Maximize Benchmarking with Time-Driven ABC New Techniques that Change How We Measure Performance

Humans are competitors by nature. We continually seek ways to track performance against our rivals. To satisfy this need, we form departments within our companies, implement systems, and complete projects to institutionalize our performance analysis. The results are the Key Performance Indicators (KPIs), Benchmarks, and Balanced Scorecards that help us govern. Benchmarking is a perennial hot topic, and will be the focus of our discussion here.

The Problem

One thing traditional metrics have in common is their simplicity. In the past, they needed to be easy to calculate and easy to understand. Why?

• Accessing detailed information was difficult. Benchmarking studies require us to aggregate data inputs from a dozen different systems (e.g., ERP, CRM, WMS, and Financial).

• Performing the calculations and distributing the information to hundreds of different departments with varied needs is challenging. Each surveyed department or company could have their unique method for calculating the "same" metric. For example, when calculating cost per drop, I&K distribution includes the cost of the dispatchers and route specialists. However, a competitor may only include the cost of the drivers.

As a result of these challenges, benchmarks are based on transactional aggregates. For example, companies would base their metrics on the number of quotes, the number of orders, or the number of set-ups. These numbers are easy to track, and it is easy to spot trends. They can be used for external and internal purposes.

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