Supply Chain Benchmarking Process

Supply chain benchmarking:

Benchmarking is a management tool that can be defined as the systematic process of searching for best practices, innovative ideas and efficiencies that lead to continuous improvement. (Wong and Wong, 2008).

For simplicity, benchmarking can be understood as an improvement cycle that includes plan, do, check and act. While planning you define what process is to be benchmarked and a type of benchmarking study. “Do” refers to a study of selected processes and the data collected from a benchmarking partner. “Check” focuses on carrying out gap analysis based on the collected data. “Act” relates to implementing/launching processes on the basis of gap analysis.

Initially, supply chain benchmarking focused on internal performance

(Source: Modern Materials Handling, 2001)

Benchmarking on a basis of SCOR metrics:

SCOR model provides standard process definitions, terminology and metrics for supply chain management across different industries (Stewart, 1997). In recent times, SCOR metrics are increasingly adopted as standard supply chain performance measures and used for benchmarking practices.

However, on the downside, it should be mentioned that SCOR model fails to address the issue of integration synchronization (Wong and Wong, 2008). Furthermore, SCOR model is reported to be rigid and not being able to reflect changing nature of dynamic supply networks (Samuel et al., 2004).

Benchmarking on a basis of supply chain management scorecard:

An SCM scorecard can be developed on the basis of supply chain maturity model. Five levels of maturity are recognized which differ on the extent to which the process is explicitly defined, managed, measured and controlled. As the maturity level increases, level of process capability defined in terms of control, predictability and effectiveness also increases. Maturity levels, in order of increasing maturity are:

• Ad hoc

• Defined

• Linked

Although external benchmarks help in comparing similar operations in an industry, supply chain operations are not standardized. Due to this, comparing overall performance of companies based on external benchmarks can be challenging and probably misleading. On the other hand, internal benchmarks must be created with the focus of continuous improvement, with companies setting their own previous performances as a baseline. (Trew, 2002)

While implementing benchmarks and choosing related metrics, corporate goals must be acknowledged. Additionally, this process must be done at the corporate level and not with respect to individual departments. Benchmarking can be integrated with the SCOR model as a useful resource for additional metrics. To implement a SCOR model as benchmarking program, there are several steps including establishing global supply chain goals, identifying opportunities and developing the scorecard, measuring and analyzing, and design and implementation. It has been proved that even though this process may seem costly, the supply chain effectiveness of companies has considerably increased and it also proves as an obvious competitive (Boon,