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Ad Mi 2009 Trends In Supply Chain Benchmarking Survey
 

Ad Mi 2009 Trends In Supply Chain Benchmarking Survey

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Sample results from one of ADMi\'s independent research studies...contact us for help with developing, performing and analyzing your supply chain research needs @ info@autodiversity.com

Sample results from one of ADMi\'s independent research studies...contact us for help with developing, performing and analyzing your supply chain research needs @ info@autodiversity.com

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    Ad Mi 2009 Trends In Supply Chain Benchmarking Survey Ad Mi 2009 Trends In Supply Chain Benchmarking Survey Document Transcript

    • 2009 Trends in Supply Chain Benchmarking AutoDiversity Management inc. (ADMi) Supply Chain Consulting Research White Paper Series October 2009 Copyright© AutoDiversity Management Inc. (ADMi)
    • 2009 Trends in Supply Chain Benchmarking TABLE OF CONTENTS Table of Contents ..........................................................................................................................................................2 Editor’s Note ..................................................................................................................................................................3 2009 Trends in Supply Chain Benchmarking: Introduction .........................................................................................4 Methodology & Purpose | .........................................................................................................................................5 Respondent Profile | .................................................................................................................................................5 2009 Trends in Supply Chain Benchmarking: Results ..................................................................................................6 Business Profile & Supply Chain Spend | ...................................................................................................................6 Question 1: What is your primary business category? ..........................................................................................6 Question 2: What is your organization's annual supply chain spend? ..................................................................8 Current Engagement & Views on Benchmarking | ....................................................................................................9 Question 3: Does your organization currently participate in benchmarking programs? ......................................9 Question 4: What type of benchmarking is currently performed? .......................................................................9 Question 5: What type of benchmarking will your organization be considering in the next 12 months?..........11 Perceived Benefits of Benchmarking | ....................................................................................................................12 Question 6: Please rate each supply chain category by how likely they are to benefit from benchmarking activities? .............................................................................................................................................................12 Advantages & Complexities of Benchmarking | ......................................................................................................13 Question 7: Given your experience, what were the positive results achieved in previous benchmarking activities? .............................................................................................................................................................13 Question 8: Given your experience, what were the primary difficulties experienced when participating in previous benchmarking activities? ......................................................................................................................14 Data Sharing & Benchmark Timing | .......................................................................................................................15 Question 9: In your opinion, how easy is it for your supply chain organization to generate and share quantitative performance data that might be used in benchmarking programs? ..............................................15 Question 10: In your opinion, what time of year is most appropriate for your supply chain organization to participate in benchmarking programs?..............................................................................................................17 Concluding Analysis ....................................................................................................................................................18 About Us & Contact Information .................................................................................................................................20 Copyright© AutoDiversity Management Inc. (ADMi) P a g e |2
