The search for appropriate benchmarking partners: A macro approach and application to corporate travel management

Benchmarking is an increasingly popular approach in the quest for increased performance, both by manufacturing and service firms. At issue is who is best and what do they do. However the identification of leadership companies is more art than science. Secondly, most benchmarking efforts have had a micro orientation, ignoring for the larger part differences in operating environments, service levels, and relying on simple engineering ratios. Such ratios are not appropriate when there are multiple outputs being produced with multiple types of resources, with no clear product/resource allocations. Our suggested analytical approach utilizes Allocative Data Envelopment Analysis, an important extension of DEA, to identify benchmarking partners for which on-site visits would be the most relevant and beneficial. Our macro approach yields as useful byproducts individual resource consumption targets and the minimum total cost needed to meet a given vector of outputs, in a prespecified environment. The approach is illustrated on a data set of corporate travel departments.