When implementing cost performance benchmarking, organizations should consider the following key features and processes:
- Data Collection: Organizations need to gather accurate data on their own costs and performance metrics, as well as those of comparable organizations.
- Peer Selection: It is important to select comparable organizations to benchmark against. This could be done based on industry, size, location, or other relevant factors.
- Metrics: Organizations should determine which metrics to use in the benchmarking analysis, such as cost per unit of output, labor costs, productivity, efficiency, and return on investment.
- Analysis: The collected data should be analyzed in a systematic way to identify areas of improvement and best practices. This may involve creating graphs, charts, and tables to compare data and highlight trends.
- Feedback and Action Planning: The results of the benchmarking analysis should be communicated to relevant stakeholders and used to inform decision-making and action planning. Organizations should develop a plan for implementing changes based on the insights gained from the benchmarking analysis.
- Continuous Improvement: Cost performance benchmarking should be seen as an ongoing process, with organizations regularly reviewing and updating their benchmarking metrics and data to ensure that they remain relevant and up-to-date.
- Communication: Effective communication is key to the success of a cost performance benchmarking initiative. Organizations should ensure that all relevant stakeholders are aware of the benchmarking process, understand the results of the analysis, and are involved in the implementation of changes.
Through its market intelligence platform, Mintec Analytics, procurement practicioners are able to access a range of tools enabling them to build detailed views of their supplier costs. By providing access to market prices across a wide rnage of commodity raw materials, procurement teams are able to compare supplier cost with current and future market prices to ensure they are buying and contracting at the best possible prices.