    • 2009 Trends in Supply Chain Benchmarking EDITOR’S NOTE October 16, 2009 At the beginning of 2009, we were approached by several clients wanting to discuss benchmarking and other collaborative performance measurement methods. The level of interest was so much higher and the questions being asked were so much more externally focused than in the past few years that we decided to undertake this study to better understand how organizations viewed and used benchmarking in this current economic climate. The study was meant to be brief and precisely focused and was designed in the form of a 10 question survey distributed online to a targeted list of supply chain professionals. Although the brevity of the survey indicated that the results would merely be a temperature check of current opinions on the subject, we found that the responses yielded much richer results and correlations than initially anticipated. Although benchmarking enjoys a healthy adoption rate, a full 39% of respondents do not currently participate in any benchmarking activity. With future adoption rates indicating that benchmarking activity will be getting deeper and broader in the next 12 months, those choosing not to participate in some form of benchmarking may find it difficult to identify, and take advantage of, the gains achieved by their competitive sets. Most interesting was the difference found between participants opinions regarding the ease of internal data collection and the perceived lack of comparable data points as a barrier to achieving benchmarking benefits, as well as how the respondents viewed the value of cost management in relation to actual benefits achieved through benchmarking . Thank you to all the respondents that made this study possible and I hope that you find the results as interesting and useful as we did. Marc A. Brazeau Principal AutoDiversity Management inc. (ADMi) Copyright© AutoDiversity Management Inc. (ADMi) P a g e |3
    • 2009 Trends in Supply Chain Benchmarking 2009 TRENDS IN SUPPLY CHAIN BENCHMARKING: INTRODUCTION Current economic instability has required companies to identify ways to reduce overall costs while improving organizational productivity and performance. As Global supply chain networks recover from the whipsaw swing between the under-capacity of just a couple of years ago and the over-capacity experienced today, many companies are more focused than ever on the cost effectiveness and performance of the supply chain to drive overall corporate efficiency. The question we hear is, “how do we evaluate supply chain performance and cost structure in relation to overall corporate efficiency and goals?” AutoDiversity Management Inc. (ADMi), recognizing the demand for insight into the strategies and tactics that enable supply chain improvement, performed a global cross- industry review of client opinions on the use of benchmarking as a tool to improve supply chain transparency, performance measurement, and business development opportunities. As global markets concentrate on rebounding, it is crucial that cost saving activities be identified and acted upon without hesitation. Solid, relevant data is required to establish robust processes in order to maximize supply chain network performance and The question we hear is, ensure organizations are well positioned for the economic resurgence. “how do we evaluate And, as we look to the inevitable recovery of our industry, it’s time to focus on a supply chain new theme: Collaboration, and the challenge of how we, as supply chain professionals, performance and cost identify, capture and institutionalize the communication and cooperation best practices developed throughout this economic crisis and whether collaborative benchmarking is structure in relation to … an effective tool to accomplish that. corporate efficiency and Because of the participant involvement in the program development; identifying goals?” performance dimensions for studies, agreeing on data collection requirements, promoting the development of standard metrics and encouraging the transfer of best practices within the industry, collaborative benchmarking provides effective performance comparisons that promote overall improvements in the supply chain without eroding competitive advantages of the participants. The cornerstone of effective collaborative benchmarking is relevant and reliable data producing truly actionable items for tactical or strategic implementation. Effectiveness is further enhanced when participants agree to blind the data, making it impossible to identify a specific participant’s responses and ensuring complete transparency, which produces high value results that can be used to develop baseline performance comparisons and indices. This study aims to provide valuable insight into the current uses of benchmarking as an integral management tool in 2009, the perceived benefits and barriers to participating in benchmarking initiatives, and the opportunities that benchmarking can offer the supply chain industry in 2010. Copyright© AutoDiversity Management Inc. (ADMi) P a g e |4
