Whether in an increasingly global supply chain or a more complex manufacturing facility, management and performance must continuously be analyzed while best practices and processes must frequently be identified and adapted inside and outside the organization.

A new report claims that benchmarking — the process of improving performance through continuous measurement and comparison with industry peers, as well as qualitative analysis of business processes — is the key to improving supply chain management.

ProLogis, the world's largest owner, manager and developer of distribution facilities, recently announced the release of its latest edition of the ProLogis Supply Chain Review, entitled Benchmarking — Prerequisite for Building Best-in-Class Supply Chains.

"Benchmarking, when used properly, can lead to significant increases in supply chain efficiency," said Leonard Sahling, first vice president of research for ProLogis.

In fact, the report found that companies that undertake formal benchmarking initiatives often realize a substantial return on their investment within the first year; and benchmarking data can often be procured free of charge from the likes of industry, trade and professional associations.

"Today, the best performers in this area are spending far less on logistics than the median, while their logistics performances are much better than the median. In short, effective benchmarking can provide a huge competitive advantage in the marketplace."

Yet while companies are striving to create best-in-class supply chains and are using benchmarking to achieve such a goal, continuous improvement is entwined with other manufacturing processes and is not relegated only to the supply chain.

Sure, building flexibility into manufacturing processes and facilities, and integrating and coordinating the overall supply chain network, will both simplify and hasten product flow and facilitate just-in-time (JIT) delivery. And a slimmer supply chain will optimize the alignment of product capabilities with what customers actually want, writes Paul Loftus, a managing partner of Accenture, Inc., at TheManufacturer.com.

Studies also indicate that more than half of all U.S. manufacturers have embarked on some kind of lean manufacturing initiative. Far fewer actually achieve lasting improvement.

Pelion Systems Chief Technology Officer Dave Gleditsch writes in IndustryWeek this week:

With so much volatility occurring in the industry, it's easy for manufacturers to find themselves in perpetual firefighting mode. In the midst of that volatility, strategic management concerns like Lean often slide down the slope of priorities. Ironically, though, it is during those times where Lean principles can pay the greatest dividends.

Moreover, Gleditsch writes:

To address this issue, many manufacturers have put dedicated continuous improvement (CI) teams in place — separate from operations. This is a solid sign of investment in the process; however, it's critical that CI teams remain connected to the day-to-day workings of the plant and work collaboratively with the plant manager to ensure that any improvement efforts are linked with compelling operations challenges.

Accenture's Loftus says that successful lean manufacturers focus on the following four core capabilities:

• Undertake lean manufacturing as a way of life – commit to it 100 percent and involve everyone in the company, from top management to the shop floor, in changing the company's culture along lean lines
• Recognize and embrace boldly that long-term success involves far-reaching change
• Measuring the right things with appropriate technologies and sharing the results
• Avoid the big letdown by staying the course through fully integrated and consistently communicated change programs

Collaboration and support brings continuous improvement in the supply chain and lean initiatives full circle. As in Loftus' first point of lean success, ProLogis' Supply Chain Review found that high-level management participation and support is generally a hallmark of any successful benchmarking effort. And the three subsequent points are likewise pertinent to the overall supply chain: the role of change in long-term success; measuring and benchmarking the right factors; and integration and communication.

Companies that "eschew rigorous benchmarking exercises are destined to lose their way in the competitive fray," ProLogis' Sahling said. "However, those with the foresight and discipline to institutionalize benchmarking stand to reap substantial rewards in the form of improved efficiency and lower costs."