PHASE 1
PLAN
PHASE 2
MEASURE
DC Benchmarking
Roadmap
3 Strategies: Cost Leadership Customer Focus Unique Service Offering
Focus on: Reducing costs. Satisfying customer Product or service not
requirements; customers duplicated or equaled by
may be willing to pay others, so that customers are
slightly more. willing to pay higher prices.
Example: Wal-mart Target Apple
Step 1: Set Benchmarking Priorities
Benchmarking must be guided by your company’s vision and strategic objectives.
And a fourth strategy:
Hybrid
Be all things to all
potential customers.
CAUTION! This strategy is
hard to carry off successfully.
Step 2: Identify Key
Processes to Assess
lp
m-m
(for
rs).
Be best in class in those areas –
but don’t ignore the others.
Step 3: Collect Data
You need both operational and managerial data. The biggest challenge in successful benchmarking is getting accurate,
comparable data, whether it’s benchmarking data from other companies or your company’s own measurements.
Example: A firm claims to ship complete, on-time orders 99.8% of the time, yet customers complain orders are frequently late.
The reason for the discrepancy: The supplier didn’t consider an “order” an “order” until it was complete. This meant hundreds
of orders were not included in the performance metric.
STOP!
Traps to watch
out for:
Are comparisons equivalent?
Has the data been massaged?
Is the data measured in a way that makes sense?
Tip: To minimize “gaming” of the system, create a table that clearly states:
• your current measures.
• their definitions.
• how they’re calculated.
• who collects the data.
The results of our 12th annual DC metrics
survey, conducted with the Warehousing
Education and Research Council, TSquared
Logistics, and Georgia College and State
University, are now available at
www.werc.org/metrics. The survey report
includes benchmarking data from more than
450 companies. Wondering where that data
can take you? Here’s a roadmap.
Total order-
cycle time
The average end-to-end
time between order
placement and order
receipt by the customer.
Excluding nonworking
days: Sum of (Time
order received by
customer – time order
placed)/Total number
of orders shipped
Metrics Definition Calculation Source of Data Responsibility