    • 2009 Trends in Supply Chain Benchmarking Methodology & Purpose | ADMi conducted the 2009 Trends in Supply Chain Benchmarking survey during the months of July and August of 2009, distributing the questionnaire to 1,941 supply chain leaders across six industries. Participants were asked to gauge supply chain and benchmarking activities within their organizations. Survey responses were collected over a 4 week period then analyzed and summarized at an aggregate level. The 2009 Trends in Supply Chain Benchmarking survey provides a comprehensive picture of industry benchmarking involvement and opinions as well as an analysis of when and where some of the largest industry players want to focus future study efforts that yield tangible benefits. With this in mind, a series of questions was devised to determine whether respondents: • currently participate in benchmarking programs, • the types of benchmarking pursued or that they are interested in pursuing, • how benchmarking benefits their organization, • the strengths and weakness of benchmarking studies, • the potential for data sharing and, • the importance of timing for performing and participating in benchmarking activities. Respondent Profile | Survey participants were drawn from six global industries, all of which rely heavily on supply chains. Contributors were identified via trusted and direct sources; either as existing clients, known colleagues or recognized decision makers that expressed interest in participating in the survey. Selection criterion was vital to ensure meaningful survey data for analysis. Respondent profiles include: • 83% at or above responsible managerial positions, with 56% at the director level and above. • Responses from North America, the United Kingdom, the European Union, the Russian Federation and China. • 59% considered purchasers or consumers of transportation services, with remaining 41% representing logistics service providers (LSP’s). • All modes of transportation (truck, rail and vessel) and several services (port/terminal operations, freight forwarding, third party logistics providers and freight processors) are represented. Copyright© AutoDiversity Management Inc. (ADMi) P a g e |5
    • 2009 Trends in Supply Chain Benchmarking 2009 TRENDS IN SUPPLY CHAIN BENCHMARKING: RESULTS Business Profile & Supply Chain Spend | Question 1: What is your primary business category? The opening question profiled the primary business interests of respondents. As depicted in Figure 1, the Automotive (54%) and Transportation (23%) industries are chief respondents. General Manufacturing and Energy & Petro (8% each), Chemical (4%) and Technology (3%) make up the remainder of the study. Figure 1 - Primary Business Additionally, respondents from within the Automotive community covered both original equipment manufacturers (OEMs and Tier 1 suppliers) and service providers not elsewhere classified as Transportation, such as port and terminal operators and non- transportation supply chain service providers. Therefore, 72% of the Automotive slice IS made up of OEM’s with the remaining 27% coming from industry specific service providers. (Figure 1a – Automotive Breakdown) Copyright© AutoDiversity Management Inc. (ADMi) P a g e |6
    • 2009 Trends in Supply Chain Benchmarking Figure 1a - Automotive Breakdown Furthermore, the Transportation sector includes logistics service providers, third The study has an party logistics concerns and transportation brokerages and International freight forwarders. The Technology sector includes information systems and technology equitable distribution of providers to the overall supply chain industry. purchasing decision- Although overall response rates are slanted towards the automotive industry, the makers and supply chain crucial dimension of this profile is the equitable distribution of responses from supply operator respondents chain purchasing decision makers (59%) and logistics service providers (41%), providing a very balanced opinion base for the remaining study questions. (Figure 1b – Purchasers vs. Providers) Figure 1b - Purchasers vs. Providers Copyright© AutoDiversity Management Inc. (ADMi) P a g e |7
    • 2009 Trends in Supply Chain Benchmarking Question 2: What is your organization's annual supply chain spend? Feedback on the next question establishes the significance of the yearly spend on supply chain operations. Regardless of an organization’s budget, if supply chain costs apply, they represent a significant overhead. A strong and equal representation from a range of businesses - this question applied mostly to the 59% of service users - revealed the importance of this considerable outlay on an organization’s bottom line and therefore the indisputable opportunity it provides to realize savings. Findings validate… the importance of capitalizing on any re- engineering benefits resulting through Figure 2 - Annual Supply Chain Spend benchmarking The survey confirms that over 70% of respondents have a budget greater than $10 million and of these a quarter have a budget over a billion. The 56% of respondents with annual supply chain expenditure over $100million are ideally placed to benefit from quick-win savings revealed through benchmarking, mainly attributable to the scope of their spend activity. The significance of efficiencies on the supply chain outlay is further emphasized by the finding that only 15% of respondents reported no such spend. Although this slice, representing physical transportation service providers, doesn’t technically have a ‘transportation spend’, these respondents are likely to gain by follow-on efficiencies identified around productivity and network design. The findings validate that, regardless of actual spend, the proportion of achievable savings bears out the importance of capitalizing on any re-engineering benefits resulting through benchmarking or any other comparative study method. Copyright© AutoDiversity Management Inc. (ADMi) P a g e |8
