Importance Of Benchmarking In Operations Management

Operations Management.

For a company to be able to perform at its best, it is useful to use such a tool as benchmarking. Benchmarking means comparing something to a set level of performance that one can look upon to and compare himself to. In other words, it is comparing the process to the best practice in the field. Benchmarked could be such things as quality, price, cost-effectiveness and other factors. Benchmarking is important also in terms of improving company's supply chain management. As you are comparing your supply chain to the best practiced supply chain, it gives you detailed information on how to make your company's management processes more successful. When supply chain is benchmarked, it focuses on three aspects: the supplier,

Successful global supply chain management gives the company a better place in the market, by gaining competitive advantages, and cost reduction can be achieved. SCM also brings logistics culture into the organization, which improves the quality of the service. Supply chain can be managed effectively only if network of professionals exists, who continuously integrate all data and exchange information. What successful supply chain needs are professionals with excellent knowledge in laws, regulations and other legal aspects concerned with international trade. However, one of the most important aspects of a successful supply chain is focusing on customer satisfaction. (Branch,

Supply chain cycle time reduction, or in other words time compression, strives to achieve increased speed, response to changing market needs, shortening the time and keeping up with the speed. This can be achieved by supply chain network collaboration, integration, information exchange, making supply chain more transparent and many other tactics. By time compression in supply chain, company will also reduce the days of how long the inventory is kept, which is very important for company as it will raise profits and make accessible much needed capital. Reduction in inventory will allow reducing the labor which in relation will reduce costs for the company. Moreover, as the days in inventory are reduced, related bank and interest charges are reduced. For companies that want to reduce their supply chain cycle time - analytical approach is required. It requires continuous controlling to notice the areas where improvements are possible. To reduce the time in supply chain, the strategy could be as follows. First, a company should measure the process that they have at the time. This means to measure how long is the whole process beginning to the end and to notice areas of improvement. The next step is to look at supply chain as one whole process, not