In today’s fast-paced business environment, the need to establish a rigorous baseline of current performance and a subsequent benchmark to compare competitive performance is essential. The combination of these two measures not only helps to define operating practices and related costs, but also can provide a foundation to develop targeted strategies for improved performance.
The Service Baseline
The ChemLogix benchmark process begins with the acquisition of a service baseline for both customers and suppliers. Service metrics arguably drive costs ranging from 15 to 30% of sales for the typical specialty chemicals company. Benchmarking of freight rates, logistics routes or the supply chain is dependent on service requirements. There are typically three measures of service:
- Service Level – The order to delivery time split into the order-to-ship and ship-to-deliver (or transit) times, both are measured in days.
- Service Reliability – This is the percentage of time that the standard or promised service level is met.
- Service Flexibility – This is the percentage of time the supply chain team is required to meet service levels that are less (or more stringent) than the standard service level.
Given the service baseline, apples to apples benchmarks can be developed for three tiers of measurement.
- Tier I Benchmark: RATES - ChemLogix analyzes the current rates on your shipping lanes compared with the “industry best” for most modes of transportation. Utilizing our extensive proprietary database of lane and carrier information, we juxtapose a client’s current rate position with best of breed examples that have similar service requirements.
- Tier II Benchmark: ROUTES- ChemLogix can also go a level deeper than rates and evaluate and assess the opportunity for cost improvements in a company’s freight mix. This analysis focuses on the feasibility of optimizing cost and service in Transportation. To determine the economic value of freight optimization, we first factor current carrier rates, service requirements, business rules, process change requirements and existing technology. We then look at factors that drive cost savings, such as mode switching, multi-stop load scheduling, real-time order optimization, routing guide execution and load planning. Past analyses have uncovered additional savings opportunities beyond a rate improvement of ten to twenty-five percent of the freight spend.
- Tier III Benchmark: The SUPPLY CHAIN - ChemLogix constantly updates supply chain baseline and benchmark data at three levels including the Company, Business Unit and Category. The baseline is a summary of historical performance; the benchmark is a comparison of competing companies, business units and most importantly categories within the business units.
The combination of ChemLogix Baseline / Benchmark with real time performance reporting both identifies and supports projects to drive both service and financial performance improvement.
For a no-obligations discussion of how ChemLogix can deliver value to your company through our Benchmarking services call 215-461-3805 or email information@chemlogix.com.