Any recommendations on tools/processes for supply chain benchmarking?

2.1k views4 Upvotes8 Comments

Supply Chain Benchmarking & Intelligence, Program Manager in Manufacturing, 10,001+ employees
There are plenty of benchmarking methodologies out there to leverage and every company is different, so I don’t necessarily have specific a recommendation for tools or processes.

Instead, I would advise implementing a continuous benchmarking process that is an input into your strategic planning process. This is a continuous process so it shouldn’t be treated as a one-and-done activity. Benchmarking must be revisited to ensure progress is being made. Action needs to be taken on the insights identified.

Have a cadence and process around whatever benchmarking framework you have, including an implementation piece. Without it, the benchmarking framework isn’t helpful. Lastly, involvement from the groups or stakeholders you're benchmarking is critical because ultimately they will ultimately have to accept your findings and help build the case for change.
Managing Consultant in Miscellaneous, Self-employed
Since supply chain is all about tradeoffs across service, cost, and cash; these need to be considered when benchmarking; otherwise, it's dangerous to perform benchmarking blindly.  As an example, the Days Inventory Outstanding may look very different for a premium vs. discount retailer, but so might the profitability.

Because of this, I recommend benchmarking in two dimensions: one dimension for profitability and one dimension for capital employed.  You can start at a high-level with public financial statements and compare a profitability metric such as gross margin or operating margin vs. a capital metric such as cash conversion cycle or inventory turns.  It works really well if you plot the intersection of both types of measures on a scatter plot for your own company (or even specific business unit) vs. your competitors.  Be sure to plot several years of data, especially due to recent dynamics.  You can broaden or narrow the aperture of the metrics (e.g., all capital employed vs. PPE vs. inventory turns) to zoom in on specific areas of the business.

Further, you can actually easily plot an 'indifference curve' which substitutes profitability for capital to arrive at a constant output.  The curve could be based on a competitor's high water mark or a median of peer performance, etc.  The curve is just a line, but moving to that line could involve improving profitability or cash position or a combination thereof, and this should be dependent on strategy.
Chief Supply Chain Officer in Software, 11 - 50 employees
I agree with Patrick and would add that the first level of primary benchmarking should be based on specific and accurate internal comparisons (e.g., similar customer and product groups, etc.) versus using external benchmarking numbers.  Experience has shown that it is sometimes difficult to verify that you are comparing "Apples to Apples" with outsourced numbers. 
CEO in Consumer Goods, Self-employed
Based on previous comments, let's assume that benchmarking is to compare internal benchmarks only, not external. For the measurement tools, you can use data engineering ETL tools to automatically extract from your ERP system. Or, you can ask an admin to collect it all and put it into a spreadsheet. For visualizations, Looker Studio is free, otherwise you can use Power BI or Tableau. 
Founder, Self-employed
Good question and comments here. Thank you for sharing.

I would start the process with, what is the purpose of benchmarking your supply chain?

It helps to define the action's strategy and plan you need to achieve your goal.

If you want to benchmark to see where you are and what needs to be done to move your supply chain to the next level (in terms of operations, profitability, sustainability, resiliency, SC optimization, innovation, etc.) by benchmarking, collecting information, and comparing KPIs with leading companies in the same sector/industry to see the gap and provide a roadmap to move forward.

And, in the process of translating the industry's best practices to practical, achievable goals that actually fit your business needs and ultimately, it must start with the customer, serve and fulfill your customer's needs.

The tools and processes will vary based on what you want to achieve and what paths you take.

Hope that helps.
Senior Director of Supply Chain in Manufacturing, 10,001+ employees
I would always start by being a good hear to your customers ! Listen to the voice of your customers, enforce understanding of who are your customers, their needs, their sentiments and identify gaps ! This may already be a good start to move towards better world !
Supply Chain Director, Self-employed
Benchmarking is valuable. The key is to first decide on what is the scope and purpose of the benchmarking and build a program then define deliverables. Good quality Data is very critical once you are clear on scope and direction.
Gartner Hierarchy of Supply Chain Metrics identifies 17 critical metrics to focus on across the end-to-end supply chain and can guide you to drill down on the focus area to benchmark. Other than Gartner there is the SCOR model as well as an APQC Supply Chain benchmarking actual process as well as a host of others like Coupa. IBM and other Consulting management firms also provide the service.
Sustainable Supply Chain Adviser in Healthcare and Biotech, Self-employed
I see really great answers here already, so I would only like to add on top of those.
As a leader, I usually ask this question: why do I want to benchmark and where do I want to get with it?
Follow up questions:
1. have I done any benchmarking beforehand (internally and/or externally)? if not, most likely one internal process is best to start with to know where the function/company itself is
2. if I've done external benchmarking before, did we reach the desired outcome? if yes, then as others pointed out, use the one already used and make it a recurring exercise - then you will start seeing results and patterns that need more evaluation to change. if not, then the selection really should be based on what your goals with the benchmarking are - before you pay for it.

L'art pour l'art benchmarking is a vanity exercise and I've seen many organisations fooling themselves with it for long. Please don't do benchmarking just because someone above you was "advised" to do one. Always ask and evaluate if it is value adding in that situation.

In general, I'm a fan of benchmarking, as it brings immense value, but I always make sure that people do it for the right reasons and not just for management reporting or similar.

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