08 January 2007 | Antony Barton
There are seven essential factors in supply chain benchmarking, according to a US study.
The Supply Chain Review, called "Benchmarking - Prerequisite for Building Best-in-Class Supply Chains", from ProLogis, a US-based provider of distribution facilities and services, found that gaining support from senior management is key to benchmarking success.
The other factors are:
- the clear definition of the benchmarking scope
- clarity of objectives
- a reliable record of the organisation's previous performance
- consensual recommendations with participation by all affected operating departments and the agreement of as many stakeholders as possible
- comprehensive feedback from the investigating team
- adequate resource and training for the benchmarking team
One of the most common pitfalls of benchmarking, according to the report, is to view the performance indicator itself as the goal. If the company achieves its targets the inefficient processes that underpin this success will be overlooked. The report stresses the quality of the process as a whole is more important than quantitive results.
The authors add that previous research shows that companies that apply the lessons of their benchmarking exercises were rewarded with an average first-year payback of $189 million (£98 million). The research was conducted by the non-profit American Productivity and Quality Center, which provides benchmarking and best-practice research for around 500 organisations worldwide.