    • 2009 Trends in Supply Chain Benchmarking Current Engagement & Views on Benchmarking | Question 3: Does your organization currently participate in benchmarking programs? This response demonstrated support for benchmarking and a commitment to identifying real performance improvements. The response to question three indicates a readiness within the industry to capitalize on the gains that benchmarking programs deliver. With just under two thirds of the respondents currently engaged in such exercises, the extensive benefits of these programs have been recognized by the industry; however, there are still a significant number of players that have yet to fully realize the benefits that are accruing to their competitive set. (Figure 3 – Current Benchmarking Engagement) For those 39% not currently engaged in benchmarking activities, consider what these organizations are missing out on in terms of improvements and where they fit in with competitors now and in the future. If current benchmarking program adherence continues to increase in depth and scope across the industry, as time goes on, those organizations choosing not to participate in benchmarking programs may be put at a significant disadvantage in establishing best practices and influencing industry policy. This response demonstrated support for benchmarking and a commitment to identifying real performance improvements Figure 3 - Current Benchmarking Engagement Question 4: What type of benchmarking is currently performed? Further to the preceding question, the survey explored the types of benchmarking engaged in and, where there is engagement, it found that the studies performed to date were not truly holistic in their approach. Narrow dimensions are chosen for studies based on specific needs rather than amalgamated to create a comprehensive understanding of the correlation that exists between the multiple dimensions that make up high performing supply chains. Copyright© AutoDiversity Management Inc. (ADMi) P a g e |9
    • 2009 Trends in Supply Chain Benchmarking The survey outlined the 5 types of benchmarking most commonly used: • Strategic: Observing competitive advantages or disadvantages in common or uncommon groups • Process: Identifying and observing specific business processes to identify best practice • Functional: Focusing on a single function to generate specific operational improvements • Performance: Assessing an organization’s competitive position through specific performance dimension comparison • Product: Designing new products or upgrading current ones, this includes reverse engineering of competitive products Overwhelmingly the survey found that the focus of benchmarking Figure 4 - Type of Current Benchmarking studies has been on Operational elements were analyzed separately rather than studies that capture specific business the wider impact on overall delivery. (Figure 4 – Type of Current Benchmarking) processes Overwhelmingly the survey found that the focus of benchmarking studies has been on specific business processes. Fifty-nine percent of respondents preferred to focus their attention on process improvement and the identification of best practices. Naturally companies that improve processes and network performance in an economic downturn will be well positioned to take advantages of an upturn in the economy. The performance of the supply chain network was a close second, with 49% of the respondents replying that they would like to assess their competitive position within the market by comparing specific performance metrics. While many companies indicate an inability to strategically plan and set a course for their supply chain organization, 46% of the respondents recognize the importance of strategic benchmarking to identify advantages and disadvantages in their supply chain network. Copyright© AutoDiversity Management Inc. (ADMi) P a g e | 10
    • 2009 Trends in Supply Chain Benchmarking Question 5: What type of benchmarking will your organization be considering in the next 12 months? In order to generate meaningful responses, the question regarding planned benchmarking covered only programs planned for the next 12 months. The responses confirmed that benchmarking initiatives are on the rise across all areas of the industry. (Figure 5 – Planned Benchmarking) Figure 5 - Planned Benchmarking Comparing the findings from this question to those of the current benchmarking Benchmarking initiatives engagement statistics in question 4, we find, surprisingly enough, that Product are on the rise across all benchmarking seems to be poised for the biggest gain in adoption, with Functional a close second (Figure 5a). This is an interesting finding because both of those types areas of the industry require greater detail and technical proficiency to perform, which may imply that current benchmarking practices are indeed evolving, as previously thought, into deeper and broader areas of study and geared more towards technological advancements in supply chain management systems and equipment R&D (Product), as well as the organizations ability to synthesize the benefits of those advancements into workload productivity (Functional). Figure 5a - Current and Planned Benchmarking Variances Copyright© AutoDiversity Management Inc. (ADMi) P a g e | 11
