Benchmarking in Logistics and
Supply Chain Management
Compiled by Rulzion Rattray
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Benchmarking.
• What is benchmarking?
– Ongoing process of measuring products, services,
practices & processes against the best that can be
identified in order to:
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Learn about & improve best practice.
Achieve realistic targets.
Integrate improvements into your strategy.
Use best practice as inspiration for innovation.
Be externally focused.
Be purposeful about improvement.
Measure improvement.
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Benchmarking
• A control process.
– Involving employees in the process of
evaluation and change.
– Philosophy one of self control rather than
imposed control, where the person most closely
associated with the task is involved in the cross
measurement and assessment of practice.
– Places personnel in a position where their
unquestioned beliefs (paradigm) may be
challenged , creating opportunities for
innovation and learning.
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Benchmarking the Supply Chain
• What to Benchmark?
– Supply Chain Council suggests:
• SCOR (Supply Chain operations reference) Christopher, M. 1998 pp 106):
• Plan, Source, Make & Deliver. SCOR is designed to
provide a common framework to facilitate cross
organisational benchmarking.
• Who to Benchmark with?
– Competitors
– Significant opportunities for firms in non
competing industries
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Benchmarking Logistics Processes
•One method to measure and compare the
output. A form of reactive control.
•Alternative to concentrate on the processes
which requires a number of steps:
1 Understand the process. Use those most
closely involved and develop flowcharts
2 Identify critical points
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Mapping Supply Chain Processes
• Producing a flow chart the first step and
highlighting “value adding” time and “nonvalue adding time” (Christopher, M. 1998 pp 110).
– Value Adding Time:
• Time that results in increased value for the customer
– Non Value Adding Time:
• Elimination of this time or activity would not reduce
the perceived value of the ultimate consumer.
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Cost and Value added:
Value
Added
Time place
& form
perception
Transport
Finished
product
Regional
Stock
Customer
order
Production
Raw
material
Time!
Cost Added
Production, Storage & transport costs & the time value of money
Adapted from Christopher, M., (1998), “Logistics and Supply Chain Management. Strategies
for Reducing Cost and Improving Service”, Financial Times Pitman Publishing, London. pp 111.
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Suppliers and Distributors
• Involve inbound and outbound elements fo
the value system. Their cost will add to the
ultimate cost!
• Establish and Encourage:
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Commitment to continuous improvement.
Acceptance of innovation and change.
Use of regular and formal and benchmarking.
Employee concern for the ultimate consumer.
Leadership involvement
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Setting Benchmarking Priorities
Strategic Importance
Processes that are
competitively critical
Relative impact on
business.
•High total cost
•High revenue
•High human input
Organisational Readiness
Benchmarking
priorities
Make V Buy Economics
Processes with high
impact on value and
hard to outsource
Processes carried out
by “ready to improve
personnel”.
Adapted from Walleck et al, (1991)
“Benchmarking World Class Performance”,
The McKinsey Quarterly, Cited in
Christopher, M., (1998),
“Logistics and Supply Chain
Management.
Strategies for Reducing
Cost and Improving Service”,
Financial Times Pitman
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Publishing, London. Pp118.
Key Performance Indicators
• Highlight issues regardless of measurability
that have high impact on the organisational
success.
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Articulate the strategic objectives to personnel.
Understand measurable outcomes of success.
Communicate importance of key processes.
Highlight and focus attention on key
performance indicators.
• Better faster Cheaper!
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Conclusions.
• Benchmarking vital tool in maintaining
world class status.
• Massive potential for developing learning
and innovation.
• Supply chain mapping useful in ensuring
that the whole system is kept in view.
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References
• Christopher, M., (1995), “Logistics the Strategic
Issues”, Chapman Hall, London.
• Christopher, M., (1998), “Logistics and Supply Chain
Management. Strategies for Reducing Cost and
Improving Service”, Financial Times Pitman
Publishing, London.
• Kaplan, R.S. & Norton, P., (1992), “The Balanced
Score Card - Measures That Drive Performance”,
Harvard Business Review No 92105, January
February.
• Walleck A.S., et al, (1991), “Benchmarking World
Class Performance”, The McKinsey Quarterly, No. 1.
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