Supply Chain Management Benchmarking for A1 Cash and Carry

1. Do you have a global view of your supply chains and can you analyze the complexity of the network?

2. Do all your stakeholders (procurement, logistics, supply chain, quality etc.) have the same understanding (and basically the same knowledge) of you supplier network?

3. Does your risk management cover the entire supplier network?

4. Can you identify risk gravity in reaction to an incident (i.e., insolvency or natural disaster) at a sub-supplier site?

5. Can you identify places on supply chains where quality standards or compliance regulations are missing?

6. Do you have a master plan in case of an incident at a supplier site?

7. Do you know how a change of supplier would impact the whole supply chain?

8. Can you manage the lead time for specific products within the entire supply chain?

9. Do you know the added value of your products for each step in the supply chains?

10. Can you identify the critical paths in your supply chain?

11.Can you use scenario planning to compare different supply chains in your network?

I work for A1 Cash and Carry; it’s a food service whole sale business. We are catering to restaurants, banquet hall and hotels. We have three locations across Ontario. We serve our 8 000 products in variety of categories such as beverages, dry food, frozen, dairy, chemicals/janitorial and kitchen hardware. Business services over 1500 customers daily between three locations, this also includes walk-in customers and delivery customers. We are only open to business members, not the public.

Business Strategy: Provide enough product and service to our customer so it becomes one stop shop. 

1) Balancing the inventory on hand while meeting the customers demand without shorting any product. Also extra inventory holds lot of money.

2) Investing on ERP to connect all the departments and monitor inventory by bin location with min & max, also auto generate PO.

3) Managing cash flow of the business and increasing the payment terms with the suppliers while improving the accounts payable.

4) Currently we have no e-commerce business set up but we are planning to start the e-commerce business and customer can order online.

5) Internal business is faced with challenge of retaining employs for long term.

6) Increasing the business margin.

Best practices are current, sustainable, repeatable methods of doing business that have been proven to provide a competitive advantage in the marketplace. The problem with looking at best practices in any of the functional areas of supply chain is that, simply put, one size does not fit all. The best practice for one company will not necessarily be an acceptable approach for another. Further, best practice may vary from industry to industry. It is important to recognize that SCM functions in a retail supply chain are different in many ways from SCM practices in a continuous process, which are different again from a project type of environment.

Business Background

There are many reasons to benchmark our processes against our own historical performance, against the performance of our competitors and the performance of those considered “best in class” at what they do even if they may not be our direct competitors. Sometimes practices from different industries can migrate over to your industry and with some minor adjustments or changes create significant value. A key element of implementing Lean practices is to measure performance. This provides a baseline to compare against others and to compare the before and after results from a performance improvement intuitive.

In this session candidates will have the opportunity of using hands-on applications of the tools by creating supply-chain-oriented balanced scorecards for their organizations. In this session, we will explore

• Benchmarking

• Lean Distribution

• Continuous Improvement

• Exercise: Information Collection

Upon completion of this session, you should be able to:

• Identify an opportunity to use benchmarking at your organization

• Implement continuous improvement through the use of applicable tools at your organization

• Determine the relevance of benchmarking and identify when it becomes inappropriate for instituting learning and change

• Consider Lean practices in the context of distribution and in your own operation

• Understand the concept of continuous improvement

Benchmarking is the process of identifying, understanding and adapting outstanding practices from organizations anywhere in the world to help your organization improve its performance. It is a process of comparing internal performance to external standards of excellence and defining ways to close the existing gaps. The objective is to achieve best-in-class performance through continuous improvement activities or business process re-engineering.

Benchmarking has detractors, however, who suggest it prevents real change. Rather than focusing on unlimited opportunities, you are merely comparing yourself to existing players in the market.

The benchmarking entities studied should be organizations known to perform supply chain processes and activities particularly well. These organizations, facilities or units can be external (e.g., competitors or non-competing partners) or they can be internal to the benchmarking organization. Note that it may limit creativity by looking at existing processes of your competitors instead of finding new ways to approach issues.

• Ensures targets are set high enough to remain supplier of choice.

• Convinces organization / employees that a higher standard is achievable.

• Measures what is done well, to market as a competitive advantage and what needs improvement.

• Allows for a culture change to be implemented.

• Establishes priorities for obtaining competitive advantage.

Internal benchmarking  Comparing metrics and processes between departments or between regional businesses in a multi-global company. Easy to establish a baseline; helps determine drivers of competitiveness. Also used to measure change management. Opportunity for improvement is limited to what the firm already knows.

Competitive benchmarking Comparing metrics and processes between one company and others identified as direct competition. Helps to improve positioning with customers by focusing on what matters to them. Generally requires a third party to gather and analyze the data, sharing only aggregate averages and your specific data with your company. Difficult to get clean data (metrics may be calculated differently). Opportunity for improvement is limited to what customers already expect.

Industry benchmarking  Moving beyond direct competition to others serving different market segments in the same industry or different markets with similar processes. Allows for greater insight into improvement opportunities but may be difficult to implement due to practical differences.

Best-in-class benchmarking-  focuses on the ultimate goal, not just improving what is known. It examines multiple industries, not just your own; looks for radically innovative practices; broad perspective, customer focus. It’s difficult to define best-in-class companies, so one’s metrics must be universal and must show a statistically significant improvement from the MEAN. Once identified, a best-in-class company may not wish to participate in any benchmarking effort with the masses.

The following is a general seven-step approach to benchmarking:

1. Determine the process, or processes, to benchmark.

2. Form a benchmarking team.

3. Identify key performance measures.

4. Measure your organization’s current performance and link to current practices.

5. Select appropriate benchmark entities among:

o Competitors

o Internal facilities

o External partners

6. Measure the benchmark entity’s current performance, and link to its current practices.

7. Change your organization’s current practices to match the benchmark entity’s practices, and close the performance gaps.