Moving quality goods is hardly a solitary event. Successful supply chains realize that no matter how unique their brand may be, everything from the products themselves, to the methods by which those products are designed and distributed result from mutually developmental processes. Just as companies tailor their marketable offerings based on the examples set by predecessors and contemporaries, so too do their supply chains rely on the competency of competitors to further the potential of their own processes, products and services.
What is Benchmarking?
Benchmarking is an invaluable exercise in best utilizing competitors’ strengths to boost your own. When benchmarking, supply chains conduct a series of tests to reveal which parts of operation are performing admirably, and which need reevaluation. This is done by comparing quantifiable results of current practices to the effects of methods used successfully by others. For supply chains, this measurement can be internal (examining differences in practice between multiple distribution facilities owned by the same organization), or external (examining procedural differences between an organization and industry competitors).
A typical benchmarking test for a supply chain might examine data in areas such as inventory positioning, efficiency of movement, supply chain risk, and supplier performance. Information is gathered regarding the quality, time frame and cost of current processes; for example, a company employing a push-pull method of inventory might measure results against a local competitor who relies on a purely push approach.
What Makes Benchmarking Valuable?
Rather than leaning on guesswork to determine success rates, benchmarking develops a comprehensive, data-based image of industry performance, and allows you to form a picture of how well your organization, or your facility, is doing in relation to it. Using a common system of measurement, benchmarking breaks the individual pieces of a procedure into bite-sized bits of comparable info.
By setting a standard of performance, benchmarking allows companies insight into not only where they are on the scale of success, but where they would like to be. Analyzing the relationship between time and result quality shows which methods worked best in the shortest amount of time. Using this info, new theories can be devised to imitate methods that worked, and reduce, change or discard inefficient processes. If supply chains can figure out how to take practices used in specific situations, and combine them to best suit their own, they will begin to see how growth, progress and innovation can be driven simply by referencing the common standards which benchmarking provides.
