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1.0 What is Benchmarking?
2.0 What is the objective of Benchmarking?
3.0 Why is Benchmarking Important?
4.0 What are some of the ways of doing Benchmarking?
5.0 When Should Benchmarking Begin?
6.0 Is there any misconception of Benchmarking?
7.0 Why is Benchmarking different from other improvement tools?
8.0 Features of Benchmarking
9.0 How do we start Benchmarking
10.0 The Benchmarking methodology
11.0 Some tips for success in Benchmarking activities
What is Benchmarking? back to top
Benchmarking is a business excellence tool for finding, adapting, and implementing outstanding practices from within an organization or outside the organization to achieve superior performance. Commences with identifying what you need to improve, followed by learning how to improve by partnering in learning and sharing with leading client organizations. After implementing changes, reviews track performance and identify further opportunities for improvement.
Benchmarking is an on-going search to continuously improve. Once the organization has identified the desired benchmark levels, the organization applies learning from partners to adapt and improve performance of targeted processes. Benchmark levels do rise so the organization will need to monitor progress outcome performance to determine potential opportunities to improve against partners with higher performance. At this point in time the organization decision for benchmarkING is based upon strategic importance and urgency.
What is the objective of Benchmarking? back to top
Benchmarking aims to examine, compare, and improve performance of processes used in business operations. Examines process flow, efficiency, effectiveness, adaptability, cycle time, or cost and share how things are done. Benchmarking requires a thorough understanding of one's own processes; and results in recommendations for change to improve performance. To the bigger picture benchmarking allows an organization to compare itself with others and, in the process, step back from itself and reflect.
Why is Benchmarking Important? back to top
Listed here are five reasons why benchmarking is important to be undertaken for performance improvement.
Strategic Planning
Benchmarking enables enterprises to form their strategy(s) in a more practical way from the related information collected on the market, possible moves of competitors, latest technology of products or services, financial resources and the source of customers.
Market Forecast
Benchmarking enables enterprises to evaluate its current market situation or its estimate market potential. It serves as a source of information for direction of development of major players in the market, and the trend of development of products and services.
Innovation Stimulation
Benchmarking is a perfect source for management innovations and enables companies to find new products, new processes, and new ways to manage resources of the company.
Product/Process Comparison
Benchmarking is important for comparison. It allows collection of information of products and processes of competitors or prestigious enterprises and serves as a standard to compare against similar products or services.
Goal Determining
Benchmarking is important as a means of finding the best process and facilitates sustainable improvement and increase performance. It is one of the effective management tools that can be used to create incremental changes as well as strategic reforms for the organization. Comparative measurement through benchmarks helps to identify problems and opportunities. Benchmarking offers an organization an opportunity to change and to improve. The tool tells how well an organization is performing, how good an organization needs to be (it will give a practical vision), and how to get there (a roadmap). An ongoing process, benchmarking is linked to the mission, vision, and values of the organization for finding improved ways of doing things.
What are some of the ways of doing Benchmarking? back to top
Once you have identified what you want to improve using the funnel approach you can choose different kinds of partners for benchmarking within your organization or with another organizations and do
Sector benchmarking across other organization in the same sector; or
Industry or functional benchmarking by comparing your organization and your processes against other organizations in search of better or world-class practices of the same industry; or
Generic benchmarking through partnerships across functional areas, for instance, benchmarking turnaround time with an airline industry to a car racing industry. Or
Internal benchmarking by partnering between different areas within the organization; and
Competitive benchmarking by partnering with potential competitor client organizations.
When should Benchmarking Begin? back to top
An organization should begin benchmarking from the point of instantly learning and sharing with other client organizations new and improved ways of doing things. It is important to understand ones own level of performance and the priority of benchmarking opportunities. The organization should understand which particular strategy and supporting processes are of greater importance before starting to do benchmarking.
Is there any Misconception on Benchmarking? back to top
Many regard the benchmarks as benchmarking. Benchmark is only a small part of the benchmarking process.
Benchmarking starts from identifying an area for improvement and ends in enhancing the quality of the services and product.
The data comparisons are benchmarks such as performance output figures. Benchmarks act as a pointer to what an organization should be improving and from whom the organization should be learning.
Why is Benchmarking different from other Improvement Tools back to top
Benchmarking looks outside the organization and brings much accelerated improvements. Changes made as a result of benchmarking is large and noticeable at all levels of the organization. When the organization goes on the implementation phase the organization learn from its partner so that the organization will accelerate and improve more quickly. Benchmarking allows partner re measure to track performance improvement at the validation stage.
The Code of Conduct guide benchmarking encounters and protects customers Benchmarking Partnerships. Adherence to Benchmarking principles contributes to the efficient, effective and ethical benchmarking.
Benchmarking Code of Conduct
Individuals agree for themselves and their company to abide by the following principles for benchmarking with other organizations.
1. Principle of Legality
If there is any potential question on the legality of an activity, consult with your corporate counsel.
Avoid discussions or actions that could lead to or imply an interest in restraint of trade, market and / or customer allocation schemes, price fixing, dealing arrangements, bid rigging, or bribery. Don't discuss costs with competitors if costs are an element of pricing.
Refrain from the acquisition of trade secrets from any means that could be interpreted as improper, including the breach or inducement of a breach of any duty to maintain secrecy. Do not disclose or use any trade secret that may have been obtained through improper means or that was disclosed by another in violation of a duty to maintain its secrecy or limit its use.
