The procedure for identifying savings potential by benchmarking the production processes includes four steps:
Preparation for benchmarking: First, both the production steps that most strongly impact the product price and the suppliers taking part in the process benchmark need to be identified. Existing suppliers and new ones may be included.
Involvement of the suppliers: As the next step, an invitation to tender is sent out to the chosen suppliers. The invitation includes ques¬tionnaires on the cost and time required for individual process steps.
Identification of best practice costs: The offers from the various suppliers are compared in detail. The first thing to check is which production steps are the main cost drivers. Summarizing the least expensive production steps, together with a comparison of external data sources, determines the best practice process. Computing the difference between each supplier's process costs and best practice determines the amount of potential savings.
Implementation of savings potential: Part of the savings potential is achieved directly in negotiations with suppliers. In the case of complex changes in production processes, the suppliers need to submit an implementation plan.
For procurement, the benefits of process benchmark are a high level of price transparency and fact-based decision making. Knowing the suppliers' production processes and the costs associated with them helps negotiations, as these can be conducted in a more substantive and targeted manner. The database of best practice process costs created during the benchmarking procedure can also help determine future target prices for new products. A crucial factor for successful process benchmark is the involvement of production and engineering at an early stage.