ASSESSING THE MARKETING EFFICIENCY OF SAMBALPURI BASTRALAYA

HANDLOOM COOPERATIVESOCIETY: A DEA APPROACH

ABSTRACT

The handloom industry of India is one of the important manufacturing institutions of the world.

There has been growth and innovation both with in and outside the co-operative sector that gives

us clues regarding the potential of handloom industry in 21st century. It occupies a significant

position in our rural economy in terms of potential for employment and income generation.

Orissa is famous for his exquisite handloom products. The handloom sector plays a vital role in

the state economy. Sambalpuri Bastralaya Handloom Co-operative Society has the distinction of

being one of the largest handloom co-operative societies in the state as well as in the country.

The paper deals with study of marketing channels of Sambalpuri handlooms and compares the

performance of some selected sales branch of Sambalpuri Bastralaya Handloom Cooperative

society Ltd, Bargarh. The motivation of the study originated from the loss suffered by the

society. Some inputs and outputs of the sales branch are identified to apply the Data

Envelopment Analysis (DEA) in order to measure the relative efficiency and reference units. The

analysis has found that only sales cannot increase the efficiency of a sales branch.

Key Words: Efficiency, Data Envelopment Analysis, Marketing Channel

Introduction:

Sambalpuri Handloom Industry of India has a legacy of unrivalled craftsmanship. It occupies

an important place in the rural economy of Orissa. The industry engages largest number of

workers, next only to agriculture. The nature of the fabric is durable, strong, absorbent,

washable and that held color permanently. Thousands of peoples are engaged in various

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activities like ginning, spinning, dyeing, bleaching, weaving and finally trading of the cloth..

Sambalpuri sari with motifs, tie and dye are reflected superb craftsmanship. Some of the

typical varieties of Sambalpuri handloom saris from Orissa that have own acclaim in the

world are Bomkai, Khandua, Bichitrapuri, Saktapar, Posapalli, Tarabali, Rupashree etc..in

cotton silk, Bapta, patta and tassur. It is fabricated using tie and dye method known as

IKAT. The craftsman conceptualizes the design, draws it and according to the design color is

added. To protect and promote the interest of weavers, Sambalpuri Bastralaya Handloom

Cooperative Society (SBHLCS) Ltd., Bargarh, Orissa was set up on 22.06.1954 by

Padmashree Krutartha Acharya.

Significance of the Study:

The authors have developed their interest in handloom industry because its problems are

talked regularly over daily newspapers, magazines and in other modes. A starting point of our

analysis was to understand the problem. The gathered data are presented through Table-1 to

Table-4 for the year 1999 to 2004.The data reveals that SBHLCS is suffering loss as well as

saris worth millions of rupees laying in sales branch without being sold. This means not only

loss of skill but also livelihood for thousands of weavers for whom weaving is a way of life.

Stocks are pending due to the marketing inefficiency of sales branch. The demand of saris is

still exist which is evident from the revisiting of the number of customer to sales branch.

Marketing Channels of Handlooms:

We observed that marketing of Sambalpuri handlooms are done through the following four

channels.

Marketing Model

i.
Weaver Consumer

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 ii
Weaver Master Weaver Consumer

iii
Weaver Stockiest Consumer

iv
Weaver Weaver Co.Op. SBHLCS S.Br. Consumer

In the first model the independent weaver may gain profit but the customer may not get

proper satisfaction due to lack of variety, design and color etc. In the second model the

weavers are neglected. Their labor is not taken into account. The master weaver becomes the

center of profit. In the third model the weavers are also neglected because they sells their

products to the stockiest, then it reaches to the customers. In the fourth model the product

passes through the sales branch of Sambalupri Bastralaya to the customer. Here the

customers as well as the weavers are benefited.

Objective of the Study:

• To measure the relative efficiency of sales branch of SBHLCS, Ltd., Bargarh.

• To know the reference units of inefficient units to become efficient.

To meet the desired objectives we have followed the data envelopment analysis which is

described below.