    • 2009 Trends in Supply Chain Benchmarking Perceived Benefits of Benchmarking | Question 6: Please rate each supply chain category by how likely they are to benefit from benchmarking activities? Survey participants gauged supply chain performance dimensions as to which accrue the greatest benefit from participating in external benchmarking studies. Respondents rated benchmarking benefits for each supply chain category on a scale ranging from 1 to 4: 1-Unlikely, 2-Somewhat Likely, 3-Likely and 4-Highly Likely. Based upon feedback, benefits accrued fairly consistently across each performance dimension. In fact no category scored below the midpoint demonstrating that a corporation’s individual benchmarking aspirations are closely shared by competitors and colleagues alike. (Figure 6 – Benchmarking Benefits by Supply Chain Category) Organizations vary only mildly in terms of where they feel the greatest benefit is achieved and as a whole the industry is very much in harmony when stipulating benchmarking benefit requirements. Organizations vary only mildly in terms of where they feel the greatest benefit is achieved and as a whole the industry is very much in harmony when stipulating benchmarking benefit requirements Figure 6 - Benchmarking Benefits by Supply Chain Category Cost Management obtained the highest rating at 3.3, network design and operations averaged 3.00, with systems, organization, and strategy all falling between 2.77 and 2.82. This information confirms the current economic landscape indicating that supply chain organizations are focused on overall cost reduction to ensure a competitive edge and be ideally positioned for an economic turnaround tomorrow. Respondents agree that companies need to re-evaluate organizational structures and processes ensuring these are robust and capable of reacting quickly to changes in the marketplace. Benchmarking is an ideal mechanism for rapid evaluation and to indicate where tactical changes can be achieved in terms of both quick-wins and long- term improvements. By identifying tactical actionable items through “like competitor” benchmarking, network design and operations not only benefit from improved service levels, but the achievement of reduced operating expenses provides immediate cost benefits to the organization and can engender a baseline roadmap for long-term strategic planning. Copyright© AutoDiversity Management Inc. (ADMi) P a g e | 12
    • 2009 Trends in Supply Chain Benchmarking Advantages & Complexities of Benchmarking | Question 7: Given your experience, what were the positive results achieved in previous benchmarking activities? Survey feedback highlighted the positive results that customers of benchmarking programs have achieved through past studies. (Figure 7 – Positive Results of Benchmarking) …Although organizations value cost reduction highly there is an understanding that this Figure 7 - Positive Results of Benchmarking can only be repeated, The top three positive results from benchmarking activities are: measured and improved • Provision of a performance baseline (62%), upon through the • Provision of a competitive ranking alongside similar companies (59%), and implementation of… • The generation of cost savings initiatives (54%). effective long-term That the provision of a performance baseline is seen as the most significant governing strateg(ies) outcome emphasizes the importance of a roadmap to ensure sustainable competitive ranking and on-going cost savings amongst other results. As highlighted in the Benefits section, although organizations value cost reduction highly, there is an understanding that this can only be repeated, measured and improved upon through the implementation of an effective long-term governing business strategy. Respondents value the baseline and competitive ranking as they provide an assessment of current supply chain operations and comparison against competitors. In this manner participants can evaluate whether they are champions (top performers) or challengers (low performers) in a particular study dimension. This either validates past supply chain strategy or provides valuable data to develop a strategy improvement plan. Effective benchmarking studies also determine which dimensions are strategically important to an organization and whether these operations support company goals, which may not always be aligned. Copyright© AutoDiversity Management Inc. (ADMi) P a g e | 13
    • 2009 Trends in Supply Chain Benchmarking Respondents recognized that the key to an effective supply chain organization is controlling existing cost structure and knowing the competitive advantages the organization possesses alongside any weaknesses that may pose a risk. Equally it is crucial that the organization be able to identify and implement actionable items to reduce cost. It appears that although respondents were fairly satisfied with past studies, they weren’t entirely satisfied with the identification of specific actions to improve performance (only 46% ranked this as a positive result). The identification of mining gaps was also ranked at the lowest of the positive results at only 31%. These last two points support one of the top weaknesses identified in past studies that data can be too high level lacking the required detail to identify mining gaps in organization or pinpoint actionable items that impact performance. In addition to the responses contained in Figure 7, the survey also polled respondents for any additional benefits they felt were generated by these programs. Of all those surveyed only one respondent felt that no benefits were achieved. Whereas the following gains to their organization were reported by multiple respondents: • Education of staff, Although respondents • Improved forecasting accuracy, were fairly satisfied with • Identification of new potential markets, and past studies, they • Illustration of potential for change without upsetting status quo. weren’t entirely satisfied Question 8: Given your experience, what were the primary difficulties with the identification of experienced when participating in previous benchmarking activities? specific actions to To ensure a program of continuous improvement in benchmarking operations, the improve performance survey sought to gather information on the greatest challenges, weaknesses or difficulties that respondents had encountered on previous benchmarking programs. Figure 8 - Challenges of Benchmarking A lack of comparable data was by far – 69%- the most frustrating shortcoming of past studies. The apparent inability to compare like-for-like data, performance, processes or networks seriously compromises the results of the study restricting the participant’s ability to validate network performance. Copyright© AutoDiversity Management Inc. (ADMi) P a g e | 14
    • 2009 Trends in Supply Chain Benchmarking Another important weakness highlighted was that benchmarking results are frequently perceived to be too high-level to be effectively acted upon (36%). Further to this, many respondents viewed benchmarking studies as a time consuming (33%) activity, likely due to the time required to clarify and synthesize data. The lack of experience in some companies conducting supply chain studies may add to the frustration of participants having to explain processes and network operations to ensure a valid comparison is conducted. Despite overwhelming respondent support for benchmarking studies (only 5% felt there was no value) there is a clear recognition that these studies need to produce valid and weighted comparisons which generate actionable items and deliver the opportunity for quantitative performance improvements. Excluding data comparison, the other challenges are statistically low barriers to benchmarking participation. Comparatively, the Positive Results illustrated in Figure 7 confirm that participants feel the positive outcome of these far outweighs drawbacks. In addition to the responses contained in Figure 8, the survey also polled respondents for additional challenges encountered during benchmarking programs. Despite overwhelming Difficulties included the following: respondent support for • Funding, benchmarking studies… • A reluctance to share confidential information, (they) need to produce • Difficulty in obtaining data from specific regions (Japan was highlighted), valid and weighted • The lack of a common language or definitions within the industry, and comparisons which • The impetus for change needs to come from the client (LSP do not generate actionable necessarily feel the need to change). items and deliver the Data Sharing & Benchmark Timing | opportunity for Question 9: In your opinion, how easy is it for your supply chain organization quantitative performance to generate and share quantitative performance data that might be used in improvements benchmarking programs? A company’s ability to react and quickly gather detailed data to participate in benchmarking studies brings with it a strong competitive advantage. Companies that have data readily available demonstrate a firm understanding of their network performance and cost structure alongside the ability to develop tactical and strategic plans to improve their performance. Repeatedly the importance of this data for benchmarking has been raised: 69% of respondents rated a lack of comparable data the most frustrating shortcoming in Figure 8. Respondents were polled to gain an understanding of the realities of information sharing. As illustrated in Figure 9, data gathering activities for benchmarking studies was rated as follows: • Very Easy for 11% of respondents, Copyright© AutoDiversity Management Inc. (ADMi) P a g e | 15
    • 2009 Trends in Supply Chain Benchmarking • Easy for 18% of respondents and, • Somewhat Easy for 38% of respondents. Feedback demonstrates that 67% of organizations are currently in a strong position to participate and benefit from benchmarking studies that produce timely, detailed and actionable results. This is significant when correlated to the results of question 8 regarding perceived challenges, namely an overwhelming majority feel the lack of comparable data leads to poor outcomes in benchmarking, and yet this similarly strong percentage of respondents is reporting that internal data collection is somewhat easy or better. How do the data comparisons get lost between internal and external analysis? And more importantly, why is it so difficult for an industry that measures so much, and in such common detail, to properly establish comparative definitions? Another drawback identified by the study that can be compounded by data collection difficulties was the time consuming aspect of participating in benchmarking studies. When a company struggles to gather quantitative data, protracted manipulation of the data may be required to synthesize it for the study to be truly meaningful. Lengthy analysis may unfortunately lead to frustration and dissatisfaction in participating in 67% of organizations are benchmarking studies or, when the conclusion is rushed, in the significance of the generated study results. currently in a strong position