Benchmarking your progress

by Dr. Robert A. Kemp

During the NFL draft each year, coaches and scouts debate the talents of top prospects. They pinpoint skills such as speed, agility and strength. Sometimes these experts describe a player who is really special. “This player,” they say, “knows where the other players are, knows where he is and where he is going. He sees the whole field.” 

The ability to see the entire field made him an extremely valuable candidate. The same ability can make you a great supply manager.

How can you do that? Use system-wide benchmarks to see the whole MRO field.

Benchmarks defined
Benchmarks give supply management professionals the reference points they need to evaluate their own organizational performance against industry standards.

As an MRO supply manager, you have three very important reasons for proving you are good at organizational responsibilities.

First, you play a more strategic role in the organization. Your responsibilities are to search for, identify and develop methods that improve performance from three critical strategic perspectives: your people, your internal systems and your supply system. By benchmarking the purchasing performance to raise operational efficiencies and effectiveness, you can enhance your overall contribution to the organizational supply system and make those people like you even more.

Benchmarking gives you a good set of metrics. Most of all, it gives you grounds to prove your value compared to other organizations.

Over the years, the supply management process has taken a bad rap for its performance and image. It’s true that some of the bad image is earned. However, you must recognize that MRO supply management is an important business function and its importance is ever increasing. You are expected to operate more efficiently and effectively with reduced resources. Benchmarking can help you identify and eliminate performance problems. Once implemented, benchmarks identify best practices and standard procedures that lead to improvements.

Third, see your organization’s position in the supply chain. The supply chain is a value-creating process. Hopefully, the process creates value along the way for producers and the ultimate customer. Everyone must enjoy increased value from your operations or they will withdraw from it. Producers will be bankrupt while the ultimate customer will be dissatisfied and turn to other goods or services for better value.

Benchmarking supply chain processes helps you identify areas that are underperforming or not synchronized.

Four ways to improve
Can you be a player who sees the entire field? Absolutely! Here are four critical areas for improvement.

1) See the world by knowing the business and economic news. Our profession has great tools in the Institute for Supply Management business reports and the Center for Advanced Purchasing Studies benchmarks and research reports. ISM provides a huge database to help its members. Twenty major American industries were included in the August 2004 cross-industry benchmark reports.

2) Take the news and your current knowledge and extend it into the future for your operations. Be farsighted and work with vision to shape your future.

3) Involve people (internal and external customers) in plans and processes to develop benchmarks that will avoid problems and enhance operations.

4) Set aside time for study and research. To be up-to-date and farsighted, you must take responsibility for professional self-development. This will put you and your people ahead of the pack. Rethink your time management goals to include opportunities for creative reading and research.

Typically, supply managers think of value as form, function, quality, cost, time, efficiency, service, risk, reliability, convenience and aesthetics. Commercially, we apply the most emphasis on quality, cost, time, technology and continuity of supply. Value is a combination of those things and is determined by the ultimate customer.

Robert Kemp is a consultant, speaker and the former president of the Institute for Supply Management. He can be reached at kempr@mchsi.com. 

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