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Why Should I Benchmark?

By Karl B. Manrodt Ph.D. | 02/15/2010 | 8:30 PM

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.

The Warehousing Education and Research Council’s Warehouse Manager’s Guide for Benchmarking states that warehouses who benchmark well, better their performance by:

  • 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 kmanrodt@georgiasouthern.edu.

Cheers!

Karl
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The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

About Karl Manrodt

Karl Manrodt

Karl Manrodt is an accomplished logistics academic and author. He serves an Associate Professor in the Department of Management, Marketing and Logistics and Georgia Southern University, Statesboro, Ga. He is also co-director of the Southern Center for Logistics and Intermodal Transportation.

Prior to joining Georgia Southern, Manrodt served as the executive director or the Office of Corporate Partnerships and the Supply Chain Strategy & Management Forum in the Department of Marketing, Logistics and Transportation at the University of Tennessee.

Manrodt's acclaimed work on DC metrics, done in partnership with Supply Chain Visions, DC Velocity and WERC, has been used as a benchmark by international firms for the past six years.



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