The Power of Operational Benchmarking in Supply Chain and Operations
Internal benchmarking – if done in the right way – can spark organizational learning, continuous improvement and strong cost reduction. Each organization has the option to do it and can start the journey towards operational excellence. It should be done in an open, and positive way, so that participants see the benefit and embrace improvement potential.
What it can do, but why it is also sensitive
Benchmarking tells you where you stand with your performance: what does good look like. It clarifies the “Ideal State”: where can we take our performance if we could combine all (our) best practices. Where can we improve? And all this within your own, protected environment, with free knowledge available. But when you use the word benchmarking, most people react reluctant. The negative image is created by high-level, quick exercises that have let to unrealistic, top-down improvement objectives (targets). The consulting industry is partly to blame for that. Also, the transparency and comparison to peers is not always very convenient, and needs to be managed carefully.
Run your benchmarking cycle in the following 4 steps:
Step 1: Build a questionnaire that touches upon the important processes and subjects (see next part “benchmark structure”)
Step 2: Run the entire questionnaire across several factories, warehouses or other units in your network. Ensure that the questionnaire is understood and this understanding is aligned across the respondents.
Step 3: Analyze and compare the outcomes with the participants. During this analysis workshop, the improvement ideas start to pop-up automatically.
Step 4: Make a SMART roadmap and assure results by proper project registration and follow-up.
When building the benchmark, ideally we have already a clear view on the information we would like it to deliver. These outcomes should allow us to compare organizational parts in absolute and relative sense, but it should also allow us to compare KPIs such as efficiency and productivity. These KPIs should also be the ones we would like to improve during the improvement phase. Although partly we will discover these during the benchmarking journey, ideally we have already some view on where to look. This will certainly improve once we sharpen and deploy the benchmark in the following rounds.
Not a 1-off
Best outcomes from benchmarking are achieved when done repetitively. During each round, participants will see their improvements – which is motivating – but also new areas to improve. The can make deliberate decisions together with their senior managers, what to address in the coming period. This will spark the continuous journey towards operational excellence.
Critical success factors
The following items are critical for your success:
- Openness towards improvement potential and willingness to learn and share: anyone can always do better on something
- The ability to compare apples to apples as much as possible, but at the same time accept the 100% apples-to-apples doesn’t exist and that this is not the point
- Durable willingness to act: start, run and finish continuous improvement projects, even if it takes some time and effort (long term approach)
- The standard change management practices, such as: (top) management support, some sort of urgency, access to resources, some early successes, and more.
How we help
Logresult supports many companies with internal benchmarking, leading to valuable insights, and learning experiences and a full pipeline of improvement initiatives. Next to that, we support our clients to harvest the potential by strong program- and project management. The platform allows quick set-up and customization of the benchmark questionnaire and online deployment to the respondents. It supports continuous rounds of benchmarking, the secure collection of data in the database, and on-top also productivity project management under the same “roof”.
Examples of outcomes in Logresult:
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