Dynamic performance assessment of a supply chain process

Abstract

Purpose – A variety of tools are available to measure supply chain efficiency, but there are a few methods available for assessing efficiency in dynamic environments. The purpose of this paper is to illustrate the use of data envelopment analysis (DEA) with the help vector auto regression in measuring internal supply chain performance in dynamic environment. Design/methodology/approach – Two DEA models were developed – the static DEA that is traditional DEA methodology and the dynamic DEA. The models are further enhanced with scenario analysis to derive more meaningful business insights for managers in making benchmarking and resource planning decisions. Findings – The results demonstrate that lagged effects can lead to changes in efficiency scores, rankings, and efficiency classification. So, using static DEA models in dynamic environment can be potentially misleading. Using impulse response analysis it has been seen that shocks given to marketing strategy in MR affects more at each of the decision-making unit’s (DMU’s) compared to other variables, further the authors could also investigate the dependent variables (output) shocks to input variables. Social implications – Methodology can be applied to a wide range of evaluation problems in place of conventional DEA models. Results show that lagged effects can lead to substantial discrepancies in evaluation results. Biased evaluation results would easily lead to erroneous decision and policy making for the firm. Therefore the authors should always take a broader perspective in evaluating longitudinal performance by incorporating the effects into evaluation and decision-making processes. Future work of this study could look into the possibility of modeling in a stochastic supply chain environment. In addition, it will also be interesting to look into evaluating the stochastic DEA model in multiple time periods in order to examine whether there is any technological influence on the supply chain efficiency. Originality/value – The contribution of this study provides useful insights into the use of DDEA as a modeling tool to aid managerial decision making in assessing supply chain efficiency in dynamic environment.