Abstract

This research examines efficiency in the transformation of performance on manufacturing competitive dimensions into business performance in the automotive supplier industry. Specifically, the study explores efficiency produced from data envelopment analysis (DEA) using cost, quality, time, flexibility and innovativeness performance as inputs and return on investment (ROI) and return on assets (ROA) as outputs. First tier suppliers to the 'Big 3' in North America were sampled. The 51 suppliers were categorized into three groups (high, medium and low) based on their efficiency. No significant group differences in quality, time, flexibility and innovativeness performance were found, but a significant difference does exist for cost. The results were further investigated by testing between-group differences for various cost reduction programmes, thereby identifying the levers and benchmarks for improving low efficiency firms.

Supply Chain Efficiency Measurement to Maintain Sustainable Performance in the Automobile Industry

“…Moreover, the quality score of efficient partners was not higher than that of inefficient partners, which is consistent with previous studies demonstrating that efficient suppliers focus on cost reduction, not on quality improvement [24].…”

“…Talluri et al [24] estimated the efficiency of 150 primary suppliers for three major automakers in the U.S.-GM, Ford, and Chrysler-and categorized them into three groups of high, medium, and low according to their efficiency scores. Then, they utilized a Kruskal-Wallis test to detect between-group differences in cost, quality, on-time delivery, flexibility, and innovation variables.…”

Operations capability, productivity and business performance

“…First, despite increasing research interest in productivity gains and the factors that lead to higher productivity, there has been comparatively little empirical study in this area, especially the mediating role of productivity in the relationship between capability and performance (Lieberman et al, 1990;Smith and Reece, 1999;Talluri et al, 2003). Productivity is a measure of "the efficiency with which physical inputs are converted to physical outputs" (Lieberman et al, 1990(Lieberman et al, , p.1195.…”

The effects of overproduction on future firm performance and inventory write‐downs

“…Financial elements or items that are characterized by carryover effects are known as permanent accounts or real accounts, they are carried and reported in the statement of financial position, and the balances of those accounts are carried forward from period to period (Reeve et al, 2011). The concept of the firm operating efficiency is in line with prior studies that have applied DEA as performance measure in industries like hospital (Chang et al, 2011), bank (Paradi et al, 2011), audit firm (Dopuch et al, 2003), and particularly manufacturing firm (Thore et al, 1994;Talluri et al, 2003;Lu et al, 2014;Kweh et al, 2018;Tone et al, 2019). The dynamic production process for an electronic manufacturing company, as used in this study, is as shown in Fig.…”