Help turn your CPO’s frown upside down by benchmarking your performance and demonstrating your value. Learn how to here.
Suppose you wanted to own the fastest car in the world. When you were shopping for that car, would you simply ask: How fast does it go? Or would you instead need to ask: How fast does it go in comparison to all other fast cars? That’s the thing about having something the fastest, or indeed, doing something well at all: it isn’t done well if it isn’t done well in comparison to something else.
The same is absolutely true when it comes to supply chain management.
At any one time, it’s likely that something in your supply chain will be changing in a less-than-favourable way, and this will irk your CPO. But a great way to show that you’re still adding value is to invest in supply chain benchmarking, which is critical to success and one of the big supply chain and procurement ideas.
So what is supply chain benchmarking, and how can you get started with it?
What is supply chain benchmarking?
When you aspire to own something like the fastest car in the world, the metric you use to measure its speed is pretty simple. The car either goes faster than all other cars, or it does not.
Anyone who has worked in procurement and supply chain, though, knows that things in our profession are unfortunately not always that simple. At any one time, there will be a number of trade offs that make meaningful comparisons more challenging.
Despite this, supply chain benchmarking – or the act of comparing your performance to various available indices – can help establish that even if things might not look so rosy in your category or area, they actually are. Benchmarking also has other important benefits, including helping you and your team identify gaps, innovate, and focus on continual improvement.
One commonly used index that may help you compare your performance against others is the SCOR method (of which benchmarking is just one part). You can use the SCOR approach to assess your business based on three pillars: process modelling, performance measurement, and best practice.
How can you get started with supply chain benchmarking?
Benchmarking can sound daunting, and there is no doubt that it can be a little time-consuming, but the benefits are certainly worth it. In order to get started with benchmarking, experts recommend:
- Start with internal benchmarking: Sometimes, excellence can be sitting right in front of you. For that reason, especially if you work in a large organisation, it’s important to start your benchmarking internally. What are other business units doing better, both locally and globally, and how can you imitate their successes?
- Review available indices: There are many available indices against which you can measure your performance, and it’s important that you choose one that makes sense for your organisation. For example, Gartner offers many different indices, as does Benchmarking Success. You can also use the methodologies detailed in the Supply Chain Index.
- Analyse your findings: No one knows your business like you do. So after you’ve finished your benchmarking, ensure you analyse your findings. Pay attention to lessons learned, but also take the time to understand why it might not be possible to be the best of the best in every metric for your particular business.
But should you track all of your spend when measuring against indexes? Anklesaria Group recommends you should only track a certain amount. Discover what that amount is, and many other game-changing ideas, in our compelling whitepaper 100 Big Ideas for 2021.