What's The Problem With Benchmarking?

What's The Problem With Benchmarking?

“Derek, do you have any target benchmarks?"

It’s inevitable, any time I speak to an audience, at least one person wants to see benchmark numbers. Whether its inventory turns, headcounts, picks/hour, transportation as a percent of material cost, or a host of other metrics, they act as if knowledge of another company’s results provides them with rich content that will enable a competitive advantage.

Benchmarking, if we aren’t careful, can waste our time and even be counter-productive to our lean efforts. Consider the two natural results of benchmarking; one is that the benchmark is better than your current state which may drive you to improve, yet it doesn't provide the necessary information on how to improve. Two, your current state is better than the benchmark, leaving you with little incentive to improve. At best, it drives the same behavior that lean thinking would drive, but contains a risk of inviting apathy into your ranks.

As a brief caveat, targeting costing activities and understanding market competition can be beneficial to an organization trying to level set their pricing and procedures with customer expectations. Some benchmarking can help an organization prioritize where improvement efforts should be focused, but this benchmarking should be done with extreme caution.

If we truly believe there is ALWAYS room to improve, and want our organization to be relentlessly dedicated to continuous improvement, what value does an external benchmark provide? Would it not be better to use our metrics from last year, last month, or last week to provide a foundation from which to drive improvement? Is it not more beneficial for us to always be raising our own bar, and never be satisfied with our current state?

Written by Derek Browning, Lean Deployment Executive at LeanCor

Posted by LeanCor Supply Chain Group

LeanCor Supply Chain Group is a trusted supply chain partner that specializes in lean principles to deliver operational improvement. LeanCor’s three integrated divisions – LeanCor Training and Education, LeanCor Consulting, and LeanCor Logistics – help organizations eliminate waste, drive down costs, and build a culture of continuous improvement.

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