Some reasons to benchmark your supply chain are provided below:
1. Why Benchmark?
Data from the BMS database demonstrates that supply chains that provide Best-In-Class service do it at half the cost of their peers.
2. Please explain how this can be?
3. Begin with the end in mind
From Stephen Covey's "Seven Habits of Highly Effective People" summarised below, Habit No 2 is to 'Begin with the End in mind'.
Before embarking on a journey to supply chain excellence, the first step is to determine 'the end' on target. How is that target to be set? From benchmarking against the best, understand the gaps in service and cost performance and then setting out a strategy and plans to bridge the gaps.
4. Lessons from sports people about benchmarking
A. Roger Bannister was the first man in recorded history to run a mile in under 4 minutes in April 1954.
Until that time no one had broken this barrier and many claimed that it was not possible for man to run that fast over this distance.
However this turned out to be a glass ceiling when he broke the record. Over the next 18 months his record was broken 12 times!
What made the difference?
The glass ceiling was broken. A new benchmark had been set against which to aim. "The end" had moved.
B. The fastest man in the world over 100m is Usain Bolt. He is the benchmark. He is the best.
To aspire to be the best what is the first thing that one would need to know?
Answer - the time, ie 9.58 seconds.
If you aspire to your supply chain being the best, the first thing that you need to know is - how good is the best? What is the benchmark?
C. Best just because you are the best today doesn't guarantee that for the future. Look at dual Olympian Johnny Weismuller.
At one stage he was the best in the world. He was the benchmark in the pool. He held 69 world records and at one stage held EVERY world record from 50 yards to 1 mile!
But that was some time ago. His world records are now being broken by 13 year olds.
Just because you are the best today doesn't mean that you will be tomorrow. So re-benchmarking against the market place on a regular basis, to understand what the 'new best' is, is essential.
"only 24 percent of executives surveyed believe that the market leaders of today will still be the leaders in five years"
Source: Bain & Company Management Tools & Trends Report, 2009.
5. "Benchmarking is the most popular management tool" (*)
Bain & Company has been conducting global Management Tool & Trends surveys since 1993 - the same year that Benchmarking Success began.
The 2009 report demonstrated that the most popular management tool was benchmarking.
The survey, conducted in January 2009 encompassed 1,430 international executives from companies from a broad range of industries and focuses on 25 tools that are available to executives.
Benchmarking knocked off strategic planning to top the tool usage list. Why? Because benchmarking was seen as a priority in achieving cost cutting in the business while improving service simultaneously.
One executive observed that for benchmarking to be most effective, his company has to dig deeper. "I'd like to see more granular, actionable benchmarking in the future. That way if we're not doing well compared to our competitors, it's a red flag to address a problem."
* Source: Bain & Company, Management Tools & Trends 2009
6. The size of the prize
So if improved customer service drives significant cost savings, how much could we save if we improve our service performances?
A sample is set out below using the Plumbing Chart approach
7. "You can't improve what you don't measure"
If performing isn't measured and benchmarked against peers, competitors, internal comparisons or imposed targets, how can improvement be validated?
Benchmarking performance - both service and cost performance - through a series of indepth KPI's is the BMS approach to 'improving service through benchmark measurement'.