Comprehensive Estimation of the Economic Security of Logistics Industry Based on DEA Model

Transcription

1 Journal of Scientific & Industrial Research Vol. 74, July 2015, pp Comprehensive Estimation of the Economic Security of Logistics Industry Based on DEA Model Rong Hao 1, 2 *, Weida He 1 and Chuan Zhang 1 1 Donglinks School of Economics and Management, University of Science & Technology Beijing, 30 Xueyuan Road, Beijing, , China *2 China Nonferrous Metal Industry s Foreign Engineering and Construction Co., Ltd, NFC Building, 10 Anding Road, Beijing, , China Received 20 October 2014; revised 22 April 2015; accepted 5 June 2015 This paper presents the establishment process of the safety evaluation index system of logistics industry that bases on the construction principle of safety index system and combines with the current situation of the logistics industry in China. Meanwhile, this paper applies DEA model to estimate the safety degree of the logistics industry from the system input-output point of view, which purposes are, on one hand, to demonstrate the safety state of the logistics industry during current and future period of time, on the other hand, to provide a theoretical basis for the relevant decision making departments about the strategy of the healthy development of the logistics industry. Keywords: Logistics; Industry Security; Data Envelopment Analysis (DEA). Introduction With the rapid development of economic globalization in the 21st century, most domestic industries are facing the impact of the international markets. Industry security has become the common problems faced by most countries in the world. The study of national economic security started early in developed countries. American scholars began to study economic security in the late 1960s. Michael E. Porter discussed the industrial security from the perspective of industrial competitiveness 1. A. Illarionov studied the concept of economic security 2. J. Sperling and E. Kirchner argued that security has two mutual constitutive elements, the political-military and the economic. They studied the economic security and the problem of cooperation in post-cold War Europe 3. Chinese earliest research on industrial security started in the 1990s. Yang Gongpu and Yu Xindong defined the industrial security 4-5. Xia Xingguo & Wang Ying thought that industrial security was the ability of a country to contend against negative factors from domestic and overseas 6. Lei Jiasu studied the basic theory and method of industrial security 7. Industrial security issues became more important after China joined the World Trade Organization (WTO). Chinese scholars Author for correspondence haorongnfc@hotmail.com He Weida and He Chang estimated the safety degree of China s three main industries 8. In the meanwhile, He Weida and Song Shengzhou discussed the relationship between industrial security and government regulation under the condition of open markets 9. He Weida et al. and Jing Yuqin further studied the theory of industrial security Manufacturing security model and the industrial safety evaluation index system are China s most important two index system 12.Along with the development of information technology and networks, as a productive service industry, the modern logistics industry has a strong correlation with national economic growth. The researches of logistics industrial security are mainly focused on the following three aspects. First is the definition of logistics industry security. Li Menggang and Jiang Zhimin defined as the survival and development of logistics industry Yuan Pinghong defined it from the enterprise level 15. Second is the analysis on influence factors of logistics industry security. Li Menggang thought that the organization factors, the structure, the industry layout and the policy factors of the logistics industry were the main influence factors 13. Jing Linbo and Lv Ping argued that it should be measured from the industrial competitiveness, the controlling power of industries and the interests of the national industries 16. However, Yuan Pinghong analyzed the issue from

