Measuring the Resilience-Efficiency Trade-off: An Empirical Application for Retail Logistics

Purpose: Retail logistics is facing higher levels of disruptions, forcing retailers to enhance resilience. However, resilience initiatives such as higher safety stock levels often come at the expense of lower operational efficiency through higher cost levels and/or reduced outcomes. Design/methodology/approach: This study offers a novel approach for addressing this critical resilience-efficiency trade-off based on robust data envelopment analysis (RDEA), combining DEA as a non-parametric tool for measuring efficiency and robust optimization as an established approach for dealing with disruptions. Based on RDEA, this study introduces a metric for quantifying the resilience-efficiency trade-off. Our study empirically validates this novel metric using a representative data set comprising distinct input and output values for stores of a German retail group. Findings: By empirically proving this metric for a real-world retail logistics case, we show that most stores sacrifice significant portions of efficiency for an increased level of resilience. However, we identify stores that can align resilience and efficiency and are able to provide a refined understanding of how different stores navigate the challenges of a resilience-efficiency trade-off. Originality/value: For practitioners, this study offers novel insights into assessing the costs of resilience, preventing managers from losing efficiency by prioritizing certain resilience initiatives over others (e.g. logistics activities over personnel resources). These insights enable a more balanced perspective in strategic resilience decision-making and logistics management.