Setting external benchmarks

Careful reviews of external good practice helps determine ‘what good looks like’ in the supply chain.

In this section you will learn:

  • What external benchmarking is
  • What types of good practice reviews exist and what insights and learnings each provides
  • Questions to ask before proceeding to build an investment case model

What you need to know about external benchmarking

External benchmarking is a way of measuring performance against an outside standard. This type of benchmarking helps you to understand how your business compares to others and where there is a room for improvement. When a ministry of health uses external benchmarking to measure its performance, it can refer to industry standards as reflected by best practices or a similarly-situated standard. The aim is to try and compare yourself with organisations and countries that have a similar context.

Three reviews to find information to determine external benchmarks

There are three different types of reviews that can be undertaken to determine what external benchmarks you can set. These include:

1. Good practice reviews of performances: in-country

Reviews of performances delivered by external suppliers operating in-country give an operational context of the functional capabilities that may have the potential for outsourcing.

2. Reviews and case studies in the relevant functional area from other countries

You can assess external country case studies from other countries to provide insights into effective outsourcing. This helps to understand the good practice benchmarks of outsourcing in functional areas of the supply chain.

3. Consolidate inputs from in-country and external reviews to determine 'what good looks like'

Lessons learnt and consolidated from both in-country vendors and other countries provide a ‘good practice’ benchmark review with comparisons made to current in-house supply chain performance.

Checklist of questions to review before developing an investment case

Two sets of questions should be reviewed before proceeding to make sure that everything has been considered:

Questions from the in-country assessment

  1. Have the in-country functional scorecards and results been reviewed (supply chain mapping, maturity models, key performance indicator analysis)?
  2. What are the functional areas in the ministry of health supply chain practices can be improved?
  3. Has a SWOT analysis been performed?
  4. What functional areas and activities are ‘core’ (e.g. procurement, demand planning) to the ministry of health and what are ‘non-core’ (e.g. warehousing, transportation)?

Questions from the external benchmarking process

  1. Where have supply chain outsourcing good practices been observed in-country and within other non-health sectors
  2. Where have supply chain outsourcing good practices been observed in other countries that can inform good practice?
  3. What were the lessons and insights from these case studies?
  4. What were the key findings to apply to the outsourcing initiative?

Finally, there is one more question to ask and answer before moving on to build the investment case model:

Is there consensus from senior management functions to take the initiative forward to review outsourcing options within the health supply chain? If you have consensus then move on to the build the investment case model. If you do not have consensus, consider consulting the Enabler Tool, Advocacy and governance, for ideas on how to build consensus and create buy-in.