2 382 J SCI IND RES VOL 74 JULY 2015 the logistics market demand, foreign investment and international competitiveness 15. Cai Jin and Zhang Xiaoying studied the harm early-warning mechanism of logistics industry which influences the logistics industrial security Thirdly, Li Menggang and Jiang Zhimin studied the construction of logistics industrial index system This study, by combining with the present safety situation of the logistics industry in China, establishes the safety evaluation index system of logistics industry and takes the use of DEA model to estimate the degree of economic security of the logistics industry in the past 10 years in China. Establishment of the Safety Evaluation Index System Criteria for the Establishment The premise for the construction of safety evaluation system of logistics industry is to determine a set of principles which are correct, accurate, comprehensive, and can guide the rationalization of the index system. Taking Industrial Safety Evaluation System proposed by H. Weida as a reference and combining with the actual situation of the logistics industry attached to the tertiary industry 12, this study enters into the following set of principles of the index system: Systematic Principle The logistics industry is a complex industry which associate with large number of upstream and downstream enterprises and have numerous and different factors that affecting its industrial security, therefore the index system of safety evaluation called for the establishment must be systematic, completely analyze the safety of the entire logistics industry, and ultimately give the results of a comprehensive and systematic evaluation. Integrity Principle The index system of safety evaluation must examine all of the objects played the major roles in the evaluation process, so that to ensure the evaluation results can be essential to reflect the characteristics of the system. Due to the fact that the logistics industry is an associated high degree industrial system, including a number of sub-sectors and complicated influencing factors, when building evaluation index system, we should analyze and define the indicators function and screen the appropriate indicators to ensure that judgment of the logistics industry safety is scientific and the indicators are most representative in the different directions. Quantifiable Principle Because many indicators of the reaction of industrial safety do not have numerical characteristics, such as policy environment class indicators, the evaluation of industrial safety as an empirical study requires a set of conversion means to quantify statistics or evaluation data of the target areas, and when assessment indicators are selected, quantitative indicators can be found in the statistics published by the authoritative department should be taken as assessment tools. Timeliness Principle The logistics industry is a rapid developing industry, compared with size and structure of the logistics industry a decade ago, there are many differences in almost all respects, and because of the continuous progress of the national information technology, this gap can be expected to continue the expansion, which requires taking full account of the timeliness to choose the latest and most complete data indicators as an analytical tool when index system of the security situation of China's logistics industry is established. Moderate Speculation and Measure Principle The logistics industry belongs to the tertiary industry and is very close to the other industries, which results in the selection of statistical indicators in many ways will encounter data boundary which is not clear so that cannot calculate the highly accurate statistics. For this reason, the accuracy of evaluation should be taken fully into account in the establishment of index system and the statistics under the premise that meet the scientific and other evaluation principles are allowed for a modest estimation and projections. Otherwise, the high accuracy requirements will make the index system can not find enough indicators for comprehensive assessment. Convertible Principle Because of the statistical work and its own reasons, during the safety assessment of the logistics industry, some needed assessment indicators are likely not to be directly obtained, which requires necessary replacement and conversion to attain the required indicators indirectly through the calculation and assignment methods.

3 HAO et al: COMPREHENSIVE ESTIMATION OF ECONOMIC SECURITY 383 Applicable Principle The ultimate goal for Industrial safety evaluation is to understand and guide the future development direction of the logistics industry through the analysis of industry status, therefore, the selected evaluation index should be controlled through artificial means such as government or corporate, and for some of the indicators depending on the natural environment decision must be discarded, or the assessment results only reflect the reality, but does not have a practical application value. In the safety evaluation index system of the whole process, a set of results of the assessment must be taken to ensure controlled and applicable eventually. Establishment Process Through the analysis of the impact factors of the logistics industry, as well as the setting principles of industrial safety evaluation indicator system, this study establishes the safety evaluation index system of the logistics industry shown in table 1. Construct the Safety Assessment Model Basic Concept of the Model There are fewer researches on the safety assessment of the logistics industry, the previous research methods in the related field are fuzzy comprehensive evaluation method, the analytic hierarchy process, BP neural network evaluation methods and so on. Both of fuzzy comprehensive evaluation method and the analytic hierarchy process method have strong subjectivity to determine the weight; the main difficulty of BP neural network evaluation method applied lies: First, it is difficult to obtain a large number of sample values; second, the samples degree of industry safety is difficult to determine. From the system point of view, the logistics industry can be regarded as a complex system of multi-input and multi-output, and achieves the purpose of industrial safety by constantly exchanging energy with the outside world. For the safety evaluation of complex industrial systems, data envelopment analysis (DEA) can be regarded as a kind of good evaluation First grade assessment indicator Industry development environment Industrial competitiveness Industrial control power Table 1 Logistics Industry Safety Evaluation System and Description Second grade assessment indicator Calculation method or description Evaluation purposes (Reflect) Capital cost One year period loan interest rates in the bank Cost of capital raising and use Total social annual logistics Derived from statistics published annually by the volume China Logistics and Purchasing Federation Logistics industry overall scale Growth rate of industry demand =Current total social logistics amount/last year total social logistics amount-1 Changing needs of logistics industry Growth rate of fixed assets investment =Current fixed assets investment amount/ Last year fixed assets investment amount-1 Logistics industry fixed assets investment College diploma or above =Number of college educated employees/ major in proportion of Total employment employees Logistics industry labor quality Personnel per capita income =Industry total labor costs/total employment Logistics industry labor costs China's competitiveness rankings Growth rate of total social logistics turnover Domestic market in the world market share Growth rate of equipment upgrade investment Per capita output Industrial concentration Foreign equity control Foreign brand control According to statistics published annually by the China Logistics and Purchasing Federation =Current total social logistics turnover amount/ Last year total social logistics turnover amount-1 =Total domestic logistics/total world Logistics =Current equipment upgrade investment/ Last year equipment upgrade investment-1 =Logistics industry output/logistics industry total labor force =Domestic ranked in the top 50 enterprise total turnover /Whole society total logistics turnover =Enterprises quantity of foreign holding 50% or more/total number of enterprises engaged in the logistics industry in China =Foreign brand quantity of domestic logistics turnover in the top 50 /50 Macro development environment Industry development speed Domestic market in the world market share Commitment of the logistics industry on technology upgrades Labor productivity Degree of logistics industry scale Domestic logistics enterprises by foreign controlled situation Domestic logistics market situation of occupation by foreign brands

