Strategic Supply Chain Management - Supply Chain Online

194 Strategic Supply Chain Management
levels. An effective benchmarking effort will help you to understand
what level of quantitative performance is possible and, more importantly,
what practices can deliver this level of performance.
Besides external competitors, we believe that companies should
study noncompetitors in other industries—provided that they have similar
supply chain characteristics. Why look outside your own industry
Because often what works in one industry can be applied successfully to
another. But be careful which companies you compare yourself against.
You should compare yourself to peers—companies with similar production
processes, distribution channels, or other dynamics that allow a valid comparison.
Otherwise, it’s less likely you’ll be able to set realistic targets.
External benchmarking requires collecting performance data—often
highly sensitive data—from other companies. Many companies are reluctant
to provide such data directly to competitors or even to noncompetitors.
To get around this roadblock, consider participating in benchmarking
surveys managed by independent third parties. These benchmarking service
providers specialize in defining relevant supply chain metrics and
working with participating companies to ensure that the data collected are
unambiguous and accurate. When choosing a service provider, look for
one that offers a thorough assessment of the supply chain practices associated
with best-in-class performance. This link between practice and performance
is the key to understanding how to change your supply chain to
reach new performance levels.
Many companies make the mistake of thinking that participating in a
benchmarking survey is the same as conducting a benchmarking assessment,
or they want to have access to a supply chain database without any
plans to participate in a survey. As Michelle Roloff, general manager of
PRTM’s benchmarking subsidiary, The Performance Measurement Group,
LLC, notes, “The benchmarks are only as good as the data the organizations
submit. We want survey responses from companies that are using
benchmarking to change how they do business. This means they’re willing
to invest the time needed to collect accurate information from a variety
of sources.”
An external benchmark is only useful if a company knows how its
own organization is performing in the same area. An effective benchmarking
program starts with a thorough understanding of your own
processes and level of performance. This means generating a comprehensive
set of internal metrics.
Internal benchmarking doesn’t depend on sensitive data from other
companies. Instead, it involves measuring the performance of comparable