Benchmarking distribution centres using Principal Component Analysis and Data Envelopment Analysis: A case study of Serbia

The efficiency of distribution systems is largely affected by the performances of distribution centres. The main objective of this paper is to develop and propose a DEA model for distribution centres efficiency measuring that can help managers in decision making and improving the efficiency. Due to numerous indicators that describe DCs operating, the main problem is indicators selection. In order to improve discriminatory power of classical DEA models PCA–DEA approach is used. This paper analysis the efficiency of distribution centres of one trading company in Serbia. Proposed models integrate operational, quality, energy, utilisation and equipment warehouse and transport indicators. Several hypotheses are tested in this paper. The results showed that small distribution centres are more efficient than large.

► PCA–DEA model for measuring efficiency of distribution centres is proposed.
► Proposed model increase discriminatory power of standard DEA models.
► Model integrates different warehouse and transport indicators.
► Model with emphasis on quality indicators showed better results.