4 384 J SCI IND RES VOL 74 JULY 2015 method. The famous American operations experts A. Charnes and W.W. Cooper developed DEA system analysis method on the basis of relative efficiency evaluation 19. DEA method based on input-output of the industry system evaluates relative efficiency of every unit and department, at the same time pays attention to optimize every decision unit. As a result, the relative efficiency is the maximum and the weight is also the best. Liu Yongchun and Yuan Mao used DEA method analyze China s industrial efficiency 20. The evaluation depends on just input and output data, so as to effectively solve the problems of evaluation of subjectivity and the difficulty to measure the safety degree. Therefore, this study uses data envelopment analysis (DEA) to establish the model for the safety estimation of the logistics industry. Index Setting The main purpose of the model is to observe the influence of the constantly changing industry security situation on the level of development of logistics industry during the period of Industrial safety referred in the research mainly depends on whether the pace of development of the logistics industry in the security situation of the ever-changing industry is affected or not.evaluation of development level of the logistics industry is including both volume and efficiency, therefore, the output indicators are selected as total social logistics volume (LS) and per capita GDP (P_GDP).The input indicators should be selected from the remaining factors in the security impact factors of the input indicators from the logistics industry. They are cost of capital (Ccost), growth rate of industrial demand (IDR), growth rate of fixed asset investment (FAIR), quality of labor (L), labor costs (Lcost,), growth rate of equipment upgrades investment (EUIR), industry concentration degree (IC), foreign equity control rate (FEC), foreign brands control rate (FBC), on which Eviews software carry out the correlation test, the results showed in table 2. According to the correlation testing and screening the indicators, the foreign brand control rate (FBC) does not passes the test, as its influence can be reflected by the foreign equity control rate (FEC), so it is removed. The growth rate of industry demand (IDR) and labor costs (Lcost) have high correlation with other indicators and its influence can be realized through other indicators, so they are also removed.the final input indexes are the cost of capital (Ccost), growth rate of fixed assets investment (FAIR), the quality of labor (L), growth rate of equipment upgrades investment (EUIR), industrial concentration degree (IC) and foreign equity control rate (FEC). Based on the test results, the correlation test has been passed. Construct the DEA Model In this study, decision-making unit is set to be the assessed year, which is the ten years and divided into 10 decision making units. Then by VRS model assessing each decision unit, an annual overall efficiency of the computing model is obtained, the model is as follows: s.t. =max 2 r=1u r Y r0 / 6 i=1v i X i0 2 r=1u r Y rj / 6 i=1v i X ij 1 j=1, 2,,10 V=(V 1,V 2,, V 6 ) T 0; U=(U 1, U 2 ) T 0 Note: X ij is the j-th year and the i-th input index value; Y rj is the j-th year and the r-th output index value; V i is the weight of the type i input; U r is the weight of the type r output. It is inconvenient to deal with the formula above for fractional programming model, thus above-mentioned Table 2 Result of Input Index Correlation Inspection EUIR LCOST L IC FEC FBC FAIR IDR CCOST EUIR LCOST L IC FEC FBC FAIR IDR CCOST

5 HAO et al: COMPREHENSIVE ESTIMATION OF ECONOMIC SECURITY 385 model is transformed by Charnes-Cooper and the model of its dual planning results is as follows: s.t. =min ; 10 j=1 j x j +s - = x 0 ; 10 j=1 j y j - s + =y 0, j 0, j=1, 2,, 10 s - 0, s + 0 The overall efficiency of each decision-making unit can be evaluated by above transformed model. The evaluation indicator of the logistics industry safety on the DEA model is each decision unit, which economic implications is actual operation speed of industrial development in the changing industrial safety situation of the logistics industry. In the changing industrial security situation, the fast speed of industry development shows high industry safety degree; instead, in the changing industrial security situation, if industry development speed abates, industry safety degree is regard to be low. θ=1 represents the industry development is in a safe state; θ=0 means industry development is in crisis state; when θ is more close to 1, safety status of logistics industry is better; when θ is more away from 1, safety status of logistics industry is more poorer. Comprehensive Estimation of Safety Degree of Logistics Industry Data Preparation The data of China's logistics industry collected from are screened in accordance with the guidelines. Model Solution In this study, basic data operated according to the transformed model and processed by the DEA pxp software is shown in table 3. Result Analysis Due to the use of VRS model and the operation result of Vrste column, the technical efficiency of decision unit reflected in the form is valuation values of logistics industry safety from 2001 to 2010 year. Safety degree results obtained in this study is consistent with the model of fuzzy comprehensive evaluation method, therefore the use of the DEA method to estimate the logistics industry safety is feasible.it can be seen from the result that safety degree is equal to 1, so China's logistics industry is in a safe state during the periods of and But the safety Table 3 DEA model operation results Year Crste1 Vrste2 Scale Note: 1) Crste refers to DEA model technology efficiency value of constant returns to scale; 2) Vrste refers to DEA model technology efficiency value of variable return to scale; 3) Scale refers to returns to scale. value is less than 1 from 2005 to 2008, especially it is less than 0.9 in the year of 2005 and 2007, and it is only in 2005, which means China's logistics industry is in an unsafe state. The main reason for this state is that as the full opening of China's logistics industry as a symbol, even more powerful foreign logistics enterprises rely on the abundant capital to accelerate network expansion in a sole proprietorship, mergers and acquisitions, joining to form a super competitive network rapidly across the country, which making the logistics industry in China be impacted. In 2008, China's official launched damage-warning mechanism for the logistics industry, which can prevent the foreign-funded enterprises to control the critical logistics channels and networks resources so as to form the monopoly and unfair competition situation and grab the high monopoly profits on the domestic logistics market. Besides, China's logistics industry is seeking to develop and innovation, so after the adjustment China s logistics industry is in a safe state in the period of Conclusions It can be seen from the security status of the logistics industry in the last decade that China's logistics industry experienced slight fluctuations during , but the whole China's logistics industry are in a stable state with the industry security situation continuously changing. The logistics industry security issues will not only

