Benchmarking Logistics Performance:Two-Stage Benchmarking Methodology
Required Reading
The following two articles are used in the Case study and provide a good overview of benchmarking metrics and their implications:
Anonymous, (2008 Dec) Time to take stock of the supply chain, Logistics Manager, London: p 34.
Chan, Felix T. S., Chan, H. K., Lau, Henry C. W., & Ip, Ralph W. L. (2006), An AHP approach in benchmarking logistics performance of the postal industry, Benchmarking, Bradford 2006, Vol. 13, Iss. 6, pg 636.
The following provides a good historical perspective of benchmarking:
Gilmour, Peter, (1999) Benchmarking supply chain operations; International Journal of Physical Distribution & Logistics Management; Bradford: 29:4, pp 259-266 (1999).
The following article provides insights into the role benchmarking can play in comparisons at the international level:
Smyrlis, Lou, (2006 Nov/Dec) Supply Chain Benchmarking, Canadian Transportation Logistics, Don Mills: Vol.109, Iss. 11; pg. 60, 3 pgs.
Read the following articles:
Chan, Felix T. S., Chan, H. K., Lau, Henry C. W., & Ip, Ralph W. L. (2006), An AHP approach in benchmarking logistics performance of the postal industry, Benchmarking, Bradford 2006, Vol. 13, Iss. 6, pg 636.
Anonymous, (2008 Dec) Time to take stock of the supply chain, Logistics Manager, London: p. 34.
Many practices can continue almost as a habit without anyone actually sitting down and thrashing out the rationale for each process or operation. DHL understands that its success and that of its clients are intrinsically linked to efficiency and effectiveness of operational processes. Sharing the value delivered through these improvements between the partners is a key enabler in driving out cost. “Within the retail and consumer group at DHL Exel Supply Chain, we've already held almost 100 Process Improvement/DMAIC workshops this year, which have contributed to continuous improvements and identified effectiveness equating to pound 4m.”
Another tactic for cutting supply chain costs is to look at the whole value chain—physical flows, information, financial flows, systems, business structure/silos, culture, etc. “We offer our customers these as ‘Value Chain Assessments' (VCA), where a customer may have a broad question—where is the risk in my supply chain? Where are my major costs and how can I impact them? Answering these questions is often easier said than done as many in-company logistics or supply chain managers lack visibility beyond their own supply chain operations. We can fill in the gaps in the picture—especially with today's highly complex and extended retail supply chains. With a wide range of clients, 3PLs can provide benchmarking and information on best practice drawn from a range of industries, as well as practical deliverable solutions. Our VCA methodology challenges our customers to embrace change—but it also challenges our own teams to do likewise. Success is not in the delivery of VCA report—it's in being a catalyst to deliver benefits to our customers.”
In an essay of 3–4 pages, answer the following questions:
Explain why a two-stage benchmarking methodology that utilizes performance evaluation metrics followed by continuous improvement metrics could be a useful tool for achieving a competitive advantage.
Discuss why the inclusion of the second phase, related to continuous improvement, represents a step forward from traditional benchmarking approaches.
Evaluate the general adequacy of the major performance criteria used in the AHP article for assessing logistics applied to other types of organizations. Feel free to suggest additions or modifications in the performance criteria if you believe there are inadequacies in the current criteria.
Describe the role a 3PL could play in implementing an effective benchmarking approach
Benchmarking logistics performance
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Benchmarking logistics performance
This paper aims to discuss issues related to the approaches of benchmarking performance in the logistics of a company and focuses on evaluation and constant improvements for a company. A benchmarking methodology that utilizes two stages of performance evaluation metrics followed by constant improvements could achieve a competitive advantage. This is because the company is able to compare the performance of the benchmarked company with other competitors in the industry (Chan et. al 2006). This is important since would show areas of weaknesses that would be improved as well as strengths to capitalize on. This is covered in the first stage. A company that does not carry out evaluations would not be able to know how others in the industry are performing and or areas of weaknesses. Competitors would be capitalizing on these weaknesses to register higher performances to the disadvantage of the company. Upon evaluation, a company can select and implement the best improvement options used in the whole industry so as to raise performance in areas of weaknesses (The Conference Board Inc, 2014). This increases the ability of a company to compete with others since all sections would attain and maintain relatively highest performance levels when compared to rivals. Other companies that do not observe the same methodology may not improve their weak areas and hence the benchmarking company would be better placed to take benefits underlying such areas. Such benefits would be in costs, time, capabilities and integration among others. These are sources of competitive advantage and puts a company in a better position to satisfy the needs of the market and register high performances.
The inclusion of the second stage of continuous improvement is a step forward to traditional approaches of benchmarking. This is because it introduces the concept of ensuring evaluations are conducted throughout as well as areas to be improved. This takes care of recent developments that take place in the industry rather than using evaluations carried out in the past. The traditional benchmarking approaches tend to preserve the status quo and hence assume dynamism in the environment (Gilmour, 1999). The contemporary environment is very turbulent such that evaluation and improvements would be rendered obsolete or ineffective within shorter durations of time. The traditional benchmarking strategies would not keep pace with the recent developments since does not emphasize constant improvements. In addition, the constant improvements take consideration of the best options available in the entire market at any given time as opposed to the traditional benchmarking tactics that would depend on measures developed internally (Smyrlis, 2006). Constant improvements would also involve best measures, practices in other industries and this could heighted performances to very high levels than if only improvements in the same industry are applied.
Major performance criteri...