Well, I asked Steven Thacker one of our benchmarking management experts, exactly that question! I hope his answer helps you.
What is Benchmarking?
Benchmarking is essentially comparing; comparing one against another. When we compare different levels of sophistication and performance in supply chains, we can identify particular levels that we think are important to achieve, or that represent typical performance levels for supply chains as a whole.
Those levels are “benchmarks”. Of course, benchmarks and benchmarking can cover all kinds of different things, at work or elsewhere. Suppose you wanted to be the fastest runner in the world.
The first thing you’d want to know is “what is the benchmark?” meaning “what speed do I have to beat to be the fastest?” You can benchmark for individuals and also for teams. You can also benchmark supply chains. Sometimes benchmarks are easy to identify. How fast you run, how high you jump and so on is simple to measure and the figures are clear and meaningful.
Elsewhere it’s more complex, as is often the case in business. It’s still just as important, though, if you want your business to improve, to know how you compare, and how good you have to be to be the best.
How can a business start benchmarking?
You can start with the things organisations frequently want to benchmark. The first of these is “How good is my service?” In fact, it’s also a good idea to go further, because today providing service should typically be a competitive advantage for an organisation.
So the questions are rather: “How good is my service today?” and “How good does it have to be to really differentiate my business compared to my competitors?”
A second one is then cost; basically, “Is that level of service, whether current or planned, cost-effective?” This is a question that frustrates businesses if they only have data that is anecdotal and subjective, but without the quantitative hard data that really tells them what’s going on. This, once again, is where the SCOR model can be a big help, because it defines formal, structured ways of capturing data that you can then hold in a benchmarking database that gives you a better guarantee of accuracy. It’s a method that’s helped businesses in many different areas, such as quality circles. In the general supply chain area, however, it’s still early days and only a few such databases exist so far across the world other than Benchmarking Success.
Steven Thacker is a contributing Author to the Supply Chain Secrets Book Series.
For further information, you might like to check out these resources:
- Supply Chain Secrets Books
- Our Supply Chain Secrets
- Supply Chain and Logistics Benchmarking
- Free KPI Report
- What is a KPI?
- KPI – Key Performance Indicator