My Mill's Performance Has Improved, But Has My Peers?
For more than 25 years, The Beck Group has been the forest products leader in providing industry benchmarking services. These studies provide company managers and owners with an ethical and accurate way to compare their competitive performance – in many facets of the business – with other leading producers.
Mills routinely track their performance and compare it to past results to judge whether they’ve improved. However, unless performance comparisons are also made against peers, the mills “don’t know what they don’t know”. The Beck Group’s industry benchmarking studies enable management to identify competitive strengths and weaknesses relative to peers and to recognize the associated opportunities for improvement. This allows results-oriented management to prioritize resources (including finances) and focus on high priority opportunity areas, often leading to major improvements in performance and profitability.
The studies are based on actual financial and operational data, verified by The Beck Group staff, and cover all key areas of the business in detail including costs, revenues, product mix, yields, and productivity. For each company and operation, the roadmap to top quartile performance and improved profitability is different. And there are always further improvements to be attained.
A CASE STUDY – A MANAGEMENT TEAM COMMITTED TO IMPROVED PERFORMANCE VIA BENCHMARKING
The following graphs illustrate the actual results achieved by one company whose management team was committed to improving their operations and who used the results of The Beck Group’s benchmarking studies to provide a management focus on key opportunity areas. The company, a Southern Pine lumber producer, participated in a number of BECK benchmarking studies over a 15 year period. Armed with the insights gained from the benchmarking studies, company management developed annual action plans and capital spending priorities. Dramatic improvements in operating results – including financial performance – have been achieved.
Figure 1 illustrates the survey over survey improvement in lumber recovery achieved by this company (labeled “engaged participant”) in comparison to the average performing mill in The Beck Group’s studies. Starting from below average performance, the company achieved above average improvement in lumber recovery, culminated by a major gain in the most recent survey.
An even more dramatic improvement was achieved in the company’s annual lumber production volume, as illustrated in Figure 2, which compares the company’s annual volume to the industry average over the 15 year period. Note that, while the industry average was increasing at an average rate of 1.7% per year, this company improved its annual output at a rate of 6.6% per year, almost four times the industry average. And, this improvement in annual volume was achieved with capital spending that was somewhat lower than the survey average in The Beck Group’s studies.
Finally, the company made major gains in improving its average lumber selling values in relation to the survey average selling values. Changes in product mix and improved grade yields both contributed to these gains. A change in sales management provided additional improvements.
We are very pleased to have had the opportunity to work closely with this company’s management over the last 15 years, and to see the results that have been achieved. Participating in The Beck Group’s benchmarking studies was an important ingredient in the company’s achieving their success, but it took a committed management team to translate the findings of the benchmarking studies into management action plans and capital spending priorities, and to successfully implement the needed changes and improvements. We congratulate company management.
Sawmill TQ – THE NEXT GENERATION OF INDUSTRY BENCHMARKING SERVICES
The Beck Group recently joined forces with Forest2Market to combine BECK’s forest products industry benchmarking experience with Forest2Market’s SilvaStat360 cloud-based interactive business intelligence platform. Sawmill TQ subscribers have fingertip access to historic and current sawmill benchmark data, which is updated quarterly and available on a 24/7/365 basis, and allows mill managers to focus on the key factors leading to their mill achieving Top Quartile financial performance.
This new service is initially available for Southern Pine lumber producers, but will be expanded in the future to other global regions and other forest industry sectors.
If you have an interest in benchmarking services, please call or e-mail us at The Beck Group or visit our website at www.beckgoupconsulting.com.
The Beck Group is a forest products planning and consulting firm based in Portland, Oregon. We take a results-oriented, practical approach to helping clients make better decisions and improving their financial and operational performance. We offer a variety of services and we operate throughout North America and overseas. Our blog post highlight recent experiences of The Beck Group staff and feature topics relevant to anyone interested in forest products. We welcome your feedback and comments.