You’ve probably already done some benchmarking today. If you keep an eye on your commuting time, you probably have an unofficial ‘benchmark’, let’s say 35 minutes. If your commuting time is above 35 minutes, you start looking for reasons for the delay, like the school bus that stopped in front of you for an extended time. Similarly, if your commute is less than 35 minutes, you spot the reasons why, like you managed to get to the bus stop on time, and the bus was on time too.
We all probably do way more benchmarking than we realize every day, even every hour.
But many companies don’t benchmark, or benchmark enough, in many areas of their organization, including their inventory management.
However, just like the unconscious benchmarking of your commute times shows you what caused delays and what made an improvement, benchmarking your inventory management can help you assess your processes and identify ways to improve them
Three Types of Benchmarking
Benchmarking helps you assess the performance of a process by some means of measurement, including by time, value or quality. In inventory management, the process of moving raw materials from receiving to a warehouse storage location can be measured for the time it takes.
There are three main types of benchmarking.
Examines processes within a single company. If a company has multiple locations that use the same process, or different production lines in the same facility using the same process, benchmarking can assess those similar operations. Each instance of the process can be assessed and compared to other instances to adopt the best practices across all production lines and/or all locations.
Every industry sector has its ‘star’ performers that have a reputation for using best processes and practices. If a company has a program of internal benchmarking in place and is looking to find out how others in their sector carry out the same processes, they can conduct competitive benchmarking.
Even after assessing your internal processes and the best practices within your industry, there may still be new ways to make improvements with methods used in another sector. External benchmarking can reveal different methods and procedures that are in use in a particular company or industry sector.
The Benefits of Benchmarking
Depending on whether you use it to improve a process’ time, value or quality, your company can realize a number of advantages and benefits from benchmarking.
1. Lower Labour Costs
If benchmarking helps reveal a faster way to complete a task, not only can it speed up your workflow, but you will spend less on the labour needed to carry out the task. The efficiencies that benchmarking reveals can even reduce the number or workers, and their costs, needed to complete a process
2. Higher Product Quality
In a case of competitive benchmarking, if a competitor’s product is known for its superior quality, the competitive product itself may be examined to help set benchmarks for your own quality standards.
3. Lower Costs and/or Increased Sales
In most industries, the companies that create products of the highest quality, or that produce them faster, or that offer a better price for a similar product, generally enjoy a number of competitive advantages. Those advantages mean being able to accomplish the same thing for less cost or being able to have higher sales and/or profit margins, or all of them together.
Benchmarking is an important way to make your inventory management more efficient and productive. But you need reliable and versatile systems in place to properly execute your benchmarking assessments and measure improvements.
To learn more about how AdvancePro Inventory Management software can give you the tools you need to help you carry out and realize the most benefit from benchmarking, all integrated with your existing systems, get in touch with us here at AdvancePro.