Data source and Methodology:

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The data collection was done mainly through questionnaires, interviewing weavers, stockiest,

employees of SBHLCS,Ltd., attending the public meetings, study of press reports, study of

websites and various other sources. Data Envelopment Analysis technique is used to assess the

efficiency of SBHLCS,Ltd..

Data Envelopment Analysis:

Farrell (1957) attempt to measure the efficiency of production in the single input and single

output case. Farrell’s study involved the measurement of price and technical efficiency of

U.S agricultural output relative to other countries. But he failed in providing a way to

summarize all the various inputs and outputs into a single virtual output. Charnes, Cooper,

and Rhodes (1978) extended Farrell’s idea and proposed a model that generalizes the single

input, single output measure of efficiency of a decision making unit (DMU) to a multiples

input multiples output setting. A DMU is an entity that uses inputs to produce outputs. This

approach to performance measurement is called Data Envelopment Analysis (DEA). The

DEA technique involves the use of linear programming (LP) to solve a set of interrelated

problems to determine the relative efficiency of DMUs. The cooperative society’s sales

branch constitutes a DMU as we consider the performance of various sales branches. The

efficiency of a DMU is computed as follows

Efficiency = weighted sum of outputs / weighted sum of inputs

DEA is an approach comparing the efficiency of organizational units such as schools,

hospitals, shops, sales branch and similar instances where there is a relatively homogeneous

set of units. It focuses on individual observations as represented by optimization of each

observation in contrast to the focus on the averages and estimation (regression) of parameters

that are associated single optimization statistical approaches. The analysis will ensure outputs

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achieved from the inputs provided and will compare the group of DMUs by their strength in

turning input into output. At the end of the analysis the DEA will be able to say which units

are (relatively) efficient and which are (relatively) inefficient. The term ‘relative’ is important

here which a DMU identified by DEA, as an efficient unit in a given data set may be deemed

inefficient when compared using another set of data. The relatively “most efficient” units

become the efficient frontier and the relative efficiency of other units is compared with the

efficient frontier. An advantage of DEA is that it uses actual sample data to derive the

efficient frontier that each unit in the sample is evaluated without prior information on the

most important inputs and outputs in the evaluation.

Sales branches of SBHLCS Ltd. are considered here as DMUs. One of the goal of the

management is to ensure that each of the branch achieve the best possible performance, the

problem, there fore is deciding what this means and how best to go about measuring it. The

inputs of sales branches of SBHLCS can be inventory of saris, number of employees, floor

space, wages of staff and overhead costs. Managers can develop the performance of a sales

unit such as business per employee or profit per unit of office space utilized. All these

attempts to measure performance may not produce a clear picture as branches may exhibit

considerable variation depending on the performance indication chosen. In most cases

attempts are made to find a comprehensive performance measures by giving a priori weight

to a variety of performance ratios. This is where DEA helps as it provides more

comprehensive measure of efficiency by taking into account all-important factors.

In the present study following three inputs and two outputs are considered.

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Inputs

• Inventory of Sambalpuri Saris

• Number of employees
• Wages of employees

Outputs

• Yearly sales
• Customer’s satisfaction.

The customer satisfaction is calculated as number of customer visiting to the particular sales

branch twice or more than twice.

Mathematical Model

The basic DEA model for “n” DMUs with “m” inputs and “s” outputs proposed by Charnes
et.al. (1978), the relative efficiency score of pth DMUs is given by
s

∑v k ykp
Max zp = k=
m
1

∑u
j=1
j x jp

s
(1)
∑v k yki
s.t k=
m
1
≤1∀i
∑u
j=1
j x ji

vk , u j ≥0∀k, j

Where, k=1 to s (no. of outputs}

j= 1 to m (no. of inputs)
i= 1 to n ( no.of DMUs)
yki= amount of output k produced by DMU i
xji = amount of input j utilized by DMU i
v k = weight given to output k

u j = weight given to input j

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The fractional program (1) can be solved as the linear programming problem
s
Max z p = ∑vk ykp
k =1
m
s.t ∑u j x jp = 1
j =1 (2)
s m

∑vk yki − ∑u j x ji ≤ 0
k =1 j =1
∀i

vk , u j ≥ 0 ∀ k, j
The above LPP is run n times for each year over the data (Table-1 to Table-3) to get the
relative efficiency of all the DMUs. The reference units and relative efficiency has been shown in
Table-4 and Table-5.

