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7 Steps to Self Assessment

How better benchmarking can maximize performance in your fulfillment center

April 2008 By Kate Vitasek
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Do you wonder how your fulfillment operation performs against others in your industry? Do you know which processes you’re handling well and those that need improvement? Or even which processes have the most impact on customer service levels? Or which of them lower warehousing and fulfillment costs while improving performance?

Benchmarking, the process fulfillment managers use to draw meaningful comparisons between their companies’ performances and industry standards, can provide answers to all these questions. First, consider the two types of benchmarking.

• Performance Benchmarking compares quantitative performance results, or metrics, to those of several different companies or to industry standards. Its objective is to identify areas for improvement.

• Process Benchmarking compares specific processes to best-in-class process attributes in a qualitative manner. Its objective is to improve specific processes and operations within the business.

Many companies rely solely on quantitative performance benchmarking or comparing metrics. But they never turn over the rock to learn what companies are doing to actually drive their results. Processes drive results, however, and performance benchmarking only identifies gaps in the desired result. In other words, process benchmarking diagnoses the root cause of the gaps so they can be treated.

Effective and Practical
Though outside consultants can help with benchmarking, many companies can self-assess their warehousing and fulfillment operations. Benchmarking your organization takes work, but it needn’t be overwhelming. Try these seven steps.

STEP 1: Set benchmarking priorities. The benchmarking process begins with the company’s strategic planning process. Aligning the fulfillment team’s objectives to company goals will likely make benchmarking successful and add value by focusing on issues that have the greatest impact on that strategy. Benchmarking projects won’t get the support needed from C-level executives if they don’t have a positive impact on the company’s goals.

STEP 2: Identify key processes. Focus on the processes that have the greatest impact on the company’s customers and the company itself. A simple four-quadrant matrix can help you identify benchmarking priorities. Benchmark those processes that have high costs or strategic impact on your company, and/or high impact on your customers so you're focused on high-value activities.

You can focus on processes that have lower impact, but their results won’t create optimal value from the investment driving those improvements.

STEP 3: Collect data. Comparing your company metrics to available best-in-class benchmarking data (quantitative benchmarking) will expose underperforming areas. Research of best-in-class performance may be interindustry or intraindustry, so your time required can vary widely.
 

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