to participate and benefit from benchmarking studies that produce timely, detailed and actionable results Figure 9 - Ability to Share Corporate Data Organizations that struggle with detailed data gathering may find themselves at a competitive disadvantage if they cannot fully grasp the impact of change on the supply chain network or its cost structure. These companies may struggle to improve their networks and become more competitive in the marketplace. Companies that excel in information gathering appear to have strong system support to maintain and retrieve crucial data quickly and accurately. Those with data readily available appear to be at an advantage with a greater capacity to develop strategies to improve performance and monitor progress. Copyright© AutoDiversity Management Inc. (ADMi) P a g e | 16
    • 2009 Trends in Supply Chain Benchmarking Question 10: In your opinion, what time of year is most appropriate for your supply chain organization to participate in benchmarking programs? Although there doesn’t appear to be a preferred time period during which to th participate in benchmarking studies, respondents sent a clear message that the 4 quarter was to be avoided. For the majority of respondents (38%), the timing is irrelevant, whereas: 23% preferred the first quarter, 15% preferred the second quarter, and 21% preferred the third quarter. The first quarter is preferable for data collection….so that results are delivered and actionable items applied during the third quarter Figure 10 - Timing of Benchmarking Ideally the first quarter is preferable for data collection, allowing for synthesis and analysis to occur during the second quarter so that results are delivered and actionable items may be applied during the third quarter along with the annual budget, strategic and operational planning periods of most organizations. Administratively, the fourth quarter is a busy time for most companies making it difficult to guarantee the availability of resources for participation in any type of benchmarking study. Copyright© AutoDiversity Management Inc. (ADMi) P a g e | 17
    • 2009 Trends in Supply Chain Benchmarking CONCLUDING ANALYSIS The 2009 Trends in Supply Chain Benchmarking white paper confirms that the majority of respondents recognize the value of benchmarking and participate in studies today. Further, the survey reveals that planned benchmarking is on the rise across all study dimensions, suggesting the possibility of an influential gap between those currently benchmarking and the remaining 38 percent that have yet to engage in the opportunity for an unbiased evaluation of their network. Respondents also clearly endorse and support the use of benchmarking as a performance management tool. With growing participation, even during an economic downturn, they actively seek out opportunities for growth, improvement and investment. Meanwhile, those not yet taking advantage of external benchmarking are at risk of falling behind their competitors and may be at a disadvantage in establishing best practice and influencing industry policy. This prospect is highlighted by the finding that, amongst all the growth areas of benchmarking, both Product and Functional benchmarking are poised for the greatest adoption indicating the majority’s involvement in extensive and comprehensive studies that target technological, analytical and organizational management advances. Participants are asking for benchmarking studies focused on operational performance improvement, process enhancement and overall costs reduction with the provision of a clear strategic direction to identify gaps and opportunities that can be taken advantage of without eroding industry competition. Internally, organizations that benefit the most from benchmarking studies such as Purchasing, Operations and Network Design, and Organization and Strategy will garner the ability to identify and implement changes effectively. The value of truly effective benchmarking studies depends upon the ability to correlate various dimensional aspects into detailed, actionable items which cannot be identified by concentrating on just a single element. A multi-dimensional study identifies and explains the correlation between various aspects of the supply chain network, drawing together the impacts of cost, operations, and quality. While identifying a willingness to participate in external benchmarking studies, respondents acknowledge the industry’s existing level of distrust for participating in collaborative efforts. This reluctance to share information may be due to perceived competitive reasons or a lack of understanding of the benefits that can be realized from cooperation in such studies. Respondents recognize that data must be shared in order to provide more relevant and detailed industry benchmarking studies with competitive comparisons of network cost and operations for all participants. Contrary to common assumption, the survey demonstrates that cost savings is not identified as the single most beneficial dimension. Rather, the provision of a baseline and the competitive ranking of each company’s supply chain network were recognized as being of most value to participants. This factor bears out that benchmarking can be as beneficial to supply chain partners as to their purchasers. As opposed to focusing solely on price reduction, comprehensive cost management, including the administration and correlation of all aspects of the supply chain, provides the most Copyright© AutoDiversity Management Inc. (ADMi) P a g e | 18