Table 1
1999 2000
DMU Inventor No. of Wages Sales No. of Inventor No. of Wages Sales No. of
y on any emplo- per in satisfied y on any emplo- per in satisfied
month in yees year in customers month in yees year in lakhs customers
lakhs
lakhs in year in lakhs in year in
lakhs lakhs
hundreds hundreds
1 8.00 6 2.30 67.7 67.2 8.80 6 2.41 85.4 85.3
1 3
2 1.00 5 1.89 10.6 13.25 1.80 5 2.1 10.3 12.92
4
3 0.45 4 1.9 1.47 2.10 0.45 3 1.3 3 5.00
4 3.00 4 1.9 44.5 55.63 3.50 4 2 79 59.25
1
5 1.55 4 2 27.4 21.96 1.60 3 1.4 52.3 65.48
6 9
6 1.60 5 1.88 27.9 24.86 1.70 5 2.41 35.8 35.82
7 2
7 9.45 6 2.29 57.9 57.92 9.50 4 2.1 68.8 55.04
2 1
8 0.60 4 1.4 15.0 15.01 0.65 4 1.45 20.9 26.17
1 4
9 0.42 4 1.4 4.32 4.93 0.52 4 1.5 3.45 3.83
10 0.80 4 1.4 3.76 5.01 0.82 4 1.5 5.14 6.42

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Table 2
2001 2002
DMU Inventor No. of Wages Sales No. of Inventor No. of Wages Sales in No. of
y on any emplo- per in satisfied y on any emplo- per lakhs satisfied
month in yees year in customers month in yees year in customers
lakhs
lakhs in year in lakhs in year in
lakhs lakhs
hundreds hundreds
1 9.50 5 2.1 68.81 75.40 9.80 6 2.65 89.82 112.27
2 2.00 4 1.45 20.94 12.28 2.40 5 2.31 16.21 16.24
3 0.46 4 1.5 3.45 2.00 0.45 4 1.68 1.74 2.90
4 4.00 4 1.5 5.14 70.82 4.28 4 1.65 87.74 109.67
5 1.80 6 2.52 93.81 66.80 1.80 4 2.25 58.36 58.36
6 1.95 5 2.21 9.83 50.74 1.95 5 2.31 35.4 44.25
7 9.80 3 1.4 1.33 69.65 9.80 4 1.64 108.0 129.63
3
8 0.65 4 2.12 88.53 17.58 0.70 4 1.60 18.10 27.15
9 0.62 3 1.51 53.44 3.40 0.50 4 1.72 2.62 1.96
10 0.83 6 2.52 38.06 6.67 0.83 3 1.60 5.50 4.12

Table 3
2003 2004
DMU Inventor No. of Wages Sales in No. of Inventor No. of Wages Sales No. of
y on any emplo- per lakhs satisfied y on any emplo- per in satisfied
month in yees year customers month in yees year lakhs customers
in in year in in in year in
lakhs lakhs
lakhs hundreds lakhs hundreds
1 10.50 6 2.74 61.30 36.78 12.00 6 2.84 19.11 25.48
2 2.50 5 2.40 13.60 15.54 3.00 5 2.48 5.61 11.22
3 0.44 3 1.44 0.53 1.06 0.45 3 1.50 0.55 1.23
4 5.00 4 1.72 71.86 47.90 5.28 4 1.80 29.7 34.00
7
5 1.85 4 2.34 41.87 41.87 1.00 4 1.83 16.2 20.30
4
6 2.00 5 2.39 28.89 28.89 1.30 5 2.4 11.03 16.54
7 9.25 5 1.71 102.0 81.65 11.20 5 2.46 32.0 45.75
7 3
8 0.73 4 1.70 14.14 17.67 0.73 4 1.8 5.96 7.15

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 9 0.42 4 1.82 1.46 2.19 0.52 4 1.86 1.48 1.70
10 0.73 3 1.70 2.50 3.33 0.83 3 1.6 2.12 3.18

Table-4: Reference units and relative efficiency.

