Believe it or not, benchmarking can do wonders for your supply chain. How? By helping your company target the right consumers, and helping you maintain inventory to keep up with the consumer trends. Benchmarking shows you how well your supply chain is performing against other companies in your industries. The more you know about other companies and how they’re performing, the more advantage you have, since you can predict how they do things, and you can either do it better or find a different, more effective way.
There are various ways to benchmark your supply chain but here are three methods that work the best.
1. Internal Benchmarking
“The internal benchmarking process is beneficial in many ways than one, including its ability to help improve cross-enterprise performance,” says Joe Leslie, a marketing writer at Write my X and 1 Day 2 write. “Before you move onto its external counterpart, you will first need to look at your company’s warehouses, operations in transporting, and procurement functions, so that innovations continue to drive performance.”
2. Informal Benchmarking
Informal benchmarking involves measuring certain functions or aspects of your business, and then comparing said functions and aspects against other areas. For example, if you see that Warehouse A is doing better than Warehouses B and C, you might ask yourself, “what are we doing in warehouse A that sets it apart from our other two warehouses?”
This method should be treated as a beginner one because you’ll be measuring against small sample sizes, which doesn’t show you how good they are. It also requires that you measure things in the same way, and that you apply a metric that’s standard – not complex.
3. Hiring Pro Benchmarking Firms
This method is a last resort if your company is unable to benchmark your supply chain effectively. While there aren’t many professional benchmarking firms, you’ll need to dig around in reputable networking platforms. Be sure to interview and compare potential vendors to determine what will work best for your business.
With that said, be sure to look for the following in pro benchmarking firms:
- Their data-gathering processes
- Their business philosophies
- The industries that they specialise in
- The benefits that they provide, etc.
The cost wasn’t listed above because regardless of how cheap or expensive a firm is, what matters the most important is how well they perform.
Step-By-Step Process In Benchmarking
“Since benchmarking comes in many variants, its complexity stems from supply chain management and logistics, along with its shipping procurement,” says Jared Gossamer, a business blogger at Origin Writings and Brit Student. “Therefore, you’ll need to have a plan to run this process with little to no problems.”
There are 12 key steps to benchmarking in your supply chain:
- Learn what needs to be improved
- Define your benchmarking process
- Compare and contrast potential partners
- Identify possible data sources
- Gather plenty of data
- Isolate data discrepancies
- Learn differences in process
- Set realistic goals for how you want your supply chain to perform
- Practice internal and external communication
- Meet set goals
- Review results from the process, and then adjust to improve it
By following these 12 steps, benchmarking your supply chain should be smooth to both implement and maintain.
As you can see, benchmarking holds a multitude of benefits for your supply chain. However, it’s important to implement benchmarking carefully, so that your supply chain doesn’t rush into a new way of tracking performance. You’ll need to pick the right benchmarking method to benefit your business.
Nevertheless, if you’re looking to start benchmarking as a novice, your best bet would be the informal benchmarking method, since it works with a small pool of data. In fact, informal benchmarking can be a great stepping stone that can lead you to more advanced methods. Once you learn the ropes of measuring metrics and comparing them to rival companies’ metrics, you’ll know how your supply chain is doing, which will make your company capable of performing well in this business.