KPI and Benchmarking Part 2 of 2

Benchmarking is comparing your company results/metrics to a similar company in and outside your industry.  Compare yourself to the best! So how do you stack up?  Are you as good as you thought you were?

The point is to highlight areas where you can improve and perhaps it can be achieved by “mirroring” best practices.  For example, you may be able to decrease inventory investment and improve customer service at the same time by implementing “vendor consigned inventory.”

What do you mean?

Well, what do you mean, what do you mean?

It’s simple once you see it in practice and understand the concept.  Simply put you invite a strategic partner (maybe WW Granger) to own and maintain some portion of your inventory.  Most companies start by identifying a consumable product or product line (like maybe fasteners).  Effectively they “own” the inventory until you consume it and they also maintain a pre-established quantity on hand at all times.  Let’s stay real by noting, they won’t do this just out of the goodness of their hearts, but for perhaps a marginal increase in cost to you for this service.  It then becomes a true win-win situation.

This concept can be expanded into all types of products and could even lead into “inventory sharing” of capital assets and critical spares where the logic is that companies like Power Generation Stations could, for example, share in roto blades that might cost $250,000 per each set.  This works because the statistical odds of both companies crashing at the same time are not very likely.

The concept doesn’t have to be restricted to manufacturing because hospitals do this with blood.  Blood banks will typically service area hospitals with just one blood supply pool of the various types of blood and if there is a critical situation they will call on neighboring blood banks and the Red Cross in joint blood drives.

Dashboards are a completely different concept but equally as simple in their concept and implementation.  Think of your car’s dashboard.  It only contains the critical information that you need to operate the vehicle safely.

So what do you need in a car?

Here is the important detail to be remembered: not all functions have nor can use the same KPI’s and dashboards because each function is unique and therefore has unique critical needs.  Let’s say it again another way.  Finance is different from Customer Service, which is different from Quality Assurance.

Don’t misunderstand, they may very well have common components or elements and that is fine, but while the dashboards may be similar, they are not necessarily identical.  For example:

• Sales should be the same
• Customer names should be the same
• Rejects/Returns should be the same

This does not mean the dashboard is cut and paste identical though.  You can see an example below.

KPI’s and benchmarking are how you track and improve the performance of your operations and dashboards are how you report the data.  That is all there is to it.  Never make it harder than it is, but do apply these techniques.

Your path to business success.