Product benchmarking in the air cargo industry: Non-parametric measurement of an aircraft value for money. Issue 4 (2nd May 2017)

• Record Type: Journal Article
• Authors: lo Storto, Corrado
• Is Part Of: Benchmarking. Volume 24:Issue 4(2017)
• Page Start: 857
• Page End: 881
• Publication Date: 2017-05-02
• Subjects: Benchmarking -- Value for money -- Data envelopment analysis -- Air cargo industry -- Decision-making framework -- Shannon's entropy; Benchmarking (Management) -- Periodicals; Total quality management -- Periodicals; 658.562
• DOI: 10.1108/BIJ-06-2016-0086
• Languages: English
• ISSNs: 1463-5771

Abstract

Abstract : Purpose: The purpose of this paper is to present an objective decision-making framework and conduct a benchmarking study in the air cargo industry. Design/methodology/approach: The decision-making framework and benchmarking methodology evaluates the aircraft value for money (VfM) as a benefit-to-cost ratio calculated adopting a measure of relative efficiency. This efficiency score is measured as a comprehensive efficiency index obtained by combining several efficiency scores calculated by implementing four data envelopment analysis (DEA) models. Findings: The framework is used to carry on a benchmarking study in the air cargo industry on a sample of 27 airplanes. The average VfM is 67.04 percent, with measurements between 39.96 and 116.03 percent. Only three airplanes achieve full VfM and behave as benchmarks to the remaining airplanes. Boeing B727-200 is a broad player in the market. Some old cargo models (DC 9-30F) deliver the same amount of VfM as more recent aircraft models (i.e. MD-11F and A300-600F). Research limitations/implications: The decision-making framework and benchmarking methodology can usefully support managers to make sound decisions and plans. Even though DEA generates attributes weights to different alternatives that are independent of the buyer preferences, the framework flexibility allows introducing a weighting scheme to take into account the managers preferences for certain aircraft performance/functional features. It can easily include new functional/performance measurements and adapt the VfM measurement to the particular economic context, strategy, and business model of the airlines, or be transferred to different industries. Originality/value: The framework combines technical, functional performance, and economic cost measurements to get a unique efficiency index to evaluate the airplane VfM.