Benchmarking generally refers to the process of measuring one’s performance against a set of pre-established standards by the world or your competitors present in the same business process as you. It is essentially aimed at improving the business and operational practices that your company is already following, and refining those practices after carrying a thorough comparison with that of your competitors. Thus, the benchmarking activity is driven by a desire to enhance operational capability, to lower costs and improve service.
Benchmarking, with regards to logistics, has the same meaning as it is the main constituent of any supply chain. Benchmarking in logistics involves evaluating the amount of time that a product takes to reach its ultimate customer; expediting the flow of material within a supply chain; monitoring the storage, and shipping operations; and checking the cost effectiveness of logistics operations.
The following areas of logistics may require benchmarking:
1. Loading/ offloading;
4. Value added services;
All these factors are crucial in logistics, and needs to be evaluated against the standard practices to remove any financial loopholes or human error. Effective logistics require managing the aforementioned areas, and making necessary improvements after checking them through performance measurement tools.
In times of economic hardship, it has become increasingly challenging for logistics companies to maintain their performance, and costs together. The ever increasing fuel prices have also doubled the freight rates which is affecting their business tremendously.
Through benchmarking, you may identify areas that are taking more than what should be invested, or doesn’t have all the necessary resources. Remember, more than anything, time and money is crucial in logistics.
Thus, by reducing the amount of time and money, you can have a valuable competitive advantage over your competitors. For example, if they take 6-10 hours to deliver a product, you can take less than 4 hours to do the same job.
Also through this assessment, you’ll be able to discover new opportunities that can be helpful in improving the quality of your services, and handling processes at each step.