Benchmarking using the example of a Russian company. Benchmarking of purchasing activities. Benchmarking procurement. Feedback can be obtained through surveys to help determine

Hello, dear purchasing enthusiasts!

In this publication, we continue to review various purchasing tools from the wonderful book “Purchasing chessboard” from consultants A.T. Kearney. Today we will look at one of these tools , How product composition benchmarking.

Increasing differentiation, shorter product life cycles and increasing product diversity make sourcing increasingly complex. As a result, it is becoming more and more difficult to implement volume consolidation techniques or achieve economies of scale. Therefore, the first step in this case will be the use of appropriate tools to bring order to the resulting chaos. Using analysis and benchmarking, it is possible to identify potential improvements that can be realized through joint efforts between R&D and manufacturing departments.

A sample of competing products is sent to several suppliers for component analysis. Suppliers provide proposals both for the product as a whole and for its components. By combining the best proposals, the best concept is selected, while the buyer gains an understanding of the suppliers' production costs.

Product composition benchmarking includes seven steps:

1) coordinating the approach with suppliers: it is necessary to identify new potential suppliers (except existing ones) based on their portfolio, competencies and abilities;

2) identification of relevant competitive products;

3) preparation of appropriate costing templates;

4) receiving adjusted templates from suppliers;

5) evaluation of proposals;

6) determination of potential savings:

Determining the supplier with the lowest price for each product within the existing cost estimate;

Product reconfiguration using the lowest cost components;

Determining the lowest production costs

7) determination of target costs

The result product composition benchmarking is a reliable analysis of comparable competitive products.

good example of product composition benchmarking is an example benchmarking of rear view mirrors from an automaker

A car manufacturer decided to benchmark its rear view mirror product formulation after obtaining agreement from four suppliers (2 existing, 2 new) to participate in the process. The team, made up of engineering and purchasing personnel, decided to include two products from direct competitors and two products from competitors in low-cost countries in the process.

The following components were used for the costing templates: body, hinge mechanism, adjusting head, suspension, frame and mirror glass. Parts and materials were specified for each individual element. Suppliers were asked to determine the costs of major product elements and development services, including overhead costs. To better understand the benchmarking procedure, a joint meeting was held with suppliers.

A few weeks later, the results were available with corresponding potential savings, optimal functionality and efficient production processes. Minor functional differences between competing products were identified and financially assessed. Negotiations and subsequent feedback were provided to each of the suppliers.

Potential savings of 27% were identified for the entire product, with the breakdown as follows: 5 to 10% for body, 15 to 25% for hinge mechanism, 5 to 15% for frame, 25 to 30% for mirror glass, from 30 to 35% - for additional indirect costs.

Thus, as the example above shows, product composition benchmarking is a fairly effective purchasing tool that allows you to get up to 30% savings.

Using the experience of leaders in your industry, focusing on their proven developments in organization, production, management, etc., it is easier to achieve a comparable level for your company and even gain an advantage. A method based on a scrupulous analysis of other people’s experience, with the introduction of the best practices, the purpose of which is to optimize and increase the efficiency of one’s own business, is called.

How to effectively use competitor analysis (and more)

Before starting the research, the first step is to select a standard whose effective operation and commercial success are undoubted. Direct competitors, enterprises in the same industry, and even companies operating in completely different areas, but the most advanced in terms of organization of production, management and marketing, can be used as a standard.

There are several types of benchmarking:

Competitive. Involves a comparative analysis of competitors (similar products, implemented business processes, competitive advantages).

General. The best practices of companies in any industry other than the one in which the company using benchmarking operates are studied and adopted.

Functional. The work of individual departments, the performance of specific functions (personnel management, procurement, logistics, etc.) of similar companies, not necessarily competitors, are compared.

Naturally, in the case of direct competitors, no one will reveal their cards voluntarily. Several analysis techniques are used here: purchasing competitor’s goods and studying their advantages, surveying employees of related companies (common suppliers, for example), direct purchase of information, attracting leading employees of a competitor to work in your business. The most important thing is not just to study and understand the pros and cons of others, but to identify your own mistakes and shortcomings and introduce the best into your business.

