Benchmarking in Supply Chain Management

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Organisational supply chain does not only focus on the usual field of operations or purchasing but also puts a lot of emphasis on customer-focused and customer-driven techniques for managing supply chains (Gunasekaran Patel & McGaughey 2004, p. 335). Taking a strategic approach involves utilising resources efficiently while simultaneously creating an agenda for change allocating resources efficiently. To realise these strategic objectives, organisations should focus their supply activities to satisfy customers. Organisational managers should think differently about what they do and the purpose of the company and organisational networks in meeting consumer demands through efficient (operational) and efficient (strategic) supply chain strategies, relationships, and structures. This study aims to discuss some of the management models in use to change supply change performance. Also, this paper evaluates the different benchmarking approaches available to an organisation and the challenges often associated with undertaking a benchmarking exercise. Lastly, this study critically analyses lean and agile systems and outlines how these would benefit a supply chain of a particular organisation.

Performance Management Models Used to Change Supply Chain Performance

Supply chain administration is an essentially distinct viewpoint regarding business organisation which is subject to the idea of joint ventures within the marketing and advertising route along with a high level of connection involving entities in that channel (Gunasekaran Patel & McGaughey 2004, p. 336). Conventional models of business organisations relied on the idea that businesses are best served through minimising their expenses and maximising their revenues. However, there has been a development of other models that suggest that separate firms compete not as a business beside a business, but rather as supply chain alongside supply chain. Hence, effective establishments will be the companies whose supply chains are more economical as equated to their rivals. This section discusses performance management models used to change supply chain performance. The models considered are continuous replenishment model, integrated supply chain model, and Make to Order (MTO) model.

Several companies have adopted continuous replenishment model to streamline their deliveries to customers. By monitoring the inventories of clients and automatically replacing materials used when required, these businesses have also purposed to enhance their operations through doing away with the need for purchase orders and other related paperwork. Continuous replenishment model provides the additional potential to establish a close relationship with customers which can boost consumer loyalty. The ultimate aim of supply chain management is to elevate the value of the consumers while upholding competitive prices.

Tesco PLC provides an excellent example of supply chain management through performance management models. The company keeps its prices low, and their shelves stocked, making it the leading retail business in the UK (Smith & Sparks 2009, p.148). One of the reasons why Tesco PLC is capable of offering such low prices and maintaining a constant inventory level is using an adequate continuous replenishment program stimulated by point-of-sale purchases; it is mostly focused on purchasing, vendor evaluation, and product sourcing. Since the system can replenish inventory speedily, Tesco PLC does not have to incur a lot of expenses on sustaining huge inventories of merchandises on its warehouse. The program also enables Tesco PLC to modify acquisitions of store items to satisfy consumer expectations and demands. Therefore, the constant replenishment model places the customer central to the organisational activities.

Benchmarking Approaches in a Supply Chain System and the associated challenges

Supply chain functions in the organisation ought to be continuously assessed to recognise where enhancements may be made or even inadequacies eradicated. Among the approach to assist accomplish this would be to execute some benchmarking assessments of the organisation's supply chain systems. Benchmarking, sometimes referred to as goal setting enables an organisation to evaluate the options they may currently have intended for improving upon several parts within their supply chain such as productiveness, inventory reliability, delivery precision, storage density, as well as time frame (Hong, Jungbae Roh & Park 2012, p.450). There are three kinds of benchmarking approaches, specifically: internal, external and competitive benchmarking.

Internal benchmarking

The internal benchmarking method makes it possible for an organisation having a variety of facilities which run same supply chain procedures to assess the tactics in which the course of action is carried out inside all those establishments. For instance, in case a firm runs five distribution stores in the USA and also in Canada, the procedure involving benchmarking will analyse several operations which occur at every single distribution facilities as well as evaluate the way they tend to be executed and what enhancements might be made through assessing the outcomes from the benchmarking. When an organisation benchmarks the functions about inventory precision, delivery reliability, along with storage density, the findings from the assessments belonging to the facilities will guide the firm to further improve on all those functions undertaken in the facilities.

External benchmarking

About organisations which have carried out internal benchmarking and wish to check out innovative techniques by which to enhance overall efficiency on their internal functions, external benchmarking may provide substantial changes. Most companies assume that their operations tend to be efficient as possible, however frequently, the efficiencies are restricted to the know-how inside the organisation. The external benchmarking procedure takes the firm beyond its market and also exposes the company to several approaches along with methods. For instance, a producer and supplier involving electrical products have benchmarked their facilities internally for several years and may have explored strategies concerning bettering efficiencies. They approached an exceptionally efficient retail firm to check out their central facility along with benchmarking processes which take place there to compare with their factory operations. The external benchmarking permitted the producer of the electrical products to evaluate the techniques observed in the retailer’s factory and create a development strategy for its companies using the results.

