Benchmarking: Comparing performance over time and against industry norms

The second input is capital — the assets you use. Improvements in technology can provide significant improvements in productivity; however, these bumps in productivity come with a cost. New equipment is not inexpensive. You have to weigh this expense against the expected productive life of your existing feed mixers, trucks, grain dryers, etc. Analysis methods include payback calculations and tax implications. Many new technologies also come with labor savings — and these have to be factored in as well.

Examples of these types of measures in the grain and feed business include: tons of feed produced/employee; bushels of grain marketed/employee; tons of feed marketed/delivery truck; tons of feed manufactured/feed mixer; or bushels of grain shipped/storage bin.
Safety measures

The safety of your employees and customers is of paramount importance. Fortunately, feed and grain products do not pose particularly challenging safety hazards for customers (unlike products like a lawn mower or chain saw); however, safety is always a significant concern due to potential downtime, lawsuits and loss of goodwill, repair costs for equipment or tools and spoiled or damaged products.

Education is a key component, and management’s ability to help employees from becoming complacent with routine jobs that have inherent risk is the challenge. Safety also spills over into maintenance of data and computers, i.e., updated virus software and backup of data.

Benchmark measures can include the number of CPR certified employees; accidents/thousand hours worked; safety meetings held/year; smoke detectors/building, number of fire drills held/quarter; the percentage of computers backed up daily or weekly; the decibel level of equipment (can be a standard to work toward reducing); or the grain dust levels (measured as g/m3 or oz/ft3).

Management dashboards and other sources of comparison
A relatively new method of tracking benchmarks or standards on a real-time basis is to utilize the power of computers, combined with the value of looking at things visually. This approach has been put together in new management “dashboard” software programs.

According to idashboards.com: “A management dashboard offers simple graphs, charts and maps that make it easy to track progress and follow trends.”

If you can track data regularly, real-time reporting using a management dashboard can mean that as manager you can take action at the first sign of a problem, instead of waiting for a monthly or quarterly report.

It is also important to realize that dashboards are not a panacea. You need good data and reporting systems to prevent inputting faulty data. It is also important to input the “right” data, and this is your call as a manager — what information provides you the best view so that you can make the proper decisions? A good dashboard should also pare down items so that you do not have too much data. Given their intuitive design and visual nature, a dashboard program might be worth looking at for your company.

Industry benchmarks are sometimes hard to come by. While not an endorsement of their product — you might check out Pennent Systems (www.pennent.com). Created by Cargill, in collaboration with Feed Management Systems, Pennent is a program which helps managers improve efficiency in their feed mills by establishing a cost standard against which to benchmark. Its approach allows for customization of a cost model based on a firm’s equipment and product mix. Another key component, which helps provide functionality, is the software’s ability to do “what-if” scenarios.

Benefits of benchmarking

Benchmarking provides a relatively quick and easy method to track standards or goals you have for your feed or grain business. As a manager, you are certainly aware of the benefits of performance measurement. Appropriate benchmarks can be used to:
• Set goals and standards
• Document accomplishments

Tracking benchmarks can allow you to detect and correct problems as well as manage, describe and improve processes. All of these are functions of management, and benchmarking is a tool which can be used to make you a better manager. In fact, by tapping into that competitive streak we talked about earlier, setting benchmarks can be fun and motivating. ¦