22 July 2023 Discover how logistics benchmarking can help you become a performance leader in your industry. Understanding how the market works, keeping track of new developments in logistics processes, staying updated on new technologies and industry best practices, as well as analyzing the results of major companies aligned with the sector are not easy tasks. These are fundamental and decisive actions for managers to stimulate growth and development in their logistics activities. We know that warehouse management requires process optimization and speed to keep up with market demands, and all of this represents a real challenge for managers in their daily routine. Both actions must occur simultaneously, as it makes no sense to improve internally without knowing what is happening in the external environment, or to be aware of what is happening in the market and ignore internal processes. Having a macro view, in this case, is essential. But, in the end, is it possible to monitor results and all the market news, as well as make improvements efficiently while respecting the reality of the supply chain? The answer is yes, and in this article, we share some important ideas about logistics benchmarking with you. What is logistics benchmarking? One of the fundamental points for the growth of any company is the constant measurement and analysis of its performance, as it is not possible to increase market visibility or business profitability if there are no goals, set milestones, action plans, and result monitoring. With this in mind, we ask ourselves: is your company today capable of efficiently measuring all processes? In logistics, one of the most common mistakes is the lack of alignment and definition of objective goals in relation to segment practices. A warehouse that knows how to clearly choose its goals, as well as measure results and evaluate the quality of work through correct KPIs (Key Performance Indicators), according to the criteria it wants to analyze, is certainly at an advantage over the competition. However, it is important to understand that data and information are not always sufficient if they are not compared with something. Therefore, benchmarking is necessary and has become one of the great allies of logistics managers when it comes to achieving high performance. It helps in defining main goals and monitoring metrics. So, from this process, progress and results are evaluated based on a comparative analysis. According to the American Productivity and Quality Center (APQC), benchmarking is “the process of continuously improving performance by identifying, understanding, and adapting outstanding practices and processes found within and outside the organization.” According to the agency, studying best practices offers the greatest opportunity to gain a strategic, operational, and financial advantage.” In practice, logistics benchmarking can be seen as a reference point between your warehouse and the competition. In this way, the warehouse can compare past performance of a parameter with that of other companies or with the overall industry average. Therefore, benchmarking allows you to clearly and objectively understand how your warehouse is achieving or not achieving its goals, contributing to decision-making. In summary, logistics benchmarking allows the manager to monitor significant and relevant parameters for the warehouse, providing a reference point for comparisons with another period of result analysis and/or with other companies in the same sector, in addition to assisting in planning goals and strategic decisions. Why is benchmarking important for the warehouse? So far, we have seen that logistics benchmarking provides concrete information about warehouse performance, allowing a clearer view of its condition in relation to the market, that is, whether it is operating in accordance with defined goals and standards. The standards, read here as KPIs, evaluate various criteria such as: speed, costs, errors, damages, safety, and customer satisfaction. By understanding which parameters should be considered and comparing results with internal and external references, strategic, operational, and even financial advantages are obtained. All of this has a single goal: to optimize processes and achieve operational improvements on a continuous basis. Such results directly affect the efficiency of the operation and, the better the performance, the more competitive the company becomes and the more profitable the business. With logistics benchmarking, in addition to continuously measuring and improving processes, it is possible to identify and correct errors, justify business decisions, as well as provide data that allow for the adoption of technology, investments in equipment, or warehouse infrastructure. Let’s take a look at an example: A warehouse has ten operators in the picking area. They were monitored, and their work was measured hourly. Over time, it was observed that the monitoring metric for that area was 100 orders per hour or 10 orders per employee in one hour. With this information in hand, once the order numbers drop to 90/hour, the manager can advance some important hypotheses: Stock issues. Problems in warehouse organization. Insufficient picking time. Employees need better working conditions or training. Need to automate processes, reducing manual activities. Drop in demand. Given this scenario, it is possible to quickly identify the problem and find solutions based on information, promoting improvements in different areas of the supply chain. On the other hand, when the numbers remain consistently the same, there is an opportunity to set more ambitious goals – using the right resources, of course, but always seeking to increase warehouse performance. How to apply logistics benchmarking? 