Benchmarking is the systematic process of (1) identifying the ideas, practices and operating procedures of the best in class performers in one’s own industry or within some other related industry and then (2) incorporating those practices into one’s own organization. If done successfully, this process can result in significantly improved performance. Orr & Boss uses its customized version of benchmarking to facilitate quantum gains in operational improvements for clients, particularly in plants and warehouses.
- Metric benchmarking is used to compare our clients’ performance to best-in-class organizations. We identify areas of competitive advantage for our clients and those areas in need of improvement.
- Process benchmarking is used to identify best business practices and develop corrective actions for closing critical operational performance gaps.
Targeted areas for improvement during the benchmarking process include:
- Service Levels
There are few performance indicators more important than how well a company provides service to its customers. Depending on the industry and customer requirements, the appropriate service metric may be OTIF (On Time In Full), the number of line items shipped complete, the number of units shipped complete; etc.
- Inventory Turns
For most manufacturers, the amount of inventory employed is a key performance indicator since inventory is often a major user of capital. By increasing inventory turns, a company can reduce its total inventory and therefore its capital employed.
- Raw Material Costs
Raw materials are frequently a huge portion of a manufacturers cost structure. Depending on the industry and the product being manufactured, raw materials can be as much as 80 percent of the product cost.
- Cycle Times
There are several ways one can define cycle time. No matter how one defines it, long cycle times generally cause excessive inventory levels, increased costs, and poor customer service. Reducing cycle times can allow a company to produce more products through the same amount of equipment.
- Warehouse and Distribution Costs
One often overlooked area of improving costs is in warehouse and distribution costs. This is especially true in freight costs where rising fuel prices and capacity limitations have greatly increased freight costs.