Ruthless policing of benchmarks is critical

JOY ORLEK WHILE FEW will dispute that there are opportunities to improve efficiency and productivity in the supply chain and to strip out the costs, to achieve this you have to find them, understand their impact and create solutions. According to Martin Kelly, quoted in Ireland’s Chartered Institute of Logistics (CILT) newsletter, the answer lies in benchmarking. “In order to get better you have to decide better than what. And that means agreeing on a starting point from which to measure performance. “Benchmarks must be agreed upon and key performance indicators (KPIs) established as a gauge to evaluate improvement – a simple concept but not always easy to implement.” This because few managers are happy to concede that their warehouse may not be operating at peak efficiency or that customer service levels don't measure up to their competitors. The only true measure of the impact of various alternatives is to have clearly defined KPIs which will show what change will do to your costs, margins and profit in order to measure the repercussions, he said. The key is to secure agreement on realistic benchmarks – decide the process, set the standards and police them ruthlessly by keeping a faithful eye on the KPIs.