Actions speak louder than benchmarking
I will have to stop there before I bore myself to sleep, but I thought you might like to know, given your obsession with benchmarking. Supply chain professionals constantly ask me how their stock-turn compares to the rest of the industry, craving data to measure their forecast accuracy against.
The honest answer is usually disappointing, because there's little meaningful information. I stress meaningful, because mountains of data is compiled daily about industry performances. But what is it telling you?
Nearly all businesses I meet use slightly different ways to calculate supply chain performance indicators. Even a customer service measure as simple as OTIF (on time in full) comes with more strings attached than a Thunderbirds movie.
I have seen supply chain directors tearing their hair out because global affiliates interpret some of their measures in different ways. How on earth can you compare the results? That's like scoring each athlete's performance differently in the Olympic Games. Good luck on deciding who wins a gold medal.
Then there's what you do with the benchmark. Are you saying that if I confirm that your stock-turn is lower than the industry average, you will spring into action, but if it's higher, you will do nothing and look smug? Then you have missed the point.
The actions based on monitoring performance are the crucial thing. If they are effective, your performance will increase, whatever the original score. I agree with businesses where stock reduction is the key indicator, not stock levels. The difference might be pedantic, but the change in behaviour is big, with a focus on continuous improvement. So stop weighing each rice grain and check instead that you haven't overcooked it!
Hugh Williams is founder of supply chain planning specialist consultancy Hughenden
