Why your organisation should benchmark


PCindices_against_USDollar_Euro_indices.pngOrganisations seeking to become leaner and more efficient can’t manage what they don’t measure.

“Over the 15 years that I have been benchmarking SA organisations I have seen very little evidence that there is any direct relationship between how much organisations procure and the prices they pay. Rather, it is better-informed organisations that pay lower prices and receive better service from suppliers,” Alan Low of Benchmarking service provider Purchasing Index (PI) tells SmartProcurement.

Interestingly, recent PI benchmark reports show that:

Domestic courier overnight rates for 1kg parcels vary by up to 72%.
SA car-hire rates for Group B cars vary by up to 60%.
Office cleaning productivity varies by up to 68%.
Guarding hours per company employee vary by up to 79%.
Domestic air travel air fares on major routes vary by up to 35%.
PC prices have increased at a much slower rate than the Rand has weakened, so if your organisation is linking prices to Rand/Dollar exchange rates, the chances are that you may be paying over the odds.

Benchmarking provides a valuable source of empiric information as it shows what other SA organisations’ are doing compared with their peers; not just in terms of prices paid, but also service performance, scope, management information and innovation.

The benefits enjoyed by procurement functions that benchmark:

• Identifying how other organisations are managing to save money.
• Showing how you stack up against your peers.
• Highlighting the cost of personal or technical preference.
• Providing independent marketing material to demonstrate the value procurement brings to the organization as a whole.

If you would like PI to present our benchmarking services to you and your team, please contact Alan Low on Alan.Low@p-i.net

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