Analyzing the Performance of Malaysian Logistics Companies using Principal Component Analysis (PCA) and Data Envelopment Analysis (DEA)

Abstract

Logistics operations play a crucial role in the overall business activities, especially in today’s global and interconnected marketplace. A well-implemented logistics operation leads to cost savings and enhanced market responsiveness, resulting in an overall business competitiveness in today’s challenging business environment. This study used Principal Component Analysis (PCA) and Data Envelopment Analysis (DEA) to analyze the performance of 14 well-known logistics companies in Malaysia from the year 2010 until 2020. The most crucial factor affecting logistics performance was identified using PCA to reduce data dimensionality. PCA results showed that current assets, net fixed assets, current liabilities, operating income, and revenue significantly affected the performance of logistics companies. Then, the efficiency frontier was evaluated using DEA, which considered current assets, net fixed assets and current liabilities as input while operating income and revenue as output variables. In the DEA process, Lingkaran Trans Kota Holdings Berhad is the only company that maintained a full efficiency score of 100 percent throughout the entire period, indicating the efficient utilization of its resources. On the other hand, MISC Berhad was the least efficient, with an average efficiency score of 32.17 percent. This study’s findings can be used to increase organizational competitiveness by optimizing performance and boosting efficiency.