Seong-Jong Joo

Benchmarking the operational efficiency of third party logistics providers using data envelopment analysis

Purpose – In an era of downsizing and financial cutbacks, the operational efficiency of third party logistics providers (3PLs) dictates their competitiveness and/or survival. In an effort to help 3PLs enhance productivity and price leverage in the increasingly competitive third party logistics market, this paper aims to develop a meaningful set of financial benchmarks that will dictate best practices. In particular, the paper proposes a data envelopment analysis (DEA) that is proven to be useful for measuring the operational efficiency of various profit or non‐profit organizations.Design/methodology/approach – Using the examples of major 3PLs in the USA, this paper is the first to illustrate the usefulness of DEA for measuring the competitiveness of third party logistics services. The proposed DEA model also helps 3PLs identify potential sources of inefficiency and provide useful hindsight for the continuous improvement of operational efficiency. Furthermore, the proposed DEA model not only helps 3PLs est...

A data envelopment analysis‐based balanced scorecard for measuring the comparative efficiency of Korean luxury hotels

Purpose – This paper aims to develop a balanced scorecard for measuring the comparative efficiency of Korean luxury hotels and then set the benchmark of performance standards for Korean luxury hotels in the increasingly competitive hotel industry. It also aims to identify the root causes of inefficiencies and then propose ways to improve the competitiveness of Korean luxury hotels.Design/methodology/approach – This paper proposes data envelopment analysis (DEA) to measure the comparative efficiency of six luxury hotel chains in Korea, relative to prior periods and their key competitors. In particular, this paper develops the Charnes, Cooper and Rhodes (CCR) model that is designed to derive weights without being fixed in advance. Also, the results of the CCR model with constant returns to scale were compared to those of the Banker, Charnes and Cooper (BCC) model with decreasing returns to scale.Findings – The paper finds that the declining efficiency within some Korean luxury hotels coincides with more agg...

Scheduling preventive maintenance for modular designed components: A dynamic approach

One of the benefits of modular design is ease-of-service. While modular design helps simplify field maintenance, extensive depot maintenance and spare modules are required to support the field maintenance. This study develops a dynamic approach for scheduling preventive maintenance at a depot with the limited availability of spare modules and other constraints. A backward allocation algorithm is proposed and applied to scheduling the preventive maintenance of an engine module installed in T-59 advanced jet trainers in the Republic of Korea Air Force. The algorithm developed by this study can be used to solve similar problems for various systems such as aerospace vehicles, heavy machinery, and medical equipment. The contribution of this study includes the uniqueness of the algorithm, the flexibility to deal with variables changing over time, and the ability to incorporate additional variables to handle complex situations.

Evaluating the financial performances of Korean luxury hotels using data envelopment analysis

In the wake of catastrophic natural disasters and rising threats of terrorism, the hotel industry has been hit hard by declining revenues and increasing competition. To avoid such a downward spiral, the hotel industry should find remedies to make its operations lean and robust. These remedies may include: niche marketing, reduced debt ratio, increased profit margin, and continuous improvement of hotel service quality. These remedies, however, would be of no avail, unless the hotel management finds a way to compare its financial strengths and weaknesses against its competitors. In an effort to help the hotel management enhance its financial efficiency and price leverage in the increasingly competitive hotel industry, this article aims to develop a meaningful set of financial benchmarks that will dictate best practices and shape up a successful hotel business model. Thus, we propose a data envelopment analysis (DEA) that is proven to be useful for measuring the financial efficiency of various profit or non-profit organizations. Using the examples of first-class, luxury hotels in Korea, this article illustrates the usefulness of DEA for the continuous improvement of hotel business practices.

Measuring and benchmarking the performance of coffee stores for retail operations

Purpose – The purpose of this paper is to measure and benchmark the retail operations of selected coffee stores owned by a specialty coffee company.Design/methodology/approach – Data envelopment analysis is used for benchmarking the performance of eight coffee stores for two years using internal annual reports.Findings – Major findings are that the inefficient stores need to improve occupancy related expenses and revenues from non‐coffee items. In addition, the coffee stores locate in an affluent residential area outperform the stores in the business district.Research limitations/implications – The limitation of this paper is in the use of financial data. To overcome this issue, non‐financial data should be included.Originality/value – The contributions of this paper are twofold: providing a framework for performance measures within a benchmarking perspective and evaluating the comparative efficiency of coffee stores using internal data, which is not accessible to the general public.

