Benchmarking is a tool, a method used in the contemporary business vision with great success. Little studied in depth but commonly confused with analysis of competition. For starters, nothing better than an example to better understand its scope:
A mining company that mined coal in the US conducted a study at a Disney theme park. It's hard to think of two companies with such divergent interests making such a society (even though the seven dwarfs in the fairy tale were miners!).
What the mining company was studying was how Disney maintained the internal pneumatic system for the animated characters. Clearly, Disney cannot afford to lose its natural appeal to its attractions, so they must develop excellent maintenance routines for pneumatic air systems. The mining company analyzed these routines and was able to transfer those results to its own facilities. The decrease in downtime caused a considerable improvement in productivity. (McDonald & Tanner, 2006, p.8)
Benchmarking consists of identifying the best practices of other companies and adapting them in order to improve their own performance. Or, being more specific, it is defined as a “systematic and continuous process to evaluate the products, services and work processes of organizations that are recognized as the best of their kind with the purpose of making organizational improvements” (Spendolini, 2005, p. 14).
A must-see reference when addressing this topic is to take a look at the conception of Robert Camp, a logistics expert Xerox engineer who coined the term in 1989 and defines it very well from the title of his work: “Benchmarking: The search for industries best practices that lead to superior performance ”. In this work, reissued in 2006, the author conceptualizes benchmarking as the search for the best practices in the industry that lead to excellent performance. (Robert C. Camp, 1989).
However, benchmarking is not a kitchen recipe, but a process of discovery and continuous learning that can be applied to all phases of the business. Among her most important areas of study are quality, productivity and time management (Mora Venegas, 2005). In other words, we are facing a new management concept: continuous improvement by comparison.
Why should benchmarking be carried out in the management of a company's supply chain? In a word: change. Change is necessary in a company, either to stay in a good position or to advance. If a business is not stable, it just hopes to lag behind its competitors. After all, as W. Edwards Deming pointed out: “A company does not have to do all of these things. Survival is not mandatory. "
Hau Lee (2005) spoke to us about the organizations that achieve the “three A's” (agility, adaptability and alignment). Only companies that were able to respond quickly to changes in supply or demand, adapt to the changes that the market always brings and align all members of the supply chain to a single vision in which the interests of all of them would survive in the long term.
Here the fundamental question is: How is the necessary change managed and the unnecessary one avoided? Benchmarking is also a managed change process that uses a structured approach, identifies what needs to be changed, finds ways to change it, calculates the potential for improvement, and creates the desire for change (McDonald & Tanner, 2006, p.11). Benchmarking is also used as a global problem-solving process. Other companies use it as an active mechanism to keep updated on the most modern business practices (Spendolini, 2005, p.33).
To answer this question, the metrics used in different guidelines of the supply chain of the best companies that serve as a benchmark can help us manage that improvement (change) that we have identified. Let us remember that "best company" is not a static concept, but rather represents the model or benchmark that most efficiently displays the aspect it intends to improve. It can be used as a benchmark for companies from different sectors as well as different markets and even magnitudes. For example: a food distribution company in Lima may have its benchmark to improve its security inventory in a beer distribution company in Bogotá.
What should be taken into account in the benchmarking analysis in order to optimize the supply chain is the end that is sought with a certain guideline. For example: inventory plays a significant role in the ability of the supply chain to support the company's competitive strategy (Chopra & Meindl, 2008). Continuing with the example, if a certain company values the responsiveness more, it will obtain it by locating large amounts of inventory close to its customer. Conversely, if you are looking for efficiency through inventory reduction, you must install a centralized warehouse. The benchmarking study will be carried out with respect to a company that has implemented the valuation that is being sought: responsiveness or efficiency. A third option would be the balance between the two.
A more specific study of this guideline could be done by applying a metric called seasonal inventory, which measures the amount of both cycle and safety inventory that is purchased only for seasonal changes in demand. If my company is a department store that acquires a brand from the luxury segment and wants to know how it will behave during the change of season, I could do a benchmarking analysis with a specialized store and observe the behavior of the security inventory to avoid a breakdown of stock, as customers in that segment are willing to pay more for a higher level of availability.
The pricing strategy also requires particular attention. A company must decide whether to charge a fixed price for the chain's activities or have a menu of prices that vary depending on some other attribute, such as the response time or the place of delivery, where the customer pays an additional fee for delivery. at home but he does not pay anything if he collects it himself (Chopra & Meindl, 2008). Offering discounts or maintaining a low price policy is a current dilemma for supermarkets. Again, here what to look for is the value that prevails in the organization: if you want to maintain an optimal level of demand without weekly fluctuations, you should opt for the low price policy all the time.
There are more than a few companies that have realized the advantages of benchmarking in supply chains, but the biggest barriers are the prejudices or traditional stereotypes that exist regarding competitors: “that the competitor is my enemy” or “he is not trustworthy". It is true that there is skepticism among businessmen in sharing certain information with the competition: "I do not trust that competitors will give me real data", "the lawyers will not allow it" or "we are here to defeat the enemy, not to train them" (Spendolini, 2005, p. 29) are some of the obstacles that must be faced. Benchmarking, as we pointed out at the beginning of this section, is not a traditional analysis of competition, but a learning process.
In benchmarking there are at least four levels of achievement:
1. The current basic level or performance.
2. The achievable level, which is the best result that can be obtained using current resources.
3. The benchmark level; which is the potential level of performance that has been identified in the benchmarking study.
4. The long-term goal, which is the expected level of performance in the future.
Figure 1. Benchmarking performance levels
Benchmarking performance levels
Source: MACDONALD, John & TANNER, Steve. (2006).
The key aspect of benchmarking is the benchmark, which will be closely related to the degree of excellence that the organization is seeking. If the search has been limited within the company, the results will be limited. If we restrict the search to the sector, you can only become leader of a certain segment. This may give a short-term competitive advantage, but if you want to achieve a performance that is hard to beat, you can always raise the benchmark even further. It is on this point that I agree with the authors when they argue that the power of benchmarking is that it encourages reasoning "without feeling cornered" (McDonald & Tanner, 2006, p.13).
Finally, there are some examples of widely used benchmarking, perhaps not aware of using benchmarking properly, but which in any case are part of this young subject (Tripier, 2002):
- Observe markets that have undergone stages through which the company is just passing. Review organizational model to assess restructuring. Measure the impact of new rules of the game on companies that already use them. Compare regulatory frameworks, metrics and anticipate impacts. Quantitatively review the impact. of certain decisions.Vertical or horizontal integration.Affection of the organizational climate before conflict stimuli.
References
- Author. LEE, Hau L. (2005). Towards a high performance supply chain. Harvard Deusto Business Review. Edition 132 Authors. Chopra, S., & Meindl, P. (2008). Supply chain guidelines and metrics. In Supply Chain Management. Strategy, planning and operation. (pp. 44-64) México DF: PearsonAutor. SPENDOLINI, Michael J. (2005). Benchmarking. Bogotá: Editorial NormaAutores. MACDONALD, John & TANNER, Steve. (2006). Benchmarking in a week. Barcelona: 2000 Management Editions Agostini Planet. Author. CAMP, Robert C. (1989). Benchmarking: The Search for Industry Best Practices That Lead to Superior Performance. The University of Michigan: Quality Press.Author. MORA V, Carlos. (2005). What Benchmarking bequeaths to us. Recovered from http://www.gestiopolis.com/canales5/eco/loquenos.htmAutor. TRIPIER,Benjamin. (2002). Benchmarking. Recovered from http://www.gestiopolis.com/canales/gerencial/articulos/48/bmk.htm
