Efficiency of Courier Service Companies in Malaysia Using Data Envelopment Analysis (DEA) Models

Abstract

Many organisations in the service industry encounter the issue of unequal efficiency results. Many large corporations, such as banks, hotels and courier companies, are concerned about this issue. In particular, the last decade has seen ongoing changes in law, technology and competition in the global financial services business and Malaysian courier services are no exception. Therefore, it is essential to compare the performance of courier services offering their services in Malaysia to judge the stability of the courier service. An efficient courier service makes a significant contribution to improved economic growth in any nation. Thus, studies of courier service efficiency are critical for policymakers, industry leaders and many others who rely on the logistics sector. This paper examines the efficiency scores of six courier services in Malaysia. The Charnes, Cooper and Rhodes model (CCR) and Slack-Based Measure model (SBM) are applied in this study. There are three inputs and one output to measure the performance of the courier service. The total number of employees, the total number of courier branches and courier service volume as the inputs while the total revenue as the output. As the results show, two out of six courier services are efficient with an efficiency score equal to 1. Meanwhile, the remaining four courier services showed inefficiency score results. Suggestions and improvements to increase the efficiency of courier services in the future have been suggested. To address inefficient courier services, the SBM model gives guidelines for assessing efficiency for improvement for courier services to be more efficient.