Benchmarking is the all-important first step in supply chain performance improvement. However it can also be an incredible waste of money, time, and effort if your company fails to act on benchmarking data. While that might seem an obvious statement, there are plenty of supply chain leaders who, if they are honest, will admit to difficulties in making their metrics actionable.
Why is it Hard to Act on Benchmarking Results?
There are a number of challenges which if not overcome, foil the best-laid plans to act on benchmarking data. These include:
- An overwhelming amount of data to interpret
- Failure to align understanding of what the benchmarks reflect
- Defensiveness over areas of weakness
- Conflicting agendas and internal business politics
- Misguided management use of benchmarking results (blame, reductions in incentives)
- Failure to initiate change management (things can change a lot when you act on benchmarking outcomes)
Of course challenges are opportunities in disguise and can always be surmounted. The following tips should help your company to reduce inertia and act on benchmarking results successfully.
Preparing for Action
The change management element is one of the most important areas to focus on in driving action from benchmarking data. The initiation of an enterprise-wide change management program is essential. This is the only sure way to tackle resistance and cultural issues which will otherwise impede progress.
It’s also necessary to take a holistic approach to data interpretation. Instead of looking at each benchmark in isolation, your team should try to identify themes, patterns and interdependencies among the metrics. While you will inevitably need to make tradeoffs in some areas to improve in others, there may well be some targetable factors which can provide multiple performance benefits.
Get Your Priorities Right
It should not come as a surprise when benchmarking, to find that there are simply too many areas that require improvement. Trying to focus on them all will be overwhelming and unlikely to yield much success. Instead you should break all the improvement areas down into prioritised categories. For example, you may split the improvements into:
- High priority: for immediate improvement focus (areas where performance is sub-par)
- Medium priority: Adequate performance but need to raise the bar
- Low priority: These might be areas which will improve automatically when medium and high priority areas are improved
With your areas for improvement categorised in this way, you will have a much shorter list of urgent, high priority areas to act upon. Target these areas first. With luck, you may improve some lower-priority issues, simply by acting on the high priority matters. If not … well, it won’t hurt to let the medium and low-priority issues wait for a while.
What’s the Next Step?
If you work hard on change management and focus on a few, high-priority improvement areas, you should at least be able to start acting on the information found through benchmarking.
If benchmarking is the first step in making supply chain performance improvements and taking action is the second, the third step is no less important. That third step is cementing your changes in place—making sure they stick.
In a future post, I’ll cover the third step in more detail, offering some tips to prevent performance improvement from becoming a process of one step forward and two back.
In the meantime, if you haven’t already benchmarked your supply chain, that’s a goal to strive for. Try to make sure the results lead to action though. They are worth little if left to gather digital dust in a forgotten corner of somebody’s computer hard drive.