6 386 J SCI IND RES VOL 74 JULY 2015 help to improve safety degree of China's modern logistics industry, but also promote the healthy development of national economy and national economic security for further improving. Therefore, China must be prepared for danger in terms of peace and pay full attention to the impact of foreign logistics industry to China's logistics industry, expand the scale of the logistics industry to improve the logistics industry concentration, at the same time absorb professional and technical personnel to improve the quality of the labor force, and promote the establishment of modern logistics service system and improve the efficiency in order to entirely improve China s logistics industry's international competitiveness. Acknowledgements The authors are grateful to two anonymous reviewers for their constructive comments and suggestions. The authors also would like to thank the financial support provided by the National Social Science Foundation of China under Grant No. 14ZDA088, the Social Science Foundation of Beijing under Grant No. 14JGA014 and the Fundamental Research Funds for the Central Universities under Grant No Authors are solely responsible for all remaining errors. References 1 Michael E P, The competitive advantage of nations, The Free Press, Illarionov, The criteria of economic security, Problems of Econ Transition, 12 (1999) Sperling J & Kirchner E, Economic security and the problem of cooperation in post-cold war Europe, RIS, 24 (1998) Yang Gongpu, Wang Yu, Zhu Zhou, Wang Qiang & Li Taiyong, Research on China s automobile industrial security, J Finance and Econ, 1 (2000) Yu Xindong, The research on industrial protection and industrial security after China accession to the WTO, J Study & Exploration, 2 (2000) Xingguo X & Ying W, The influences that international investment liberalization made to China s industrial security, J Zhongnan University of Econ, 2 (2001) Jiasu L, The theory and method of national economic security, Beijing: Economic Science Press, Weida H & Chang H, Rudimentary Assessment of Main Three Industries Safety Nowadays in China, J China Indus Econ, 2 (2002) Weida H & Shengzhou S, The industry security and government regulation under the condition of open market, Nanchang: Jiangxi People Press, Weida H, Pan Yuzhang & Li Dongmei, Evaluation and Prospect of the Theory of Industry Safety, J Sci Technol Progress and Policy, 4 (2007) Yuqin J, The analysis of industrial safety concept, Contemp Econ Res, 3 (2004) Weida H, China s several important industry safety evaluation and estimation, Beijing: Intellectual Property Publishing House, Menggang L, Research on problems of China s logistics industry security, J China Business and Market, 12 (2007) Zhimin J, Wang Xifu & Li Menggang, Study on Evaluation of Logistics Industry Security, J Logistics Techn, 10 (2008) Pinghong Y, Formation mechanism of logistics industry security in China under open conditions, J Logistics Manage, 6 (2009) Linbo J & Ping L, Focusing on China s logistics industry, J China Storage & Transport, 2 (2008) Jin C, Establishing early-warning situation of industry injury and maintain security of the logistics industry, J China Logistics & Purchasing, 15 (2008) Xiaoying Z, The analysis of China s opening to the world in the field of logistics and industry security, J Prac in Foreign Econ Relations and Trade, 1 (2009) Charnes, Cooper W & Rhodes E, Measuring the efficiency of decision making units, Eur J Operat Res, 6 (1978) Liu Yongchun & Yuan Mao, Research of China's industrial efficiency based on DEA method, J Prod Res, 18 (2007)