The Importance of Benchmarking Supply Chain Operations


Supply Chain Consulting

If you’re monitoring your company’s supply chain performance based only on internal data, you’re flying blind in one eye. The equally important question is: “How is your company doing compared to your competitors and the market as a whole?” 

Your peers are trying to solve for the same challenges as you. So you need to benchmark against them. By seeing how they’re doing on average, you can better evaluate how you’re doing on your own. 

Much of the underlying cost structure and transportation service types are uniform for all businesses. This makes it easier to isolate the variables that are unique to your operations. And those variables tend to be under your control or, at least, your influence. So benchmarking is a first step to improving your financial performance. 

The challenge here is getting just the data that is relevant to your business. For example, if you manufacture automotive components, you’re only concerned with shipping costs to your customers’ assembly locations. If your products require special handling, you want some insight into the current pricing for that service.  

Still, industry snapshots will only go so far. To gain actionable insights, you need a tailored data set. For a better idea of the kinds of data you can leverage for your business, check out this article we published at the start of peak season 2022. This will also give you an idea of the scope of potential savings. 

Tap third-party sources for the necessary external data. The logistics industry generates a wealth of data, and there are many sophisticated and well-regarded organizations that make it available to individual shippers. 

Different organizations pull their raw data from different sources. In our case, we leverage anonymized aggregate details of our 3PL operations with more than $15B of freight under management. These operations cover every aspect of shipping, from port to porch, for clients in every major industry segment, and the volume passing through our 80,000+ carrier partners on a daily basis. The recommendations that follow are based on our experience in that context. 

Start benchmarking your operations with the broad fundamentals. We publish such a general overview on a quarterly basis.

  • If you’re doing better than the market generally, the goal is to see what’s working.  
  • If you’re doing worse, the goal is to find out why, with an eye toward solving the problem.  

With your goal in mind, the deeper benchmarking begins. The more your benchmark data reflects your own business, the better the analysis. 

  • Compare your internal performance to your industry generally and your segment specifically. 
  • Give special consideration for relevant factors like geography or seasonality, if applicable.  
  • Look for the correlations that are obviously misaligned. Depending on the metric, this may be a positive or negative indicator.  

Now drill down.  

  • Where do your numbers differ the most from industry peers?  
  • Is this a clue to explaining why you’re performing better or worse than the market?  

Benchmarking should not be a once-a-year strategic exercise (though it can help there too). It should be a continuous process. Depending on the velocity of your business and how central a role your logistics play, quarterly or even monthly reviews are probably in order. 

If you don’t know where to start or where to go next, let’s connect


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