Companies need to consistently analyze their supply chain and supply chain management strategies. And to do so, we suggest they conduct benchmarks.
Benchmarking involves comparing how well current supply chain and supply chain management strategies are doing compared to old processes. This allows managers to make more informed decisions on how best to improve these two operations.
Today, many professionals in numerous organizations agree that benchmarking plays a role in the success of their supply chains. APQC, a company involved in business benchmarking best practices, conducted a survey of 319 professionals and found that 76 percent of respondents noted that benchmarking plays a significant role in how their companies manage performance and do business.
If you’d like to improve both of these aspects of your business, start by learning how to benchmark properly. Here we’ll describe why benchmarking is important, the types of benchmarking (internal and external), systems to make benchmarking easier and more accurate (mobile data collection solutions), and how you can begin benchmarking.
The Importance of Benchmarking
Benchmarking allows companies to more effectively set supply chain and supply chain management goals so they can improve areas of their supply chain. These may include:
- Inventory and shipping accuracy
- Storage density
- Bin-to-pin time
- Operational and equipment efficiency
Without benchmarking, companies may go about their business completely blind. This can result in:
- Poor order and inventory processing.
- High operational costs.
- Lost clients due to slow delivery times and customer service.
- High turnover rates: Employees who feel unsafe at their job, overly stressed or unengaged are more likely to look for another position. And it’s very expensive to replace employees.
Benchmarking allows companies to compare what has been accomplished to what could be realized. It enables them to drive their business forward by fixing broken pieces of their supply chain and improve their supply chain management procedures.
Along with helping companies better improve the flow of products and services, benchmarking also allows companies to plan for supply chain disasters. For example, what if one of their vendors was in an area prone to hurricanes, such as South Florida. Benchmarking allows businesses to gauge how vulnerable this vendor is to others in potentially safer areas and how much of a financial risk it’d be to continue working with them.
In the following segments, we’ll discuss benchmarking types and how mobile data collection solutions can help companies make benchmarking easy to accomplish.
Two Types of Benchmarking
The two types of benchmarking companies should be aware of are internal and external.
1. Internal Benchmarking
If you looked up the definition of internal benchmarking, you may find that it seems to cater more toward larger companies that have multiple warehouses throughout the U.S. or world than it does to smaller companies with only one. We believe, however, that internal benchmarking is an appropriate action no matter the size of the business.
If a retail company is located throughout the U.S. and Europe, each branch has its own supply chain. If this company decides to undergo a benchmarking process, it will likely involve evaluating how each of these facilities’ supply chains operates in comparison to the other. In all likelihood, every warehouse will operate a bit differently: Some will run more efficiently than others. Managers at each facility will examine their different supply chains and supply chain management strategies to pinpoint obstacles that may hinder both from operating properly.
However, we’ll take the concept of internal benchmarking a step further. Small companies that only have one warehouse can still set internal benchmarks by examining their own processes and comparing them to how it conducted business in the past. This allows these enterprises to more effectively set supply chain and supply chain management objectives.
2. External Benchmarking
If the same retail business we mentioned earlier has already researched and made improvements to all of its internal supply chain and supply chain management procedures, it may need to set external benchmarks if it wants to reach loftier goals.
External benchmarking involves studying how other companies (possibly in a similar industry) operate their supply chain and supply chain management strategies. Upon request, these enterprises may allow the retail business to walk their warehouse, observe how employees work, and even document how their supply chain management system works. During the tour, they might also have access to mobile data collection systems, which we’ll talk more about shortly.
Conducting secondary research and consulting with industry professionals can play a pivotal role in setting and exceeding benchmarks, as well as keeping up with competition.
How Mobile Supply Chain Management Solutions Can Set Benchmarks
Now that we’ve detailed the importance of and the different types of benchmarking, the question that’s likely on your mind is: How can I begin benchmarking, and what can I expect?
To ensure you don’t waste time and resources, you’ll need a lot of data to properly benchmark. And the best way to record and extract information is through mobile automated data collection solutions. There are many systems available, and the most advanced systems allow for seamless mobile to back-end system integration, scalability and rapid response time to a business’ needs.
Here are some examples of what automated data collection solutions can do:
An ERP eliminates silos within a company, integrating all departments within a business into a single computer system. As you can imagine, this can help upper management make more informed benchmarking decisions because everyone has access to the same real-time data.
Warehouse Automation Solutions: Simple barcoding devices may not be enough to obtain the information you need. A warehouse management system, however, can help managers record more detailed data, giving them greater insight into supply chain measures.
- Transition from paper-based data collection processes, allowing employees to gather more accurate data.
- Better understand receiving routes.
- Study how orders are shipped and analyze shipment times.
- Evaluate how items are tracked.
Inventory Management: Not only is it time consuming to manually keep track of inventory, but it can be risky because employees may accidently record the wrong data. An inventory management solution can:
- Guarantee 99.9 percent accuracy.
- Obtain real-time visibility into your inventory.
- Figure out how exactly your inventory moves throughout your warehouse and to customers or suppliers.
- Better forecast stock demand.
Shop Floor Data Collection Software: The best (and probably only) way to conduct accurate internal benchmarking is by evaluating the shop floor in real time. While we understand companies may have to use paper-based procedures – either sometimes or always – integrating an automated solution where possible can go a long way to better streamlining data recording and improving benchmarking.
This system can help solve:
- Wrong data regarding out-of-stock items.
- Inaccurate picking.
- Defects to machinery or equipment that employees failed to properly record when it was first noticed.
How Can You Begin Benchmarking
If we’ve convinced you to take benchmarking seriously, the next question you probably have is: How do I begin?
While it’s a simple question, it’s answer is much more complex because every supply chain and supply chain management strategy is unique. But, in general, here are some basic suggestions that can help you begin your benchmarking initiatives:
- Form an Experienced Team: You can’t undertake the benchmarking project alone. It’s much too complicated and time consuming, so it’s best to delegate certain responsibilities to different people. For example, you have might to break up your employees into two teams who are led by two leaders. One is in charge of internal benchmarking, and the other develops an external benchmarking strategy. Both leaders work with different groups to employ field tactics, track and analyze data and report results to C-Suite executives.
- Set Goals: Your team leaders need to answer one simple question: What do they want to accomplish? By figuring out the end goal early, they can then work backwards to meet it. For example, if a landscaping company wants to improve the shipping times of lawn products from the supplier to their warehouse, one leader can set up an internal benchmark to analyze the shipping speeds in the past and then set goals to exceed that.
- Choose a System: By setting benchmarks, leaders can then make more informed decisions about which mobile data collection devices they need to meet those goals.
- Build a Report: After employees have collected their data, the next step is to put together a comprehensive report that describes how best to improve supply chain processes and supply chain management strategies.
Benchmarking is a critical component of every company. By adhering to the tips and suggestions presented here, you can make significant changes to how your company does business.