Competitive Benchmarking

Organisations which are not performing as well as all their rivals, they might need to determine reasons why their techniques are not sufficient. Consulting and analysis companies are capable of doing aggressive benchmarking research intended for firms that may identify weaknesses and strengths of these procedures depending on the ones from most of their competitors. The organisation will then develop betterment strategies in line with the outcomes from competitive benchmarking.

An excellent example of benchmarking might be the case of Blackberry Company; it was among the supreme companies in communication and electronics industry.  Blackberry Company even dealt with severe competition coming from Samsung and later got overwhelmed with the innovative Apple Inc.’s products (Rösler, Nitze & Schmietendorf 2014, p.56). The company faced the risk of making losses because its products now could not meet consumers’ demands, the situation worsened by the fact that Blackberry’s clients were now the iPhone products. Therefore, Blackberry conducted successful benchmarking activities on the successful firms like Samsung or Apple to enable it to compare its techniques in executing its operational processes. Afterwards, the company can develop improvement policies to improve its efficiency and effectiveness intended to restore its previous status. Currently, Blackberry launched new enhanced smartphones in the market which meet the current demands and expectations of consumers all over the world.

Therefore, benchmarking can be termed to be assessments of the performance and effectiveness of organisations, whether through measurement of value, quantity or time. Additionally, benchmarking assist organisations to determine its significant performance as well as enabling the firm to adjust its techniques and procedures to remain competitive in the market. The benchmark process carries out evaluations and eventually develop policies of actions aimed at improving the organization's general performance and effectiveness. On the other hand, benchmarking is associated with several challenges; the process consumes a lot of resources and time not to mention the effort required to accomplish the task. Regardless of the emerging issues, benchmarking continues to be key towards the differentiation of an organisation from the many others while performing within a competitive business atmosphere. Moreover, the process provides the organisation with unique information on business opportunities, viewpoints, action plans and weaknesses linked to various procedures.

Analysis of Lean and Agile Systems and how they benefit the Selected Supply Chain

The supply chain chosen in this particular section is the traditional approach. Lean systems refer to the sleek transitions which exist in the course of product improvement to the shipping and delivery of the same commodities. Agile methods tend to be challenging and hard to understand. The modern supply chain techniques are usually facilitated by agile technology, that mainly strengthen the importance associated with technological support within the achievement of a supply chain routine (Cabral, Grilo & Cruz-Machado 2012, p.56). For example, the present-day strategies that include route assembly, as well as constant replenishment, utilise the agile technological know-how. Physical warehouse might not exactly exist. However, products and service are going to be delivered or shipped to a client within the agreed period. 

The agile techniques may be complicated, yet it attains high degrees of effectiveness. Merchandisers usually find a method for getting their merchandise to Alibaba and Amazon intended for supply. On the contrary, organisations, for instance, eBay and Amazon are generally able to purchase and own numerous goods immediately after acquiring these products from producers. Hence, the control within the supply chain depends on the association created between the suppliers and the producers. Regardless of the difficulties, agile techniques permit easy transportation of products through extensive distances. Delivery and shipping are attributed to agile methods, plus overtime, maintenance cost diminishes.

Lean methods have advanced with time towards agile tactics as a result of integrating technological assistance. Old fashioned supply chain administrators have even embraced lean systems due to the directedness and simplicity in dealing with problems; clients can also recommend modifications for the service or product during sales, thus customer satisfaction. However, many start-ups adopt the conventional model specifically to create confidence by way of personal marketing. Though, they accept the agile techniques while they progress to enhance effectiveness in service delivery. In the modern day today, it continues to be difficult avoiding agile systems since the globe is embracing digital alternatives for nearly all problems. Considering that every organisation wants its benchmarking endeavours to achieve success, it needs to integrate long-term as well as innovative options. 

In several instances, either a lean or an agile approach may be suitable for the supply chain. Nevertheless, numerous organisations will most likely encounter scenarios in which a hybrid technique is the better fit. In such cases, they should cautiously prepare and carry out the mixed strategy with brilliance, which is usually easier in theory since it requires lots of shifting components. As with a lot of elements of the supply chain as well as operations administration, there exist many different ways to achieve this kind of objective. A good example involving hybrid technique within the supply string is a Spanish designer and also retailer, Zara (Rodríguez, Markkula, Oivo & Garbajosa 2012, p. 150). The Designer Company manufactures almost all of the merchandise it designs and even sells, also, it performs functions like cutting, dying, labelling, and packaging under one building to achieve economies of scale. Zara features a supply string which is not solely flexible and agile but features numerous Lean attributes into their operations. Several companies can discover some hybrid supply sequence that performs efficiently for them. In today's always changing, unpredictable, as well as competing worldwide economy, it may typically be in the firm’s ideal interest to employ a new supply chain that is equally agile and lean.

