Gain the benchmarking advantage today!
By Brian Milligan -- Purchasing, 10/7/1999
The word "benchmarking" might just be the most misunderstood and simplest business word of the decade. In supply management, the word benchmarking actually refers to the process of comparing yourself to the best, learning and then improving--continuously.It's a simple and powerful idea. Benchmarking was pioneered by Japanese manufacturers after World War II, was elevated by America's most successful companies like Wal-Mart and Motorola in the 1970s and 1980s, and yet remains woefully underutilized today. With that other business buzz word (the dreaded "reengineering") still making the rounds at U.S. companies, benchmarking is a practice that every purchaser will want to review again.
"In plain language, process benchmarking is not just a one-time effort, and it is not easily accomplished," says James P. Morgan, Purchasing Magazine's editorial director emeritus. "But when applied correctly, it can achieve significant breakthrough goals. On a one-time basis, delivery improvements of 50% are realistic goals for benchmarkers."
That's why Purchasing magazine decided to publish Benchmarking: In Theory and Practice. Written by Morgan and Kenneth Stork, former corporate director of materials and purchasing at Motorola and contributing editor to Purchasing Magazine, the book examines benchmarking in plain English. More important, it provides concrete ideas on how to actually get started on a benchmarking program right away.
As Stork and Morgan explain, benchmarking is essentially a four-step process of planning, analyzing, integrating, and taking action. With insights from Wal-Mart to Chrysler and Motorola, the book outlines how one should approach exceptional companies that are to be benchmarked. (The key is good networking skills.)
Loaded with practical ideas, readers will benefit from a review of the code of conduct for benchmarking on page 210. The top ten sins to avoid in benchmarking on page 79 likewise will help you avoid failed efforts. Concrete ideas on how to get upper management buy-in will help put your benchmarking project on the fast track.
Don't get bogged down in metrics, advise Stork and Morgan. Do choose a meaningful and doable project. A study of the best in supply chain management will be too broad. A look at how PC-maker Dell and other leaders manage their inventory with demand planning may be a better project.
Finally, if not convinced that you need to start benchmarking, a brief test buried on page 146 of the book just might convince you to get started. For example: Do suppliers manage your inventory? Do you have a supplier advisory board? Do you have written strategies in use for managing important supplies? If the answer is not 100%, then room for improvement via benchmarking exists.
Beware, however, once you get started benchmarking you may never stop. True benchmarking mavens say they are constantly on the search for ways to do a better job and gain competitive advantage.
For your copy, send $42 (check or money order) to Purchasing Magazine, P.O. Box 497, New Town Branch, Boston, Mass. 02456. For credit card orders call (617) 558-4348 (Amex, Visa, and MasterCard accepted). You can also visit our Bookstore on Purchasing's Web site, www.purchasing.com.
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