How good is ‘good’?
Are you best-in-class or major opportunity in your industry? Do you have a bad warehouse? Not sure how you stack up against your competitors?
One of the best ways to answer these questions is to begin the process of benchmarking. Merriam-Webster defines benchmarking as “the study of a competitor’s product or business practices in order to improve the performance of one’s own company.” Basically, benchmarking helps determine how good ‘good’ is, and how they are making the standard.
- Learning how excellence is achieved in similar fields;
- Sharing knowledge about common problems;
- Setting appropriate performance measures and targets for improvement;
- Enabling and empowering employees in making change happen;
- Extending a culture of continuous improvement.
But, Why Benchmark?
Let’s look at the most recent benchmarking survey from WERC, DC Measures 2009. Best-in-Class warehouses are achieving considerably better results than typical warehouses across several performance measures.
Let's look at one of my favorite metrics, Perfect Order Index (POI). Best-in-Class warehouses POI is greater than or equal to 98.7 percent while Typical (or Average) warehouses have a POI between 92.2 and 96 percent.
|Metric||Major Opportunity||Disadvantage||Typical||Advantage||Best in Class||Median|
|Perfect Order Index||Less than 83%||>= 83% and < 92.2%||>= 92.2% and < 96%||>= 96% and < 98.7%||>= 98.7%||94.9%|
Benchmarking helps your company to compare how well you are performing against others and identifies whether your company is at a disadvantage. Whether you are benchmarking to increase productivity or reduce operating expenses, driving best-in-class performance may increase efficiencies, profitability, and improve customer service.
There are several resources to help you get started with benchmarking. I recommend the following:
- Warehouse Manager’s Guide for Benchmarking available through the WERC Online Store.
- Attend a seminar similar to WERC’s Benchmark NOW!
- Start tracking your stats or performance measures and understand what the numbers are telling you. For WERC members, there is the WERC Interactive Benchmarking Tool.
- Participate in a benchmarking study or survey, especially one that provides you with the results of the study or survey.
Benchmarking is not hard. It just takes practice and a clear understanding of your desired outcomes. If you have an interesting benchmarking story to share with us or a particular question you would like us to answer about benchmarking or metrics, send the details or question to email@example.com.