The Application of Data Envelopment Analysis Methodology to Improve the Benchmarking Process in the EFQM Business Model

Abstract

This paper reports a survey and case study research outcomes on the application of Data Envelopment Analysis (DEA) to the ranking method of European Foundation for Quality Management (EFQM) Business Excellence Model in Iran's Automotive Industry and improving benchmarking process after assessment. Following the global trend, the Iranian industry leaders have introduced the EFQM practice to their supply chain in order to improve the supply base competitiveness during the last four years. A question which is raises is whether the EFQM model can be combined with a mathematical model such as DEA in order to generate a new ranking method and develop or facilitate the benchmarking process. The developed model of this paper is simple. However, it provides some new and interesting insights. The paper assesses the usefulness and capability of the DEA technique to recognize a new scoring system in order to compare the classical ranking method and the EFQM business model. We used this method to identify meaningful exemplar companies for each criterion of the EFQM model then we designed a road map based on realistic targets in the criterion which have currently been achieved by exemplar companies. The research indicates that the DEA approach is a reliable tool to analyze the latent knowledge of scores generated by conducting self- assessments. The Wilcoxon Rank Sum Test is used to compare two scores and the Test of Hypothesis reveals the meaningful relation between the EFQM and DEA new ranking methods. Finally, we drew a road map based on the benchmarking concept using the research results.