Conclusion and Recommendations

Conclusion

          The paper deliberates on the adjustment and improvements to be made with the aim to increase the supply chain performance and effectiveness. For better efficiency of the supply chain, the administration should not only concentrate on the everyday operations and purchasing but should also emphasise customer-driven as well as customer-focused approaches while managing the supply chain. To realise these strategic objectives, organisations should focus their supply activities to satisfy customers while at the same time utilise the available resources efficiently and effectively. Moreover, the paper also tackles the concerned issue adoption of conventional or modern time’s models and techniques.  Traditional models of business organisations relied on the idea that businesses are best served through minimising their expenses and maximising their revenues. However, better-developed approaches proposed that the concept shifted from business against a company to supply chain against supply chain. Therefore, the success of firms will depend on the organisation’s supply chains, to minimise the cost of distribution. The paper further deliberates on the effectiveness of the management models employed to enhance the supply chain. The models discussed are continuous replenishment model, integrated supply chain model, and Make to Order (MTO) model.

Again, the paper discusses benchmarking approaches as well as the challenges and difficulties associated with these strategies. Benchmarking process is aimed at evaluating the organisation's current supply chain techniques and procedures comparing them to those of the competitors. Following appropriate comparison, the company must draw up policies intended to improve several processes within the supply chain: such as improved productiveness, inventory reliability, delivery precision, storage density, as well as time frame. The paper further discusses the three types of benchmarking approaches specifically: internal, external and competitive benchmarking. Also, an example of the benchmarking scenario is given, involving Blackberry Company and its competitors Apple Inc. and Samsung companies. The paper discusses how Blackberry Company was overwhelmed by competition from the competitors and was forced to benchmark to improve its ability to meet consumers’ expectations as well as enhancing its supply chain. It was further established that, regardless of the emerging issues, benchmarking continues to be essential towards the differentiation of an organisation from the many competitors while performing within a competitive business atmosphere.

The lean together with agile techniques have been recognised as among the strategies connected with enhancement of the supply chain which could result towards the minimum cost of functions as well as decreased wastage of resources utilised in the manufacturing process. Zara, a design company, was used to elaborating on the lean and agile systems and how they can be combined to come up with a hybrid system. Zara features a supply string which is not solely flexible and agile but features numerous Lean attributes into their operations. Similarly, companies can discover some hybrid supply sequence that performs efficiently for them. Furthermore, in today's constantly changing, unpredictable, as well as competing worldwide economy, it may typically be in the firm’s ideal interest to employ a new supply chain that is equally agile and lean.

Recommendations

It is suggested that companies need to utilise the development strategies, for example, adoption of the hybrid system - both lean and agile approaches, in boosting all their supply chain models. Additionally, it is fundamental to benchmark to assess an organisation against its competitors thus effective and efficiency in the supply chain as well as meeting consumers’ expectations. Studies should be conducted to understand further the connection linking profitability and efficiency of the supply chain management in an organisation. The reviews should also deliberate on the impacts associating production strategies embracing modern technology and the effectiveness of the supply chain adopted. Lastly, it is recommended that the future studies should also scrutinise the methods of integrating innovative technologies into the supply chains management along with their impact on the supply chain effectiveness.

References

Cabral, I., Grilo, A. and Cruz-Machado, V., 2012. A decision-making model for lean, agile, resilient and green supply chain management. International Journal of Production Research, 50(17), pp.4830-4845.

Gunasekaran, A., Patel, C. and McGaughey, R.E., 2004. A framework for supply chain performance measurement. International journal of production economics, 87(3), pp.333-347.

Hong, P., Hong, S.W., Jungbae Roh, J. and Park, K., 2012. Evolving benchmarking practices: a review for research perspectives. Benchmarking: An International Journal, 19(4/5), pp.444-462.

Rodríguez, P., Markkula, J., Oivo, M. and Garbajosa, J., 2012, June. Analyzing the drivers of the combination of lean and agile in software development companies. In International Conference on Product Focused Software Process Improvement (pp. 145-159). Springer, Berlin, Heidelberg.

Rösler, F., Nitze, A. and Schmietendorf, A., 2014. Towards a mobile application performance benchmark. In INTERNATIONAL CONFERENCE ON INTERNET AND WEB APPLICATIONS AND SERVICES (Vol. 9, pp. 55-59).

Smith, D. and Sparks, L., 2009. Tesco’s supply chain management. Logistics & Retail Management: Emerging Issues and New Challenges in the Retail Supply Chain, London and Philadelphia: Kogan Page, pp.143-171.

September 04, 2023
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