A framework for benchmarking service process using data envelopment analysis and decision tree

With the increase in the influence of service industry on the economy, more and more firms are becoming concern about service and service management. Unlike tangible products, since service is a delivery system, designing and controlling delivery process are important in management of services. One of the most important issues in managing service delivery process is how to find out and improve inefficient process in an organization. Once inefficient processes are found, it should be determined which process is to be improved first, since it is impossible for any firm to improve all of their inefficient processes simultaneously. Then, in order to get some ideas about improvement, selecting a benchmark process is required. The objective of this paper is to provide a systematic approach for benchmarking service process. We used the integrated form of data envelopment analysis (DEA) and decision tree (DT) as a benchmarking method instead of using DEA alone. Although DEA is a useful technique for benchmarking, it fails to give any clear directions as to which process should be improved first. The proposed approach enables firm's manager to find inefficient service units in a firm-level and inefficient processes in a service unit-level. The proposed approach also allows the manager to select which process to improve first and which process a benchmark for referencing. As a result, it can be helpful for operating and managing firms' processes. To show how useful the suggested service process benchmarking framework is, an illustrative example is addressed. (C) 2005 Elsevier Ltd. All rights reserved.