1. Identify warehouse processes All changes start with planning and analysis. Therefore, before applying logistics benchmarking, make sure you understand all the processes that are critical in your company and need improvement. Initially, look for: Find sectors that record poor performance, delays in operations, and poor or no results. Discover which processes would have positive impacts on performance if optimized. Identify previous metrics and KPIs to have an early idea of results and facilitate the development of new goals and milestones. In this phase, you can rely on specialized management systems that provide data for more in-depth and reliable analysis, such as WMS. 2. Survey the main companies to evaluate Once all processes and sectors that need improvement have been identified, the next step is to identify which companies in your segment are strengths and references in terms of management, performance, efficiency, and quality. To gather this information, you, the manager, can consider some points such as: Direct or indirect competitors These are those who share the same sector and/or customer market. Using opinion surveys, customer reviews, news articles, or institutional publications, you can identify their level of growth, working methods, innovations, sales results, among other data that will help you in benchmarking. Companies from other segments Despite not sharing the same customers, these companies can bring innovations and different processes that serve as inspiration when building your own operational method. Perhaps at this stage, you will find it difficult to obtain information about competitors. In addition to the tips we discussed on where to get data, you can analyze technical publications available in communication channels and specialized logistics magazines. Fairs, exhibitions, and industry events can contribute with other information and updates on market news, so always stay updated and with a great network. It is worth adding that the support of consultants is also a way to obtain real and updated data for effective logistics benchmarking. 3. Adapt benchmarking to your company’s reality After gathering data and taking as a basis the working methodology and performance of competitors and leading companies in the market, it is time to adapt logistics benchmarking to the reality of your warehouse, respecting its context and processes. To do this, you, the manager, can: Define an application plan and establish the main goals to be achieved in the various processes and sectors that need improvements. Define the resources and tools necessary for the teams and collaborators involved to achieve the goals in a desirable way. Identify monitoring metrics to measure the evolution and results of activities. Perform an initial test that can be applied narrowly and compare with previous results before formalizing a methodology. Analyze the test results and verify whether the actions can be applied effectively or not. To go further: WMS and functionality for logistics benchmarking Data monitoring requires special attention and is decisive for reaching better conclusions and increasingly clear and objective goals. To achieve this, it is important to have management systems that provide real-time data and automate manual work, which can lead to registration errors and communication failures. A robust WMS system has advanced technology and allows the monitoring of various metrics and KPIs, providing performance reports, result history, and all the tools necessary to achieve good benchmarking practices in your warehouse. Discover some of the main advantages of WMS for logistics benchmarking: Real-time process monitoring The WMS system allows managers to monitor warehouse activities in real-time, making it possible to know how sectors are performing and be updated on the integrity of operations throughout the warehouse. This simplifies the monitoring of parameters related to activities such as: task execution time, number of orders shipped/hour, error rate, downtime by sector or employee, among others, in addition to advising ways to speed up the process and increase team productivity. Access to quality data The WMS system offers information veracity and data quality, meaning it reduces the possibility of errors and process failures. In this way, it is possible to make assertive decisions and increase leaders’ proactivity towards their teams, as everyone has access to reliable and immediately updated data. With the software, you can predict and measure market trends and adapt your operations based on productivity and sales history. Activity division and focus on productivity With the WMS system, it is possible to obtain recommendations based on history and results on your dashboard. It indicates and decides team roles, monitors and manages stocks, as well as offers greater security to the warehouse as a whole. All these actions aim to optimize resources and processes, allowing better customer service and reducing operational expenses. By implementing logistics benchmarking with the WMS system, you achieve continuous efficiency and can improve result measurement, putting your warehouse ahead of the competition, aligned with the leaders in your sector. Rely on Deagor to get the right technology that can help you tackle the main challenges of your work routine. With our WMS, you will have at your fingertips a powerful tool for performance analysis and process optimization, ensuring surprising results for your business! Logistics Benchmarking: Tips for Execution and Application Deagor WMS per ecommerce può aiutarti!