1999 2000 2001
DMU Ref units Z Ref units Z Ref units Z
1 - 1 4,5 0.922351 4,5,7 0.7896264
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2 4,8 0.566077 5 0.175436 5 0.1655501
6 4
3 8 0.181666 5 0.271499 5 0.1171570
8 4
4 - 1 - 1 - 1
5 1 0.976747 - 1 - 1
8
6 4,8 0.931067 5 0.643499 5 0.7011515
9 6
7 - 1 4,5 0.834134 - 1
1
8 - 1 5 0.983863 5 0.9109857
7
9 8 0.462360 5 0.202622 5 0.1477690
4 3
10 4,8 0.269694 5 0.191434 5 0.2706785
3 8

Table-5: Reference units and relative efficiency

2002 2003 2004
DMU Ref units Z Ref units Z Ref units Z
1 4 0.682471 4,7 0.520734 5,7 0.4730662
6 3
2 4,5 0.337344 5,7 0.334039 5,7 0.3430893
1 6

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 3 8 0.166155 8 0.024671 5 0.1312106
1 6
4 - 1 - 1 - 1
5 - 1 - 1 - 1
6 4,5 0.781289 5,7 0.838719 5,7 0.6360301
2 0
7 - 1 - 1 - 1
8 - 1 - 1 5 0.4973333
9 5 0.161617 8 0.215417 5 0.1720228
5 6
10 5 0.204381 5,8 0.191907 5 0.2030010
6 3

Figure-1.

Efiiciency Vs Sales
sleepers star
80

60
Sales

40 dogs
20 ?

0
0 0.2 0.4 0.6 0.8 1 1.2
Efficiency

Figure 1 shows an illustrative scatter diagram with two axes, one for sales and the other for
efficiency of the sales branch. Each one of the two axes is split into two ranges of values

Reviewing the long term prospects of each sales branch:

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The long-term prospects of each sales branch cannot be ascertained from its historical sales
alone. Historical sales may not reflect the potential of the market of a sales branch which better
management could exploit. Once the market efficiency and sales of a sales branch are known we
can judge its longer-term prospects by means of an “efficiency sales matrix” depicted in figure1.
Mean efficiency and mean sales of all the DMUs are taken into account.

Conclusions

The paper presents applications of DEA to determine relative efficiency of sales branch of
SBHLCS, Ltd. The sales of DMUs 4 and 5 can be increased. The management has to think of
about DMUs 2, 3, 9 and 10 because of their low efficiency and poor sales. They may be
made mobile to increase their both sales and efficiency. It is interesting if one can take the
non-discretionary inputs like location and others to measure the efficiency. Weavers must be
made aware to prepare the fabric according to changing life style of people.

References:

• Annual Report of “Sambalpuri Bastralaya Handloom Cooperative Society Ltd.” Bargarh.

• Banker R.D, Charnes A and Cooper W.W “Some models for estimating technical and
scale efficiencies in data envelopment analysis” Management Science, 30 (1984) 1078-
1092.
• Charnes, A; W Cooper; A.Y Lewin and L.M Seiford, Data Envelopment Analysis:
Theory, Methodology and Application, Kluwer Academic Publishers, Boston, 1994.
• Emmanuel Thanassoulis “Assessing the market efficiency of Pubs.”Journal of OR
Insight” Vol.10 issue 4 91997) 3-8.
• Farrel M. J “The measurement of Productivity efficiency” Journal of Royal Statistical
Society (A general) 120 (1957) 1040-1043.
• Kotler Philip (2001) “Marketing Management”, the millennium edition, Prentice Hall Of
India Pvt. Ltd. New Delhi,.
• Mohaptra ,P.C, (1986) “Economic Of Cotton Handloom Industry in India”, Ashish
Publication, New Delhi.
• R.Ramanathan “A Data Envelopment Analysis Of Comparative Performance Of school in
Netherland”, OPSEARCH Vol.38 No.2, (2001) 3-8.
• www.orissahandloomtosambalpurisaris.com
• www.sambalpuri.com

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