Executive Briefings

Mistakes to Avoid in Benchmarking

Many supply-chain managers fail to take advantage of benchmarking because they fear it is too difficult or complex, says Ron Webb, executive director of membership at APQC. "They think it has to be a big initiative with resources tied to it and a team behind it," he says. "It can be that but it certainly doesn't have to be."

Benchmarking is just another tool to improve performance and it can be as simple can be as simple as having a conversation with people at conferences about where your organization has issues, he says. Of course, before having such conversations a company needs to understand its processes, know how it is performing now and where there are opportunities to learn and improve, Webb says. "A company can learn a lot by just understanding its processes and mapping them out," he says. "You put that up on a wall and get your people together to talk about them and you will see opportunities for improvement right there."

Another mistake companies make in this area is to have too insular a concept of who their peer group is, he says. "In about 95 percent of the benchmarking projects we do, the company wants to compare itself with industry peers," he says. "But your competitors, when you are looking at things like procurement and logistics, may not be the best peer group," he says.

If you are benchmarking procurement, for example, you should look at companies with similar process outcomes, such as a company that executes a similar number of purchase orders every year, he says. "You know their processes have to perform at that level, whereas your competitor may be beating you in the marketplace for an entirely different reason," Webb says. "You want to compare process-to-process, not organization-to-organization. That's where the real learning is."

To view video in its entirety, click here

Many supply-chain managers fail to take advantage of benchmarking because they fear it is too difficult or complex, says Ron Webb, executive director of membership at APQC. "They think it has to be a big initiative with resources tied to it and a team behind it," he says. "It can be that but it certainly doesn't have to be."

Benchmarking is just another tool to improve performance and it can be as simple can be as simple as having a conversation with people at conferences about where your organization has issues, he says. Of course, before having such conversations a company needs to understand its processes, know how it is performing now and where there are opportunities to learn and improve, Webb says. "A company can learn a lot by just understanding its processes and mapping them out," he says. "You put that up on a wall and get your people together to talk about them and you will see opportunities for improvement right there."

Another mistake companies make in this area is to have too insular a concept of who their peer group is, he says. "In about 95 percent of the benchmarking projects we do, the company wants to compare itself with industry peers," he says. "But your competitors, when you are looking at things like procurement and logistics, may not be the best peer group," he says.

If you are benchmarking procurement, for example, you should look at companies with similar process outcomes, such as a company that executes a similar number of purchase orders every year, he says. "You know their processes have to perform at that level, whereas your competitor may be beating you in the marketplace for an entirely different reason," Webb says. "You want to compare process-to-process, not organization-to-organization. That's where the real learning is."

To view video in its entirety, click here