Set Benchmarks Process in Your Supply Chain

By- Prateek Kumar

Setting benchmarks in your supply chain process is a valuable strategy for continuous improvement. Here's a breakdown of the steps involved:

1. Define Your Goals and Scope:

• Areas for Improvement: Identify specific areas in your supply chain where you want to see improvement. This could be anything from inventory management to order fulfillment times.

• Alignment with Strategy: Ensure your chosen areas align with your overall business strategy. Focus on areas that will have the biggest impact on your goals.

2. Select Relevant KPIs (Key Performance Indicators):

• Quantitative & Qualitative: Choose a mix of quantitative metrics (e.g., lead time, order accuracy) and qualitative factors (e.g., supplier communication, customer satisfaction).

• Industry Standards: Research industry benchmarks for your chosen KPIs. This will give you a reference point for your own performance.

• Balance the Set: Pick a balanced set of KPIs that cover different aspects of your supply chain process. Don't overwhelm yourself with too many metrics.

3. Identify Benchmarking Partners (Optional):

• Non-Competitive Companies: Consider partnering with non-competitive companies in your industry for more in-depth comparisons. Industry associations might be able to connect you with potential partners.

• Benchmarking Databases: Utilize industry benchmarking databases or reports to gather comparative data. These can be a good starting point, but keep in mind they might not account for all the specifics of your business.

4. Collect Baseline Data:

• Internal Records: Gather data on your chosen KPIs from your internal systems like inventory management software or order fulfillment tracking tools.

• Standardize Measurement: Ensure consistent measurement methods across your organization for all KPIs to get reliable data.

5. Analyze the Gap:

• Compare Performance: Compare your baseline data to industry benchmarks or your benchmarking partners' performance.

• Identify Discrepancies: Analyze the gaps between your current performance and your desired goals.

6. Develop Improvement Strategies:

• Actionable Steps: Based on the identified gaps, brainstorm and develop actionable strategies to improve your supply chain processes.

• Resource Allocation: Allocate resources effectively to implement your improvement plans.

7. Monitor and Refine:

• Track Progress: Regularly track your progress towards your goals by monitoring your KPIs.

• Continuous Improvement: Benchmarking is an ongoing process. Refine your strategies and KPIs as needed to ensure continuous improvement in your supply chain.

By following these steps, you can establish a data-driven approach to benchmarking your supply chain processes and achieve significant improvements in efficiency, cost reduction, and customer satisfaction.