Calculating Supply Chain Costs as Benchmark
What is benchmarking
Based on our analysis of the client’s company size and operations, it would be reasonable to set a benchmark allowance of 15%.
Benchmarking in supply chain management is a process of evaluating and comparing the performance, processes, and practices of a company’s supply chain with those of other companies in the same industry. It is a powerful tool that companies can use to identify areas for improvement and optimize their supply chain operations.
Table of Contents
Benchmarking- Supply Chain
The benchmarking process involves gathering data and information about best practices, industry standards, and the performance of comparable companies. This data is then used to evaluate the company’s own supply chain and identify opportunities for improvement in areas such as cost, speed, quality, and sustainability.
The goals of benchmarking?
The goal of benchmarking in supply chain management is to help companies stay competitive and improve their overall supply chain performance. By benchmarking, companies can learn from others and incorporate best practices into their own operations. This can lead to reduced costs, increased speed and efficiency, improved quality, and better alignment with customer demands.
Benchmarking in supply chain management is an ongoing process, as companies must continuously evaluate and improve their operations to stay ahead in an ever-changing business landscape.
steps in the benchmarking
- Define your objectives: Determine the specific areas in your supply chain that you want to improve, such as reducing costs, increasing speed, improving quality, or reducing waste. This will help you to focus your benchmarking efforts and measure your progress.
- Collect data: Gather data on the performance, processes, and practices of your benchmarking partners. This may include information on their supply chain structure, cost structure, inventory levels, delivery times, and customer satisfaction.
- Analyze data: Compare the data you have collected with your own supply chain performance, processes, and practices. Identify areas where your benchmarking partners are outperforming your company, and areas where you have opportunities for improvement.
- Develop action plan: Based on the analysis of the data, develop a plan to improve your supply chain performance. This may involve making changes to processes, implementing best practices, or investing in new technologies
Benchmark Allowances In
transporting and storage of dangerous goods
The benchmark allowance for transporting and storing dangerous goods can vary depending on various factors such as the type of goods, mode of transportation, and storage conditions. There are specific regulations and guidelines for the transportation and storage of dangerous goods, such as the United Nations Recommendations on the Transport of Dangerous Goods (UN RTDG) and the International Maritime Dangerous Goods (IMDG) code. These regulations and guidelines establish standards for the safe handling, transportation, and storage of dangerous goods, and provide guidelines for determining the appropriate benchmark allowance for these activities.
Additional benchmark allowance for transporting and storing dangerous goods -2.5%
maintaining a continent wide distribution network
Benchmarking is a process of evaluating a company’s supply chain performance against other companies in the same industry, with the aim of identifying areas for improvement and optimizing supply chain operations. The benchmarking process involves gathering data and information about best practices, industry standards, and the performance of comparable companies.
Once the data is collected, the company can use it to evaluate its own supply chain performance and identify areas for improvement. This may involve comparing its performance to that of its benchmarking partners and identifying areas where its benchmarking partners are outperforming the company.
For example, if a benchmarking partner has a faster delivery time, the company can analyze the processes that the benchmarking partner is using to achieve that faster delivery time and consider implementing those processes in its own supply chain.
operating in a highly competitive industry with demanding customer service levels
The benchmark allowance for operating in a highly competitive industry with demanding customer service levels can vary greatly depending on various factors such as the type of industry, the size and complexity of the business, and the level of customer service required.
Companies should also consider seeking expert advice and consulting with industry experts to ensure that their benchmark allowance accurately reflects the costs associated with operating in a highly competitive industry with demanding customer service levels.
Product 1 Carriage
Product 1 carriage” refers to the cost or expense of transporting or shipping a specific product, known as “Product 1.” The term “carriage” is often used in the context of logistics and supply chain management to refer to the cost of moving goods from one location to another. This cost typically includes expenses such as transportation, storage, and handling, as well as any associated fees or taxes. The exact cost of product 1 carriage will depend on various factors such as the size and weight of the product, the distance it must be transported, and the method of transportation used.
Benchmarking is an essential tool that can help supply chain professionals enhance their company’s competitiveness and performance. The process of benchmarking, which involves collecting data and information about best practices, industry standards, and comparable companies, helps to identify areas for improvement in the supply chain, such as cost, speed, quality, and sustainability. By comparing their own supply chain operations to the benchmarks, companies can identify gaps, find areas for improvement, and set realistic goals to reduce costs, improve efficiency, and ultimately improve their competitiveness.
The regular monitoring of benchmarks helps companies stay on track and make progress towards their goals. By setting realistic goals and objectives, companies can motivate their teams to work towards continuous improvement, which is a critical factor for success. As new benchmarks become available, organizations can adapt their strategies, evaluate their performance, and continue to refine their supply chain operations.
Through benchmarking, supply chain professionals can identify best practices and industry standards, and adopt them to enhance their own operations. By learning from the best in the industry, companies can improve their own supply chain processes, reduce costs, improve customer satisfaction, and achieve better performance. By using benchmarking as a continuous process, companies can stay ahead of the competition, maintain a competitive edge, and ensure that their supply chain operations remain efficient and effective over time.
In conclusion, benchmarking is an essential practice for companies looking to improve their supply chain operations. By gathering and analyzing data, identifying areas for improvement, and setting realistic goals, organizations can enhance their performance, reduce costs, and improve their competitiveness. By making benchmarking a continuous process, companies can stay ahead of the curve and remain competitive over time.
About the Author
Vivek Sood: Sydney based managing director of Global Supply Chain Group, a strategy consultancy specializing in supply chains. More information on Vivek is available on www.linkedin.com/in/vivek and more information on Global Supply Chain Group is available www.globalscgroup.com
Vivek is the Managing Director of Global Supply Chain Group, a boutique strategy consulting firm specialising in Supply Chain Strategies, and headquartered in Sydney, Australia . He has over 24 years of experience in strategic transformations and operational excellence within global supply chains. Prior to co-founding Global Supply Chain Group in January 2000, Vivek was a management consultant with top-tier strategy consulting firm Booz Allen & Hamilton.
Vivek provides strategic operations and supply chain advice to boards and senior management of global corporations, private equity groups and other stakeholders in a range of industries including FMCG, food, shipping, logistics, manufacturing, chemicals, mining, agribusiness, construction materials, explosives, airlines and electricity utilities.
Vivek has served world-wide corporations in nearly 500 small and large projects on all continents with a variety of clients in many different industries. Most of projects have involved diagnostic, conceptualisation and transformation of supply chains – releasing significant amount of value for the business. His project work in supply chain management has added cumulative value in excess of $500M incorporating projects in major supply chain infrastructure investment decisions, profitable growth driven by global supply chain realignment, supply chain systems, negotiations and all other aspects of global supply chains.
Vivek has written a number of path breaking articles and commentaries that are published in several respected journals and magazines. Vivek has spoken at several supply chain conference, forums and workshops in various parts of the world. He has also conducted several strategic workshops on various aspects of supply chain management. He received his MBA with Distinction from the Australian Graduate School of Management in 1996 and prior to these studies spent 11 years in the Merchant Navy, rising from a Cadet to Master Mariner.
More information on Vivek is available on www.linkedin.com/in/vivek and more information on Global Supply Chain Group is available on www.globalscgroup.com
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