Applying data envelopment analysis to operating performance in textile industry

Operating performance could affect the survival and future development of a business that both businesses andbusiness managers would devote to the enhancement of operating performance. Having developed for more thanfour decades, the consistent upstream, mid-stream and downstream system have been constructed in domestictextile industry. The output value of textiles in Taiwan has exceeded 480 billion NT dollars, which is not a sunsetindustry, as generally described. The impacts of high labour cost, environmental protection measures and changesof capital market as well as the competition of emerging countries, particularly Mainland China, have made textileindustry in Taiwan face great market competition and pressure. Since textiles are regarded as one of the majorproducts in Taiwan, the operating performance could affect the survival of the overall industry. In this case, operatingperformance survey of textile manufacturers in Taiwan during 2010–2012 is combined with Data EnvelopmentAnalysis and Slack Variable Analysis to measure the total efficiency, pure technical efficiency and scale efficiencyof top 12 textile manufacturers in Taiwan, tending to provide the reference of operating efficiency improvement forthe manufacturers.The empirical results show that the overall efficiency in the 3 years appears 0.89 averagely. The relative efficiency(1) between two manufacturers, Far Eastern New Century and Ruentex Industries, achieves the optimal operatingefficiency, whereas the remaining 10 are comparatively worse. Regarding the analysis of returns to scale, two textilemanufacturers present constant returns to scale, with the optimal operating efficiency, whereas the remaining 10show increasing returns to scale, revealing that expanding the scale could enhance the marginal return and furtherpromote the efficiency.