BENCHMARKING

How benchmarking works in SCM?

📌 3. Collect and Analyze Data

Data collection could involve public sources, industry reports, site visits, or even direct contact with
benchmarking partners. The data is then analyzed to understand the performance gap and the practices
that lead to superior performance.

EXPLANATION:

Collecting and analyzing data is a crucial step in the benchmarking process.

Imagine you're trying to improve something, like the way you run a business or how you study for
exams. To make improvements, you need to know how well you're doing compared to others.
That's where data comes in – it's like gathering information to understand where you stand.

DATA COLLECTION

This involves gathering information from different sources. It could be from things like books,
websites, or talking to other people who are doing similar things.

So, if you're trying to improve your business, you might look at reports about other similar
businesses, visit their stores, or even talk directly to their owners to learn from their experiences.

It's essential to collect both quantitative and qualitative data to get a comprehensive understanding
of performance and practices.

● Public sources: Industry reports, government publications, academic research, etc.

● Industry reports: Reports published by industry associations or research firms that provide
data on industry performance, trends, and best practices.

● Site visits: Visiting other organizations or facilities that are considered industry leaders to
observe their operations firsthand.

● Direct contact with benchmarking partners: Establishing relationships with organizations

that are willing to share data and insights for benchmarking purposes.

SEGREGATION and ORGANIZATION OF DATA

This data could include metrics - the factors you currently measure that dictate the current standing
of the organization in terms of growth as a business.

1. financial performance
2. operational efficiency
3. customer satisfaction scores
4. product quality measures

Once the data is collected, organize it in a structured format for analysis. This may involve
creating spreadsheets, databases, or other tools to manage and manipulate the data effectively.

DATA ANALYZATION

Once you've collected all this information, you need to make sense of it.

Analyze the collected data to identify patterns, trends, and areas of improvement.

Look for performance gaps between your organization and benchmarking partners or industry
standards.

Identify the specific practices or processes that contribute to superior performance in those
areas.

● Statistical analysis: Analyzing sales data to identify trends and patterns.

● Benchmarking: Comparing their performance metrics with those of benchmarking partners to

identify areas where they lag behind.

● Customer segmentation: Analyzing demographic data to understand the preferences and

buying behavior of different customer segments.
 ● Store performance analysis: Assessing the performance of individual stores to identify
strengths and weaknesses.

For instance, if you're running a restaurant and find out that your competitor serves meals faster,
you might analyze what they're doing differently to figure out how you can improve your own
service.

So, collecting and analyzing data in benchmarking is like gathering information about how
well you're doing compared to others and figuring out what you can learn from them to
improve.

📌 6. Monitor Progress
Continuously monitor the results of the changes to ensure they’re leading to the desired improvements. This
involves establishing performance metrics and setting up a system for regular review.

EXPLANATION:

+ Basically, keeping track.

Establish Performance Metrics: This means deciding what you're going to measure to see if
you're improving.

Let's say you're a manager at a software development company, and you've implemented a new
agile methodology to improve project efficiency and delivery time. To monitor progress, you
establish the following performance metrics:

1. Project delivery time: The time taken from project initiation to final delivery.
2. Team productivity: The number of story points completed per sprint.
3. Customer satisfaction: Feedback from clients on project quality and timeliness.

Set Up a System for Regular Review: This involves creating a routine or schedule to check on
your progress regularly.

This could involve weekly or monthly meetings where you analyze the data collected for each
metric and discuss any deviations from the desired outcomes.

Monitor the Results: Here, you actually do the testing and evaluating part.

For instance, in the first month after implementing the agile methodology, you observe a decrease
in project delivery time and an increase in team productivity, but customer satisfaction remains
unchanged. Through regular review meetings, you identify that although projects are being
completed faster, some clients are reporting a decline in quality due to rushed deliveries.

Based on this feedback, you decide to make adjustments to the agile process, such as
emphasizing quality assurance measures during sprint planning and allocating more time for testing
and feedback loops.

Ensure Desired Improvements: Religious practice of consistency.

📌 7. Repeat the Process

Benchmarking is not a one-time activity. It’s a continuous process of comparison and improvement.

EXPLANATION:

Benchmarking must be done continuously, and regularly, given the actuality of change and
unexpected phasing within the economy and industries.

Shouldn’t be practiced as “ningas-kugon”.