Measuring supply chain efficiency using two-stage focused DEA technique in Iran's automobile industry

Academic thesis for obtaining a master's degree

Field: Business Management   But not knowing the strengths and weaknesses of the supply chain prevents its improvement. Evaluating supply chain performance provides managers with an opportunity to identify chain problems and issues and resolve them by making appropriate decisions. This is more important in large and key industries such as the automobile industry, which play a significant role in the country's economic development. Every automobile company buys the parts it needs from the manufacturers of these parts and thus forms supply chains with network properties. Therefore, it is felt necessary to conduct research from the efficiency aspect in order to improve the performance of these chains. In the present research, the network DEA approach has been used to measure the efficiency of the two-stage supply chain in Saipa Group's automotive industry. Also, to discuss the importance of network models, the efficiency of the entire chain was calculated using the traditional DEA method and the efficiency obtained from the two models was compared. The results indicate that in the traditional and network model, out of the total of 28 supply chains under investigation, 3 and 7 chains work efficiently, respectively. The maximum efficiency in both models is 100% and the minimum efficiency is 63% and 67%, respectively. Also, the cross-efficiency method has been used to rank the efficient units, based on which the 26th and 12th most efficient units were identified in the network and traditional models, respectively. For further development and in order to analyze the quality of performance, sensitivity analysis of inputs has also been done for the network model.

Keywords: efficiency, supply chain, automotive industry, two-stage DEA, sensitivity analysis

Introduction

During recent years, management and, as a result, the measurement of supply chain performance, has attracted the attention of a large number of managers and researchers in the field of production and operations management. (Asgharizadeh et al., 1389) Parallel to the evolutionary process of organizations from a single approach to a network and supply chain approach, performance measurement systems have also undergone transformation and have taken steps towards network and supply chain performance measurement. (Morgan, 2007) This attitude has its roots in systems thinking in which the optimality of any production system does not depend only on the optimal functioning of a subsystem and all subsystems must be designed in order to achieve goals. Try hard. (Asgharizadeh et al., 1389)

Supply chain management is one of the components of competitive strategies for organizational productivity and profitability. Managers in many industries, especially those in the manufacturing sector, are trying to better manage the supply chain and evaluate its performance. Gunasekaran et al., 2004) (A.

The role of the automobile industry as the driving force of industries with a medium level of technology in society is undeniable. (Salehi et al., 1388) Every automobile company buys the parts it needs for the production and assembly of cars from the major manufacturers of these parts. (Spearman, 2004) (Hopp & So it is important to evaluate and track the performance of its supply chain because several organizations are involved in this chain. (Talibzadeh, 2007)

Many critical and complex obstacles may divert the current performance measurement systems from providing significant help to the improvement and expansion of the supply chain. Due to this inherent complexity, it is necessary to choose a suitable criterion for the evaluation of the supply chain. (Burges et al., 2006) The performance of the supply chain should be presented.

In this chapter, in addition to presenting the problem statement, the issues related to the necessity of conducting research, the theoretical framework of the research (model and definition of variables), research objectives, research questions, research methods, the method of gathering and analyzing information, the scope of the research and its limitations are also described. To maintain competitive advantage and improve organizational performance, the supply chain is efficient. In this way, the competition is no longer between organizations, but between supply chains, and it is shown that the more effective operation of the supply chain leads to the improvement of the organization's efficiency., 2004)

Therefore, supply chain management (SCM) [1] is considered a strategic factor to better achieve organizational goals such as increasing effectiveness, improving customer service and increasing profitability. But to get a better SCM, it is important to develop a performance evaluation system that correctly reflects the actual performance of the supply chain. (G.Azevedo et al., 2011)

Supply chain management, like any management system and approach, needs a performance measurement system to identify success, determine the extent to which customers' needs are met, help the organization understand processes, discover knowledge that these organizations were not aware of before, and ultimately improve planning. (Morgan, 2007)

With the complexity of competition in today's market, supply chain management and as a result the performance evaluation of supply chain processes has become an influential issue. This has a more effective and deeper role in large companies and industrial groups, especially in the automotive industry. (Sabghari and Porasfendiani, 2014)

The growth of the automobile industry and the increase in the number of parts manufacturers in the country's automobile supply chain increase day by day the importance of resource planning in this chain. Currently, the supply chain of each Iranian car includes a significant number of component manufacturing units throughout the country. The need for self-sufficiency in the automobile industry, increasing the number of manufacturers and optimizing the supply of primary parts from suppliers for each production unit increases the importance of paying attention to these chains, and also the benefits resulting from the efficiency or costs resulting from the inefficiency of these chains play a more important role in the total costs and benefits of the manufacturers. A comprehensive and documented performance evaluation system should be considered as one of the main needs of large organizations such as the automotive industry. (Aghari and Pourasfandiani, 2014)

Efficiency measurement has always been of interest to evaluate the performance of organizations. (Mehrgan, 2017, 63) Among many evaluation methods, data envelopment analysis (DEA) [2] is widely used to evaluate the relative performance of a set of production processes that are called decision making units (DMUs) [3], because DEA models, considering multiple inputs and outputs, do not need to refer to the exact production function. (Mehrgan, 2017, 31)

The initial DEA model was developed by Charnes, Cooper and Rhodes in 1978, they added the use of mathematical programming to the non-parametric view of "Farrell" that was proposed in 1957 to evaluate the efficiency of decision-making units with two inputs and one output, which became known as the CCR model, which has the ability to measure efficiency with multiple inputs and outputs. (Safari and Azar, 2013) and in 1984, Banker, Charnes and Cooper proposed a new model called BCC with variable returns to scale. Classical DEA models cannot explicitly address intermediate products (Tone&Tsutsui, 2009), but consider each DMU as a "black box" considering only the consumption of primary inputs and the production of final outputs. (Chen&Yan, 2011) Traditional DEA models, where a two-stage process is presented, can only measure the efficiency of a particular stage. (Chen & Zhu, 2004)

So this research uses a DEA network model, as a two-stage supplier-manufacturer chain, to evaluate the efficiency of the supply chain in the Iranian automobile industry. It is worth noting that supply chains can be controlled under two centralized and decentralized mechanisms. In a centralized control mechanism, the supply chain is overseen by a decision maker who adjusts supplier and manufacturer activities to maximize the efficiency of the entire chain. In decentralized control, there is no such supreme decision maker to control all departments, and each department has its own strategy. (Chen & Yan, 2011) In this research, a centralized control mechanism is adopted to deal with the internal interactions of the supply chain.