The Process of Benchmarking Your Supply Chain & Ocean Freight Rates

Benchmarking of the supply chain refers to a process of collecting information on good practices from the sector and from industry leaders in order to make the study and analytics to adapt them to the real world of your company.

Why does the process of benchmarking take place in the supply chain?

Every organization has a motive to be followed; in case the motive of your organization is to achieve the world record for running a marathon, the first thing you need to consider and keep in mind is what record you have to beat, who is your competitor and, above all, what are the strengths of your competitors?

One of the most common things while making the discussion about benchmarking in supply chain management is the pursuit of efficiency inherent in your business. By the term aspiring to logistics excellence, we mean adapting the activity of the latest trends in the sector.

More often, one must make a difference, and they must also understand the benefits of combining the following concepts:

Benchmarking or comparative analysis: The process of benchmarking is used to compare processes, products, and operations with other areas of the business, firms, and leading companies in the sector. In the end, supply chain benchmarking is a comparative assessment that is utilized to perceive your performance and methods compared to those of others.

KPI (key performance indicator): It becomes mandatory to break the processes into different parts, or we can say sub-processes, to make the assignment to each one a metric or KPI that evaluates their evolution over time. With these indicators, the user will be able to detect deviations and the point of situations that need to be addressed.

Here we have mentioned some of the key steps that are involved in supply chain benchmarking.

To perform the step, it is mandatory to go through a series of stages:

1. Identification of the supply chain processes to benchmark

The first step in the competitive analysis is to identify the processes that are critical to your business. The major consideration should be on registering ineffective results and whose improvement would have a major impact on the performance. In this case, it’s extremely useful to consult your key performance indicators.

2. Identify sector leaders and gather information

Right after identifying the critical processes to analyze, the next step is to look for those firms that stand out for their efficient management. One can focus on such factors:

?           Direct competitors: Direct competitors are the ones to be drawn to first. Direct competitors are difficult to analyze since accessing their information is more complicated.

?           Indirect competitors: Due to the similar size but differentiated level within the industry, indirect competitors must also be taken into consideration. However, they do compete for the same customers and can halt your growth.

?           Businesses in other sectors: Although the businesses that operate in another sphere and aren’t competitors to your field of business, you can learn from their efficiency and methods.

3. Adopt good practices to the reality of your company

Supply chain benchmarking is not about making a copy of your competition without focusing on the context of the business. The purpose of a comparative assessment is to improvise the own processes while drawing inspiration from formulas that are working in a specific industry or organization. Adaptation of practices to your business requires:

·        To define the implementation plan and establish objectives. Here you need to specify which best practices will be carried out and how this will be done.

·        Assign resources like designate. For instance, the work team and tools need to be used.

·        Set your KPIs that will measure the evolution of your project.

4. Prepare a pilot project as a trial test

Plotting of a trial test includes applying a different picking method to certain SKUs in the installation. This step can be performed in a restricted way to compare it with the previous technique.

5. Analyze the pilot project

You need to check the results to decide whether it is scalable or not.