    • 2009 Trends in Supply Chain Benchmarking favorable long term results increasing the efficiency of all supply chain partners’ operations. The fourth quarter was deemed unfavorable for benchmarking activities yet the majority of respondents were very open to participating throughout the rest of the year. This result supports the benchmarking process of data collection, from the previous full calendar year, during the first quarter, data analysis and results review in the second quarter, with development and implementation of action plans the remainder of the year. Although many companies perform their own internal benchmarking studies to evaluate their supply chain performance, having an unbiased third party with supply chain experience and access to competitive information will benefit the participants the most by providing an honest evaluation of all aspects of the supply chain network and development of truly actionable items for tactical and strategic planning. The creation of an effective benchmarking study requires participant collaboration to develop and agree on an approach with a shared set of dimensional measurements that span all aspects of the supply chain network, which reduces the risk of results suffering from a ‘lack of comparable data points’. This cooperative approach may generate a waterfall effect in findings as participants move through the varying dimensions of study. To facilitate data sharing and that relevant, detailed and actionable output is achieved for all, an unbiased third party or facilitator, may work with a group of common competitors to identify like industries, shipping comparable products, in similar networks, with related types of equipment. It’s imperative that a significant number of industry competitors are included in the study to provide relevant and worthwhile comparisons of supply chain performance and to reduce the instances of incomparable data. Adoption of a holistic approach to benchmarking supports a collaborative effort between shippers and supply chain partners that includes all important dimensions of the supply chain network The 2009 Trends in Supply Chain Benchmarking survey bears out that benchmarking is a popular and valid tool in use widely across the industry and, indeed, confirms that benchmarking, when properly structured, defined and adopted is considered an effective tool to evaluate supply chain performance and cost structure in relation to overall corporate efficiency and goals. Companies need to pursue further collaborative data-sharing efforts to effectively realize the full benefits of measuring performance and gauging progress against competitors while improving their competitive edge. Jennifer Cavanagh David C. Vandenbossche Senior Research Associate Principal Consultant London, UK Detroit, M Copyright© AutoDiversity Management Inc. (ADMi) P a g e | 19
    • 2009 Trends in Supply Chain Benchmarking ABOUT US & CONTACT INFORMATION About AutoDiversity Management inc. (ADMI) ADMi is an impartial supply chain consultancy and research organization that offers clients strategy, research and collaboration support by providing supply chain benchmarking and analysis. ADMi provides strategy consulting, transportation research, decision and purchasing support to the Global supply chain industry. ADMi is uniquely designed to provide unbiased, non-conflict of interest supply chain research and decision support services to all the supply chain industry by creating mutually productive collaborative network opportunities, promote supply chain innovation and standards, as well as provide qualifying tools to emerging carriers and service providers to improve overall competition. Visit the ADMi website at www.autodiversity.com About Vehnet limited Vehnet is the leading name in IT systems for outbound finished vehicle logistics, providing the industry’s most advanced software to major companies worldwide. Offering unrivalled expertise and comprehensive practical experience in this sector, Vehnet is committed to continuous innovation and outstanding support, keeping clients ahead of competitors through better service, improved efficiency and reduced costs. Wherever vehicles and other rolling assets are handled, stored, processed and transported, Vehnet can make a real difference to business processes - and to carbon footprint. Operating at locations across Europe, North America and Asia, Vehnet technology is the most sophisticated and adaptable software available today. Visit the ADMi website at www.vehnet.co.uk Contact Information For more information on this report or to participate in benchmarking studies please contact: David C. Vandenbossche, Principal Consultant dcv@autodiversity.com And for more information on benchmarking in general, please visit: www.benchmarksupplychain.com Confidentiality All information in this document is provided in confidence for the sole purpose of adjudication of the document and shall not be used for any other purpose, be published or disclosed wholly or in part to any other party without ADMI’s prior permission in writing nor be held in safe custody. These obligations shall not apply to information which is published or becomes known legitimately from some source other than ADMI. Copyright© AutoDiversity Management Inc. (ADMi) P a g e | 20