Using data envelopment analysis to investigate the efficiency of resource utilisation and to develop an improvement plan

Companies use resources to perform business processes. Resource classification is necessary to obtain accurate analysis of resource performance. The resource transformation concept is the basis of this research. It states that resources constantly transform into other types of resources and the value is created during these transformations. In this paper, a hierarchical taxonomy of resources in an advisory organisation is considered. Each resource is treated as a decision making unit (DMU) with input and output factors. To evaluate the performance of the DMUs and compute their efficiency scores, it is necessary to perform weighting and aggregating processes. The assurance region method of data envelopment analysis (DEA) is applied to the data of resource transformation matrices in two levels of resource taxonomy to identify DMUs that are inefficient in utilising resources. Then, improvement plans are suggested to increase the efficiency scores of inefficient resources and compensate for weak resource transformations.