Supply Chain excellence and relevance of benchmarking

In the advent of supply chains somewhere in the root of its aspirations lies a factor of achieving excellence. Organizations need to excel which means components of organizations need to excel. Logistics, the movement of goods, has now been replaced by Supply Chain, end to end flow of goods, knowledge, finance and information. The extent to which an organization can succeed in the market place is now a factor of its excellence in Supply Chain. The cliché is – Competition is no more between two organizations, it’s between the Supply Chains of two organizations.

The industrial revolution leading into technology innovations has transpired organizations to adapt to multiple and dynamic business environments. The organizations metamorphosed many times all along the history but the need for achieving excellence has consistently been the key driver for survival and growth. Alignment and Integration of Supply Chain with the organizational objectives is a critical parameter for success. The alignment of Supply Chain to corporate objectives generally follows the top-down approach where organization goals are taken as inputs for supply chain. Supply Chains are then aligned with the goals through multiple methodologies and approaches.

Supply Chain Excellence is achieved when the supply chain supports, enhances and also integrates itself with the corporate objective. Off late, Supply chains have been viewed more as revenue generating opportunities rather than cost functions. In the process of reaching the goals lies the process of setting objectives for supply chains. In my personal experience of a Supply Chain consultant, I have come across this issue of goal setting in supply chain as one of the most acute in practice. The first and foremost question is – where am I today? It’s desirable for supply chain to start with an exercise to identify parameters against which it is being measured today and its achievement against those parameters.

The critical question to be addressed is – are the measures appropriate
a. In the width (coverage of activities)
b. In their depth (level of achievement expected)

Supply Chains have to have a holistic viewpoint for their overall operations to be measured for their excellence. So the fundamental questions to be answered are;
a. What to measure?
b. How to measure?

To respond to these issues, supply Chains have used multiple philosophies to aspire for higher goals, which means “excellence”. One of the most aggressively used and implemented technique is “Benchmarking”. It was one of the most favoured ways to aspire to become someone like the leader in the in the industry. Founded on the firm belief that aspiration for excellence ends with the quest to achieve similar results as the best in the industry, it guided organizations to a self created maze of measures and numbers. As a practitioner in the former assignments and a consultant in the current, I realize that;

a. Finding absolute relevant data is a humungous challenge. It’s rare to find the right organization, in the right industry subsector and in the same geographic area. The mismatch on either of the parameters will lead to erroneous benchmark, particularly so in emerging country contexts. e.g. an organization in engine manufacturing of a size of 100 million USD with operations only in one country will been benchmarking data of a similar organization. The limitation experienced normally is lack of availability of relevant data.

b. Benchmarking practices lack appreciation for process maturity of organizations.

c. Lack of justified benchmarking created a backlash of emotions and lack of acceptance by users.

d. Excellence is achieved by surpassing competition. Benchmarking limits organizational thinking to achieve results to match the “best”, not surpassing the best.

The process used for designing a supply chain for excellence hence seems to be limited if only benchmarking is used by organizations. Being relevant is no proof of being adequate.