Benchmarking logistics performance with an application of the analytic hierarchy process

In the increasingly turbulent environment, logistics strategic management has become a necessity for achieving competitive advantage. The use of benchmarking is widening as a technique for supporting logistics strategic management. Benchmarking can be described as the search for the best practices leading to a superior performance of a company. In this paper, we demonstrate how the analytic hierarchy process (AHP) can be used for supporting a generic logistics benchmarking process. First, the customers of a company are interviewed in order to define the logistic critical success factors and to determine their importance. The performance levels of the companies to be benchmarked are then evaluated with regard to each success factor. Second, the factors enabling the companies to achieve superior logistics performance are determined and prioritized with respect to each success factor. Third, the strengths, weaknesses, and problems of the company conducting the benchmarking process are analyzed and prioritized with respect to each enabler. Then the potential developmental actions for achieving superior logistics performance are defined and prioritized. In addition to supporting the three steps mentioned above, the AHP-based approach forms the basic framework for a continuous logistics benchmarking process.