How does benchmarking across the supply chain impact efficiency, including logistics and distribution?
Supply Chain Benchmarking improves performance with various practices.
Discover how these practices work and why they matter.
Trent Morris explains everything in the video below.
Rob: This week, we’re diving into Supply Chain Benchmarking. Our channel has plenty of content on this topic, including videos on logistics benchmarking and KPIs. We’re thrilled to welcome back Trent Morris. Trent, you’ve been busy with supply chain benchmarking lately. Can you shed some light on what companies are focusing on and how viewers can approach benchmarking themselves?
Focus on Cost Benchmarking
Trent: Certainly! Supply chain benchmarking covers various areas, but my recent work has been centered on cost benchmarking. With rising industry costs and decreasing demand, companies are keen to understand if their logistics costs are competitive. Cost benchmarking offers a more affordable method to evaluate this compared to traditional RFT or RFP processes.
Rob: That’s interesting. Many companies come to us wanting to test their costs through RFPs, which I find problematic. Using RFPs purely for benchmarking feels a bit unethical since it involves a lot of work for suppliers. How can companies benchmark effectively without this approach?
Trent: I agree with you, Rob. Responding to RFPs can be very costly for suppliers. As consultants, we’ve handled numerous RFPs and collected various bids, which we compare against industry standards. We typically analyze around 12 months of transaction data in areas like transport and warehousing and check this against industry benchmarks. If there are gaps, we might issue a small RFI, clearly stating it’s for benchmarking purposes. This transparency helps avoid unnecessary work.
Alternative Benchmarking Approaches
Rob: For those who want to benchmark without hiring a consultant, what are the options?
Trent: There are several resources available. For instance, the Drewry World Container Index tracks ocean freight trends, and the Australian Institute of Petroleum provides fuel price data. A simple Google search can uncover useful industry data. Additionally, I’ve advised clients by reviewing a couple of their trade lanes and providing initial insights. Many consultants are willing to offer preliminary feedback to demonstrate their value.
Utilizing Industry Connections
Rob: Networking within the industry can also be beneficial. Engaging with peers through industry associations or informal meetings can provide valuable cost comparisons. Just ensure you’re comparing similar items.
Trent: Absolutely! Maintaining relationships with potential suppliers, even if they aren’t current ones, can offer valuable market insights. Honest conversations about market conditions can be very helpful.
The Importance of Ongoing Benchmarking
Rob: Regular benchmarking is essential to stay competitive. It’s like running a race – you need to know how you measure up against others. Continuous benchmarking helps ensure your costs are aligned with industry standards and reveals areas for improvement.
Trent: Exactly! Benchmarking is vital for identifying optimization opportunities and ensuring you’re not falling behind industry trends.
Rob: Thanks for sharing your insights, Trent.
Don’t miss out on important details by watching the full video above.
Related articles on this topic have appeared throughout our website, check them out:
- Freight Benchmarking: What Is It? Why Do It?
- How to Select the Right KPIs for Supply Chain Benchmarking
- The What, Why, How of Supply Chain Benchmarking
- Common Sense Warehouse Performance Metrics for Supply Chain Benchmarking
- 8 Uses for Supply Chain Benchmarking and Their Most Valuable Benefits
Editor’s Note: The content of this post was originally published on Logistics Bureau’s website dated November 15, 2023, under the title “Supply Chain Benchmarking with Trent Morris“.
