Benchmarking Via the Shopping-Cart
Many organizations brag
about their benchmarking efforts and how good they are at it. I once worked for
a large paper company, and a lot of our spending in supply management was for
packaging materials involved in the making of toilet tissue and paper towels.
I was involved in materials management, plant scheduling, and packaging
engineering at the time. Fortunately, all the people involved in these
operations reported to me. We were also very fortunate that the plant manager
had a materials background and was open to suggestions from us. At first, we
went out and tried to get information from various paper institutes, but we
found this data to be unwieldy, expensive, and not up-to-date.
Then we just decided to use the shopping cart.
We went out to various supermarkets and stores and purchased as many of our
competitor’s products as we could. We basically dissected them and the
materials that they used, looking to see what they had done differently than we
had. They were using cheaper materials but had suffered no disconcerting
quality drops. Over the years, we had not kept up with the advances in
materials. In addition, the process to get new materials approved was unwieldy
and required corporate approval. This discouraged almost all the plants from
taking risks in the materials area.
We basically changed all our materials specifications
to meet or exceed our competitors. In the first year, we saved over $20 million.
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