In today’s increasingly competitive landscape, it’s important for organizations to continually identify areas of improvement within supply chain operations. One method to do this is through a series of benchmarking assessments, which allows an organization to determine its overall performance and improve processes.
According to a Supply Chain Management Review survey, 76% of respondents feel that benchmarking is ingrained in their supply chains’ business methods, but only 61% feel benchmarking is a vital component within their organizations’ decision making.
The challenge for many companies is often learning what a successful benchmarking program looks like and overcoming the hurdles that prevent them from realizing the full benefits of the methodology.
We spoke with two experts who have experienced firsthand the value of what benchmarking can do for supply chains: Grace Woo, director supply chain strategy – procurement at McCormick and Company, and Osório Carvalho Dias, head of logistics strategy at Brazilian Post Office (BPO), the biggest logistics company in Brazil and the official postal operator for that country.
Where should companies begin?
Some companies start with the idea that perfect data is required to get any value from benchmarking. But, finding a perfect analog to any supply chain is impossible.
Woo explains, “We benchmark using information from peer groups and other third-party services. Business changes fast and benchmarking is important to making sure we are heading in the right direction.”
Data integrity is important too, and is what Woo refers to as “getting to one version of the truth.”
“Data has to be clean. If nothing else, benchmarking as a tool for improving supply chain operations can break companies out of complacency. We went through this in our operations several years ago; it was a good wake up call to compare ourselves against the industry,” adds Woo.
Carvalho Dias explains the initial approach taken by BPO, “We determined the areas most important to measure by mapping all the existing processes within our internal supply chain. The goal was to identify any gaps and disconnects while evaluating the performance of each group of processes — including areas like technology, process standards, human skills, key performance indicators (KPIs) and best practices.”
There will be challenges along the way
Benchmarking is a process, and it takes a plan and persistence before it will deliver positive results for a supply chain. It also needs to be viewed as a company-wide initiative.
“Cross functional support is vital. This includes sales, marketing and other business partners,” says Woo. “Companies need to be careful that it doesn’t just become a distraction and busy work. It’s common for people to just keep asking for more data. At some point you need to just get on with it.”
At the same time, it takes a clear focus on the end goals…