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Shaibin K. R.
Abstract- Organisations are using benchmarking mainly as a strategic tool for continuous
improvement. The SCM benchmarking assessment shows managers where they
currently are in supply chain management maturity and guides them toward the future.
Identifying areas of improvement in a supply chain and making efforts to tackle them is a
continuous process. One of the methods to do this is through a series of benchmarking
tests, which allows the organization to identify those areas and prioritize the effort. These
areas can be productivity, inventory positioning, inventory efficiency, supplier
performance, and supply chain risk.Benchmarking has proven itself as a tool of
management, not belonging to the typical management fads. Well-known both in research
and business practice, employing benchmarking as a means of increasing the
competitiveness goes along with considerable problems and challenges.
1.0 INTRODUCTION
SCM and Benchmarking
The essence of benchmarking is the process of identifying the highest standards of excellence for
products, services, or processes, and then making the improvements necessary to reach those
standards, commonly called best practices. Benchmarking was begun in the late 1970s by Xerox
Corporation. During this time, Xerox was losing market share and feeling a lot of pressure from its
competitors. In an attempt to try and get back into the game, Xerox decided to compare its
operations to those of its competitors. After finding quality standards with which to compare itself,
Xerox began one of the greatest trends in the business world today (McNair and Leibfried, 1992).
Benchmarking has been gaining popularity, especially in the last five years.The process of
benchmarking is more than just a means of gathering data on how well a company performs
against others. Benchmarking can be used in a variety of industries, both services and
manufacturing. It is also a method ofidentifying new ideas and new ways of improving processes
and, therefore, being better able to meet the expectations of customers. The ultimate objective of
benchmarking is process improvement that meets the attributes of customer expectations.Robert
C. Camp headed up the now-famous study at Xerox in which the buzzword benchmarking was
coined in late 1980. When asked whether the best work practices necessarily improve the bottom
line, he replied: the full definition of benchmarking is finding and implementing best practices in our
business, practices that meet customer requirements. So the flywheel on finding the very best, is
Does this meet customer requirements? There is a cost ofquality that exceeds customer
requirements. The basic objective is satisfying the customer, so that is the limiter .
Benchmarking is a standard of measurement where you analyze and compare the cost,
productivity and the whole cycle of process with another called as Benchmarking. Benchmarking
helps your company to take you to the next level, whether you are the top of all or not, you will
receive lot of useful inputs which will make your company on top . Mostly we use the word
Benchmarking in business to compare the standard of another business, we use benchmarking
for high quality standards.Benchmarking is the process whereby an assessment of an act or
performance is measured by some means, whether this is by a measurement of time, value or
quantity. For example, an assessment of moving items from one storage location to another can be
measured by time for a single movement or by quantity if the performance is over a set period. A
benchmarking project will gather the assessments and develop a plan of action to improve the
process that was assessed. The popularity of benchmarking was spearheaded by the Xerox
corporation in the 1980s and is now used in corporations throughout the world.
looking outside itself, a company can identify breakthroughs in thinking. A similar process used in a
different way can shed light on new opportunities to use the original process.
and asking your own company if using this process will create positive results in the organization.
Then the customers expectations must be identified. Finally, the critical success factors have to be
determined in order to benchmark. These factors are links to successful business results.
Form the benchmarking team: the first step is to select overall team members. These members
should be chosen from various areas of the organization. All members should cooperate and
communicate with one another in order to get the best results out of the benchmarking process.
There are three main teams comprising the overall group. The lead team is responsible for
maintaining commitment to the process throughout the organization. The preparation team is
responsible for carrying out detailed analysis, and the visit team must carry out the benchmarking
visit.
Collect the data: this step involves gathering information on best practice companies and their
performances. Before a company identifies best practice companies, they should first identify their
own processes, products, and services. This step will allow a company to fully realize the extent of
improvements available. Site visits are also an important factor in collecting data because they
allow for a more in-depth understanding of the processes.
Analyze data for gaps: this step involves determining how your company relates to the
benchmarked company. It allows identification of performance gaps and their possible causes.
Take action: this step involves determining what needs to be done in order to match the best
practice for the process. Not only should determination of changes be made, but they also should
be implemented.
Different companies have their own benchmarking methods, but no matter which method is used,
the major steps involved are as follows: first, measure the performance of the best-in-class relative
to critical performance variables such as cost, productivity, and quality; second, determine how the
levels of performance are achieved; and third, use the information to develop and implement a plan
for improvement.
(v) Use: This is when the information generated is actually used to develop new and innovative
practices. It must be emphasised that, as all companies are unique, it is imperative that the
appropriateness and applicability of any practice to ones specific operation is considered in detail.
Benchmarking is not about copying other companys approaches; rather it is about learning and
adapting appropriate practices so that they can be usefully adopted in an effort to improve
efficiency and/or effectiveness
company will benchmark a single process at a location or a number of locations to identify where
efficiencies can be made.
6.4 Considerations
Some organizations use internal benchmarking to improve performance in different
departments. Department managers may study and emulate the best practices of one particular
department. These changes may spark improvements among all departments. Internal
benchmarking has its limitations, however. The company's top department may not be functioning
as efficiently as others in the industry. This means the other departments were not truly
benchmarking against the best departments out there.Benchmarking at its best is used as a tool to
help companies evaluate and prioritize improvement opportunities. Benchmarking can be as
comprehensive or as simple as a business requires and can draw on many tools and systems. The
insights it provides into a business are invaluable, especially in the competitive franchising arena.
Benchmarking allows a true insight into the state of your business and a clearer understanding of
where it could improve. Benchmarking has become a popular adopted procedure and is used to
gain competitive advantage. Over time the procedures used to benchmark have been improved
and modified. Many companies are becoming interested in benchmarking for the continuous
improvement it allows. Benchmarking is growing in appeal to organizations due to the cost savings
achieved in executing operations. It also supports the organizations budgeting, strategic planning,
and capital planning.
Benchmarking is a structured process consisting of several steps. When implementing the steps of
the process, a company must be aware of ethical and legal issues. These issues serve as
guidelines for both benchmarking partners to ensure mutual achievement of objectives. As
benchmarking continues to grow in popularity, the process is evolving in new and improved
directions. Benchmarking can aid any company into success just as long as it is applied correctly.
Benchmarking makes it easy to identify the gap between where the organization would like to be
and where it actually is. This gap provides a measure of the improvement an organization would
like to make . In the short run, avoiding this gap and refusing to change will decrease the
opportunities for survival in the long run. It is an excellent tool because it involves everyone,
including the management and the workers. The kind of benchmark a company should undertake is
dependent on the companys characteristics and circumstances . It is up to the top management
whether they prefer to benchmark focusing on diverse internal functions, competitors, industry
performance, or best-in-class targets.
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