This study adopts benchmarking technique and DEA approach to evaluate the operational efficiency of the major integrated steel firms in a worldwide spectrum. Besides, the Malmquist productivity index is used to analyze the productivity changes of firms in the steel industry worldwide.
From the analysis of DEA, the results suggest for each sample firm exactly which firm(s) should be the benchmark partner(s) and how much and which input slack should reduce to become more competitive. All the steel firms appear to attain a similar pattern in technology and efficiency improvement. However, from the comparison of long-term productivity indicators among cluster groupings, firms with higher technical efficiency and scale efficiency tend to maintain a more moderate and smooth progression in TFP than those inefficient ones. The major differences in efficiency among these firms are, in fact, caused by the inappropriate use of input resources. Once low efficiency firms can substantially increase their management capability in the use of resources, they will improve their technical efficiency in the same way as their benchmark partners.
On the other hand, it is strongly recommended that, for those firms that have better performance, internal benchmarking practice may be useful. The results of this study provide a starting point for managers in steel firms to correctly implement their benchmarking program. However, it should be noted that there are some other critical factors in management and operations which may influence a benchmarking project, including adequate planning, training, open interdepartmental communication, support and commitment by senior management, and a focus on customers and employees. This study contributes to provide the steel firms with a management direction as to how well a firm can enhance its productivity by improving its utilization of input factors in accordance with the DEA analysis.