Using Benchmarking To Improve Supply Chain Processes

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Using Benchmarking To Improve Supply Chain
Processes

• Dr. Robert A. Novack
• Dr. William L. Grenoble
• Center for Supply Chain Research
• Penn State University

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• AGENDA
• CSCR and Benchmarking
• Survey Methodology
• Demographics
• Benchmarking Practices
• Satisfaction With Benchmarking
• Issues and Observations

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• Survey Objectives
• To Learn About How Organizations Practice
  Benchmarking
• Why Benchmark
• What is Benchmarked?
• How used?
• Satisfaction
• Challenges
• To Provide Advice to Supply Chain Council

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CSCR Focus
Supply Chain
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Consortium BenchmarkingDeveloping an Approach

• Group Process GenericFormation
  Study Process
• Presentation Best Metrics
• Discussion Practices Survey

Start-Up
On-Going
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Benchmarking Groups
Customer Service Import S OP Transportation
BASF Becton-Dickinson BASF IBM American Standard Arkema Group Becton-Dickinson Church Dwight
CertainTeed ExxonMobil Chemical Hershey Foods Kodak Pfizer PPG Industries Brown-Forman Campbell Soup Company CertainTeed ExxonMobil Chemical Honeywell Johnson Johnson
Kodak Kraft National Gypsum Unisys Church Dwight ConAgra Foods ExxonMobil Chemical
Ocean Spray Cranberries Pfizer Heinz Hershey Foods
Sanofi-Aventis Pharmaceuticals TARP Johnson Johnson Kimberly-Clark
World Kitchen Wyeth Pharmaceuticals Kraft Foods Pfizer
Wyeth Pharmaceuticals
4/15/2014









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• Jointly sponsored research
• Penn States CSCR and the Supply Chain Council
• Survey sent to 1,221 CLM executives
• 126 useable responses
• 10.3 response rate
• 75 benchmarking firms (59.5)

Methodology
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Respondent Profile -Business Environment
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Respondent Profile -Industry
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Respondent Profile - Revenue
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Respondent Profile - Supply Chain Council Member?
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Have You Conducted Benchmarking Activities in the
Past?
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Reasons Firms Do Not Undertake Supply Chain
Benchmarking
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What are the reasons why your firm decided to
benchmark SC processes?
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Which Areas In the Supply Chain Were Benchmarked?
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Which of the Following SCOR Level One Metrics Is
Your Organization Currently Measuring And/or
Benchmarking?

• Measuring() Benchmarking ()
• Delivery performance 88.0 54.7
• Inventory days of supply 70.7 36.0
• Order fulfillment lead time 68.0 38.7
• Fill rate/ Perfect order
• fulfillment 62.7 37.3
• Supply chain management
• costs 58.7 37.3
• Supply chain response time 52.0 20.0

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Which of the Following SCOR Level One Metrics Is
Your Organization Currently Measuring And/or
Benchmarking?

• Measuring() Benchmarking ()
• Cost of Goods Sold 49.3 14.7
• Asset Turns 42.7 18.7
• Cash-to-Cash cycle time 34.7 20.0
• Warranty cost or returns
• processing cost 24.0 6.7
• Value-added productivity 22.7 9.3
• Production flexibility 16.0 9.3

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How Do You Use the Results of Benchmarking?

• 90.7 To encourage improved performance
• 82.7 To plan improvement in supply chain
• processes
• 68.0 To reengineer business processes
• 66.7 To gain a competitive advantage in the
• industry

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Process Measured
Functional Benchmarked Area

• 72.0 Transportation
• 62.7 Fulfillment

• 88.0 Delivery Performance
• 68.0 Lead Time
• 62.7 Fill Rate

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Benchmarking to Achieve Results
Process Measured

• 58.7 Supply Chain Cost

• 5.25 Reduced Operating Costs

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Benchmarking Value
Use of Benchmarking Results

• 90.7 Improved Performance
• 82.7 Plan Process Improvement

• 5.42 Performance Comparisons
• 5.52 Improved Process

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How Would You Assess the Satisfaction With Your
Overall Benchmarking Efforts?
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How Would You Assess the Satisfaction With Your
Overall Benchmarking Efforts?
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How Satisfied Are You With the Following
Attributes Concerning Your Current Benchmarking
Efforts?

• Attribute Score
• Quality of output 4.76
• Comparability 4.50
• Timeliness 4.51
• Price/ Cost 4.53
• 7 point Likert-type scale 1 not satisfied,
  7 satisfied

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How Important Have the Following Outputs or
Benefits of Benchmarking Been in Providing Value
to Your Firm?
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Please Indicate How Important Benchmarking
Initiatives Have Been to Your Firm in Achieving
Improved Results in the Following Areas?
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The Most Important Challenges to Overcome to Be
Successful in Benchmarking
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What general advice would you offer to SCC for
future member benchmarking?
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Overall Rankings of Key Processes

• Process Measured Benchmarked
• Service 1 1
• Cost 2 2
• Financials 3 2
• Responsiveness 4 4

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Overall Rankings of Benchmarking Impacts on
Achieving Improved Results

• Process Rank
• Service 1
• Cost 2
• Revenue 3

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KEY TAKE AWAYS

• Benchmarking is an important component of supply
  chain improvement initiatives, but is still not
  practiced by many firms.
• Most firms approach benchmarking as a narrow, not
  broad, effort.
• Satisfaction with current efforts is lukewarm.
• Benchmarking is not easy!