Benchmarking with data envelopment analysis: a return on asset perspective

Purpose – Selecting appropriate variables for analytical studies is critical for the validity of analysis. It is the same with data envelopment analysis (DEA) studies. In this study, for benchmarking using DEA, the paper seeks to suggest a novel framework based on return on assets (ROA), which is popular and user‐friendly to managers, and demonstrate it by use of an example.Design/methodology/approach – The paper demonstrates the selection of variables using the elements of ROA and applies DEA for measuring and benchmarking the comparative efficiency of companies in the same industry.Findings – It is frequently impossible to obtain internal data for benchmarking from competitors in the same industry. In this case, annual reports may be the only source of data for publicly traded companies. The framework demonstrated with an example is a practical approach for benchmarking with limited data.Research limitations/implications – This study employs financial data and is subject to the limitations of accounting...

A Data Envelopment Analysis for establishing the financial benchmark of Korean hotels

In the wake of catastrophic natural disasters and rising threats of terrorism, the hotel industry has seen a decline in revenue and an increase in competition. To avoid a downward spiral, the hotel industry needs to develop more competitive business strategies in order to make its operations lean and robust. These strategies may include: customer relationship management, yield management, niche marketing and continuous improvement of financial health. The success of these strategies hinges on the ability of hotel managers to assess the financial efficiency of their hotel in comparison to competition. In an effort to help hotel management enhance its financial efficiency in an increasingly competitive hotel industry, this paper proposes a Data Envelopment Analysis (DEA), which develops a meaningful set of benchmarks that will dictate best practices and form a successful hotel business model. Using the examples of 39 international and regional hotels in Korea, this paper illustrates the usefulness of DEA for the continuous improvement of hotel business practices.

Evaluating the comparative managerial efficiency of leading third party logistics providers in North America

Purpose – This paper aims to measure the comparative managerial efficiency of 24 leading third‐party logistics providers (3PLs) in North America and identify best‐practice firms among these 3PLs.Design/methodology/approach – This paper proposes data envelopment analysis to measure the slack‐based efficiency, pure technical efficiency, and mixed efficiency of 24 leading 3PLs in North America, relative to their rivals in world‐wide 3PL markets. In particular, this paper develops both the Charnes, Cooper and Rhodes (CCR) model under constant returns to scale and the Banker, Charnes, and Cooper (BCC) model under varying returns to scale that are designed to derive weights without being fixed in advance.Findings – With respect to managerial efficiency, this study did not find any significant performance differences between asset based 3PLs and non‐asset based 3PLs. Defying the common sense, relatively small but niche‐oriented 3PLs with limited service offerings tended to perform better than their larger counte...

A data envelopment analysis on assessing the competitiveness of Korean hotels

With the ever-rising cost of doing business and increased competition, many hotels have experienced financial difficulties resultant from a gradual decline in profit and market share. Since the financial health of the hotel affects its investment capability in constantly improving customer services, the service performance and the subsequent competitiveness of the hotel often reflect its financial efficiency. As such, there is a growing need to assess the financial efficiency of the hotel in comparison with its competitors. To meet such a need, this paper proposes a data envelopment analysis (DEA) that develops a meaningful set of benchmarks that will dictate best practices and form a successful hotel business model. Using the examples of 31 luxury and budget hotels in Korea, this paper illustrates the usefulness of DEA for the continuous improvement of hotel business practices.

The performance evaluation of existing suppliers using data envelopment analysis

For any supply chain management activity to operate effectively, there must be some method of monitoring supplier performance and the metrics in place to provide visibility of performance. Many different methods have been developed over the years to aid in this effort. In the literature, there are numerous examples for the application of various decision tools to aid in the selection of new suppliers or the evaluation of multiple suppliers of the same commodity. This study is an attempt to evaluate and score a focal companys existing suppliers of various commodities. The goal is to rate the suppliers comparatively using common measurable characteristics. An anonymous midsize manufacturing company in the aerospace industry has provided a full year of historical data on its 30 largest Tier 1 suppliers to aid this work. This study applies Data Envelopment Analysis (DEA) to the supplier data and results in the comparative rankings of supplier performance.