Why blind imitation doesn't work

Through benchmarking, examples of better and more efficient solutions and practices are tailored to a specific business. It is important not to use direct copying, but to synthesize something of your own, since simply copying the leader, who is taken as a standard, inevitably puts your business in the role of eternal catch-up. It is important to understand the purpose of introducing someone else’s experience, to compare the cost of innovation and the magnitude of the achieved result. For example, an ERP management system is not needed for a small company.

Benchmarking must be carried out continuously so as not to stagnate, not to lose competitive advantage and to constantly stay ahead. It is an ongoing process of improving business performance based on evaluating the products, services and performance of the strongest companies. This is constant analysis, development and implementation of improvements, business optimization.

Examples of successful benchmarking

One example of a classic method of analysis and implementation is considered to be the development of the XEROX Corporation, which includes 10 steps divided into four stages:

Preparation. The benchmarking object is identified, comprehensively assessed in terms of money, all available information is analyzed, and an enterprise is selected for comparison.

Analysis. The main parameters (quality, time and money costs, customer satisfaction) are compared, ineffective ones are identified, and the reasons why others do better are determined.

Implementation. Goals are set and optimization strategies are determined, the enterprise achieves awareness of the need for changes, and a plan for them is drawn up. Changes are implemented with mandatory effectiveness monitoring.

Repetition. Over time, all innovations become standard on the market and require updating. Therefore, benchmarking is carried out according to a new cycle.

In the course of analyzing the effectiveness of other companies, XEROX changed the procedure for storing finished products, launched two-level distribution (by the way, for the first time in Russia), accelerated the assembly of products in areas where manual labor was required, etc. Studying and implementing the best practices of many companies has provided XEROX with a competitive advantage.

A case in point are benchmark comparisons conducted by Ford. Benchmarking was carried out in the nineties in order to improve the company's shaky position. A global study of more than 50 car models was conducted to study their benefits and consumer preferences. Determined for each attractive property

Benchmarking is understood as a systematic comparison of organizational processes and operational efficiency, carried out on the basis of pre-selected indicators (Fig. 1). The purpose of benchmarking is to identify the gap between the best results achieved and those the company currently performs in order to develop new standards and/or improve processes.

There are four types of benchmarking.

1. Internal - comparison of performance results and techniques used in different divisions of the company, i.e., in business units.
2. Competitive - comparison of the company's performance and performance with the performance and performance of its direct competitors.
3. Functional - comparison of indicators and performance results of companies from the same industry.
4. General - comparison of indicators and performance results of companies from different industries, carried out to find the most effective methods of work.

All types of benchmarking can be beneficial, as they allow a company to better understand its strengths and weaknesses, identify problems and possible ways to eliminate them; they also set standards, set new directions, and generate new ideas designed to improve company performance.

Benchmarking methods vary depending on situational characteristics and/or explanatory factors that help explain differences in performance between companies being compared. Moreover, some benchmarking techniques identify expected trends and how the most effective practices will be developed. Other practical issues may be explored during this analysis.

When to use the model

The choice of benchmarking type depends on the goal. Keeping in mind that what is conceived and its implementation in practice usually do not have a 100% coincidence, we can formulate the purpose of benchmarking as follows: it is a method of obtaining an answer to one of the following questions.

• How good are we at what we do?
• Are we as good at what we do as others?
• How can we improve our performance?

The scope of a benchmarking project is determined by the impact it is likely to have on the company, how freely the results obtained from it can be communicated openly to all stakeholders to increase the likelihood of success in improvement projects, and the effort that required to achieve results that play an important role in practice.

How to use the model

Ideally, companies (or any other similar structures) participating in benchmarking should show higher or at least the same results as the company (structure) being studied, which in this case is called the target. You can find such companies with the help of experts and through specialized publications. However, differences in products, processes, structures, or leadership and management styles can make it difficult to compare companies.

