Efficiency measures of PCB manufacturing firms using relational two-stage data envelopment analysis

Taiwan is currently the fourth largest contributor to the printed circuit board (PCB) industry. In exploring the operation activities of PCB industry, most studies focuses primarily on manufacturing or production technologies. In this paper, we evaluate the performance of PCB manufacturing firms in Taiwan. Since the whole production process of the manufacturing firms can be divided into two sub-processes: production acquisition and profit earning, this study employs the relational two-stage DEA approach, which takes into account the series relationship of the two sub-processes within the whole process, to decompose and measure the efficiencies of the manufacturing firms. It is found that none of the manufacturing firms perform efficiently both in the stage of production acquisition and the stage of profit earning. In addition, the low efficiency score of the whole production process is mainly due to the low efficiency score of the profit generating process. To improve productivity and profitability, the manufacturing firms need to consider the issues of product improvements and technological innovation in the future.