Performance evaluation of introducing group technology into machining industry with data envelopment analysis

Abstract

Because of abundant manpower, easy acquisition of land resources, large markets, and rapidly development of demands, fluency, rapidness, and mass production were the keys in the layout pattern and process design of factories established by early China enterprises. Following the economic take-off, increasing civil consumption power, and rising labor awareness, enterprises faced the pressure of increasing costs. Moreover, the prevalence of economy of scale, the fierce homogeneous competition, and the mainstream awareness of personalized consumption habits further transformed goods into the production trend of small-volume production of a wide range of different items. With the similarity between production process and product design, manufacturing systems in group technology were divided into several manufacturing cells, and the machines producing the same product series were gathered to form a “cell”. Such a manufacturing process and layout pattern was called “cellular manufacturing”. The application of Envelope Method in this study expects to introduce the optimal model of group technology for the rest manufacturers improving the process efficiency.Based on 2013 Chinese Association of Machinery Industry manufacturer list and the manufacturers’ prospectuses and annual reports, this study combines Data Envelopment Analysis (DEA) and Slack Variable Analysis to measure the total efficiency (TE), pure technical efficiency (PTE), and scale efficiency (SE) of machining industry in China introducing group technology for the reference of manufacturers subsequently introducing group technology. The empirical result reveals that KEYARROW (China) Co., Ltd., as the most efficient sector, shows the overall production efficiency 1, while the rest companies reveal low overall production efficiency, especially Tai Shyang Co., Ltd. appears the lowest overall efficiency to be relatively the most inefficient sector. In other words, in addition to the DMU with the relative overall production efficiency 1, the rest 12 DMUs are relatively inefficient sectors.