This difficulty can be overcome by using one practical technique. Research shows that it is possible to compare companies included in the sample using explanatory factors. Thus, the reliability of delivery of goods to the consumer depends, among other things, on the complexity of the product. Therefore, a number of companies with approximately the same complexity of products will have similar indicators for this quality, which makes it possible to form a homogeneous group for benchmarking delivery reliability (Fig. 2 and 3).

Assumptions made about the target company's performance may be more accurate if benchmarking is applied to an indicator (for example, delivery reliability) taking into account several explanatory factors.

Benchmarking requires the following (sometimes overlapping) steps.

1. Determine the scope of the project.
2. Select your benchmarking partner(s).
3. Determine the assessments, metrics, and method for collecting the required data.
4. Collect data.
5. Analyze the differences, identify the facts behind the numbers.
6. Present the results of the analysis and discuss their implications in terms of the (new) objectives.
7. Track the dynamics of the event (monitor) using ongoing benchmarking.

conclusions

Benchmarking is not easy at all. Too often, managers or consultants resort to benchmarking on their own initiative, forgetting to select in advance the necessary indicators or tools for conducting serious detailed analysis and presenting its results. It’s hard to argue with the fact that many benchmarking projects end unsuccessfully. Comparing organizational processes and company performance through benchmarking is like comparing dissimilar objects like apples and pears. Even if benchmarking is done correctly, significant differences in performance can be explained by the fact that “we are not like them,” and this “alienation syndrome” prevents benchmarking from being used as a mechanism to help set the company on a path of change to achieve better results. results. In addition, the presence of competition may hinder the free flow of information; sometimes this happens even within a company.

By using explanatory factors, benchmarking helps a company obtain comparative data that allows managers and executives not only to improve performance (in fact, indicate opportunities for improvement), but also to show original and at the same time proven solutions that can overcome very difficult problems. problems. We therefore argue that we should encourage differences among companies within a homogeneous group rather than try to exclude “dissimilar” members on the grounds that their products or processes are “not comparable” to others.

The market places new demands on companies for their logistics activities, the quality of service and their policies in the field of logistics. Companies, in order to remain competitive and offer quality services, need to look for ways to improve. Benchmarking is one such way.

Benchmarking is a way to improve a company through evaluating and comparing indicators that characterize its work with the performance indicators of other companies. Benchmarking appeared in the United States at the end of the twentieth century and is still used as a tool for improving the efficiency of various activities. There are several types of benchmarking. But regardless of the type, its main goal remains to improve the company’s performance.

Benchmarking studies are carried out periodically. Conducting a one-time study cannot fully reflect all the benefits that benchmarking brings. One of the objectives of benchmarking is to determine the current position of a company in the market, followed by making changes. After the changes are made, it is necessary to conduct research again and understand how effective the decisions made are and how the company’s position in the market has changed.

By participating in benchmarking of key logistics KPIs, you will be able to:

• compare performance with other companies,
• make decisions to improve the company,
• track the dynamics of indicators you are interested in,
• get acquainted with the best practices in the industry.

As part of modern business, the idea is gradually emerging that it is not the firms themselves that compete, but their supply chains, which explains the increased interest in logistics.

The strongest competitive advantage in the fight for customers should be efficient logistics. Logistics of industrial enterprises consists in the preparation and implementation of the principles and methods of logistics in its activities.

It becomes obvious that it is necessary to take into account the experience of successful enterprises inside and outside the industry in which the logistics facility operates - not only foreign, but also domestic, closer to real Russian conditions.

This is a relatively new area of ​​marketing research that appeared in the United States in the 70s. The twentieth century is usually called the term “benchmarking”. Foreign scientists define benchmarking as “a systematic activity aimed at finding, evaluating and learning from the best examples, regardless of their size, business area and geographical location.”

There is a slightly different definition: “Benchmarking is a process of systematic and continuous measurement: assessing the internal processes of an enterprise and comparing them with the processes of world leading enterprises in order to obtain information that will be useful for improving one’s own characteristics.”

Many new business methods in logistics, marketing, and quality management, developed by large companies and having success, gradually began to be used by enterprises in other industries. These include 6-sigma (Motorola), just-in-time (Toyota), Poke-yoka (Matsushita Co), and benchmarking itself (Xerox).

Currently, benchmarking is a promising direction for the development of consulting. At the same time, the role of the consultant is to adapt the experience of leading companies, including those from other industries, to the real business conditions of the client company.

The benchmarking approach leads to a significant change in the decision-making procedure in the field of logistics management. Traditionally, such management decisions were made based on the results of marketing and logistics research, and management intuition in the field of organizing supply and distribution chains.

The benchmarking approach in the field of logistics of industrial enterprises involves the discovery, study and use of the useful experience of other companies in solving problems of the development of logistics systems and chains, familiarity with the best practices used, which contributes to a more informed, balanced adoption
management decisions in the field of development of intra-company logistics, thereby increasing the competitiveness of the company.

The subjects of studying benchmarking in logistics include:

1) organization of sales channels
2) warehousing (including technical equipment of warehouses)
3) logistics management
4) transportation and relations with logistics operators
5) logistics systems for managing and monitoring resources at all stages of the production and sales cycle
6) information management during the distribution of goods (including the availability of electronic document management, barcoding)
7) process of formation of logistics costs
8) interaction with suppliers and business partners.

The benchmarking process in logistics can be represented as the following diagram:

1. Determination of the range of problems in the functional areas of logistics to be considered from the standpoint of benchmarking.

2. Determination of a set of factors and variables to analyze the state of logistics at the enterprise.

3. Selection of a set of enterprises for comparison and use of experience, both in the industry to which the logistics object belongs, and from other industries. In parallel with this, external secondary information related to the use of logistics by other enterprises and the formation of supply and distribution chains by them should be analyzed.

4. Collection and analysis of indicators of enterprises selected for comparison according to selected evaluation criteria. In this case, the information received is classified, systematized, an analysis method is selected, and the degree of achievement of the goal and the set of factors that determine the result are assessed.

5. Comparison of the results obtained with our own indicators in order to determine possible areas for improvement.

6. Development of an action plan to improve the state of logistics based on the information received.

7. Implementation and subsequent monitoring.

It is obvious that such a benchmarking scheme should be periodically carried out again, since practice shows that the process of improvement is limitless, since science and management are dynamically developing, and this causes corresponding changes in the application of logistics approaches and methods at the best enterprises.

Of great importance when carrying out benchmarking in logistics is the compilation of a “collective”, essentially “ideal” image of a reference company for orientation, the state of supply chains to which one should strive.

The most important principle of benchmarking is the similarity of the logistics business processes of the logistics object with the companies being compared, which determines the possibility of using their experience.

The problem that needs to be solved during benchmarking is the need to adapt the research results to the characteristics of the company.

In the future, considerable importance should be given to the mutual exchange of information between interested enterprises, including from different industries, through conferences on various applied issues of logistics and marketing. Sources of information for benchmarking in the field of logistics are information posted on the Internet, visits to thematic exhibitions, personal contacts with suppliers, consumers, competitors, representatives of leading companies in other industries, economic periodicals, data from professional associations, and industry consultants.

According to a number of researchers, for example, Y.K.Shetty, the buyer remains the main source of information about the market and competitors. Indeed, by conducting appropriate marketing research, it is possible to find out what consumers think about the state of supply chains and the necessary changes in the nature of interaction.

Direct communication between logistics managers of different enterprises provides valuable ideas and knowledge for business, which can lead to the introduction of new forms of product distribution management, inventory management, modern software products, and the use of new logistics methods.

The main benefit of benchmarking is that the implementation of logistics and related marketing and production functions becomes more efficient as the best methods and technologies of other enterprises or industries are researched and implemented. This will have a positive effect on reducing costs (especially logistics), will lead to better satisfaction of customer needs, which will create the preconditions for increasing business profitability and creating useful competition in the market.

If there are no necessary resources to conduct benchmarking on your own, it is advisable to involve third-party organizations - consulting firms in the field of management and, in particular, logistics consulting. There are not enough of them yet, but it is obvious that this unfilled niche in the market for intellectual services for business will soon begin to be filled.