Do not, as a consultant or client, extend one benchmarking studys findings to another company without first ensuring that the data is appropriately blinded and anonymous so that participants identities are protected, nor without first obtaining the permission of the parties to the first study.
2. Principle of Exchange.
Be willing to provide the same type and level of information that you request from your benchmarking partner to your benchmarking partner.
Communicate fully and early in the relationship to clarify expectations, avoid misunderstanding and establish mutual interest in the benchmarking exchange.
Be honest and complete.
3. Principle of Confidentiality.
Treat benchmarking interchange as confidential to the individuals and companies involved. Information must not be communicated outside the partnering organizations without the prior consent of the benchmarking partner who shared the information.
A company's participation in a study is confidential and should not be communicated externally without their prior permission.
4. Principle of Use.
Use information obtained through benchmarking only for purposes stated to the benchmarking partner.
The use of communication of a benchmarking partner's name with the data obtained or practices observed requires the prior permission of that partner.
Contact lists or other contact information provided by Benchmarking Partnerships in any form may not be used for purposes other than benchmarking and networking.
5. Principle of First Party Contact.
Respect the corporate culture of partner companies and work within mutually agreed procedures.
Initiate benchmarking contacts, whenever possible, through a benchmarking contact designated by the partner company.
Obtain mutual agreement with the designated benchmarking contact on any hand-off of communication or responsibility to other parties.
Obtain an individual's permission before providing his or her name in response to a contact request.
Avoid communicating a contact's name in an open forum without the contact's prior permission.
6. Principle of Preparation.
Demonstrate commitment to the efficiency and effectiveness of benchmarking by being prepared prior to making an initial benchmarking contact.
Make the most of your benchmarking partner's time by being fully prepared for each exchange.
Help your benchmarking partners prepare by providing them with a questionnaire and agenda prior to benchmarking visits.
7. Principle of Completion.
· Follow through with each commitment made to your benchmarking partner in a timely manner.
· Complete each benchmarking study to the satisfaction of all benchmarking partners as mutually agreed.
8. Principle of the Understanding and Action.
· Understand how your benchmarking partner would like to be treated.
· Treat your benchmarking partner in the way that your benchmarking partner would want to be treated.
· Understand how your benchmarking partner would like to have the information he or she provides handled and used, and handle and use it in that manner.
Features of Benchmarking back to top
Before undertaking benchmarking it is important to keep in mind some of its unique features.
Look at your organization structure. Define the organization. Do benchmarking only on the process that needs immediate improvement in the shortest lag of time. Think global in terms of who you do benchmarking with. First start with the organizations nationally then look around the globe.
Eating the chocolate elephant. Topic & Scope Think about what keeps the boss awake at night to identify the topic for benchmarking. Think of what is the best area the organization can do benchmarking on to improve in the business.
Peeling the onion. Once you have identified the topic get to the heart of the matter. Pick the chuck. Eat only the best part not the whole part.
Finding Partners. Using the funnel approach search cross industry for new ideas & methods.
Comparing Apples & Apples Processes & Practices not Apples & Oranges Avoid comparing KPIs with other organizations because different organizations measure their KPIs using different strategies.
Benchmarks vs Benchmarking You cannot benchmarking KPIs of organizations to another because it is not comparable.
Management system to enable sustainable improvement Have a team approach to benchmarking. Through the funnel approach get points of most leverage where you can maximize competitiveness. Have a good starting point that underpins the benchmarking such as the Fiji Business Excellence Framework.
Finding partners different industries partners vary with each scope item
Do not try and reinvent the wheels inside the organization. Look for best practices outside and adapt to your organization. Know exactly what is the core problem(s) of the organization. Look at different industries. Look at different partners. Form partners with other organizations.
Learning and Sharing Code of Conduct The benchmarking Code of Conduct protects confidentiality of information. Information is shared only within the group.
Adaptation for recommendations Series of preliminary workshops and site visits identify good practices. Organizations share and learn from each other and come up with new learning for recommendations.
Implementation The implementation of best practices is done through the team leadership approach gaining buy-in and communication
How do we start Benchmarking? back to top
Have a benchmarking framework to follow that is based on a well- established methodology. Consider your organizations needs and circumstances and adapt the methodology accordingly. Make sure your methodology is rigorous and contains all the key principles.
If your organization needs convincing before committing to benchmarking you may need to demonstrate the relevance of benchmarking to your business and how it supports and aligns with organizational objectives.
Alternatively, you may pilot a benchmarking project on a significant organizational problem to illustrate the benefits. Survey your internal customers about their key needs and channel your benchmarking to these areas. Involve core organizational staff from the start so they can see the potential early on. Once you have proven the benefits of one benchmarking study, it will be easier to gain support for others.
The Benchmarking Methodology back to top
Use an appropriate benchmarking process. If your organization is part of the first local benchmarking partnerships network, then you probably heard about the Benchmarking methodology. The methodology focus on the learning and transfer of leading practices as well as maximizing the likelihood on the implementation of improvements.
1. The Planning and Analysis Stage
· Select the project sponsor
· Plan the benchmarking process, establish your team, choose your benchmarking partner.
· Select the topic for best practice benchmarking based on the criteria of the business excellence framework and the needs of your customer organizations.
· Scope the selected topic with your customer organizations so that they would have greater ownership for the project.
· Determine other organizations who are interested on the project. The issues they face and what are the strengths they can share.
· Confirm committed benchmarking partners who can share. Firm scope/timeline. Agree on methodology/measures/outcomes/roles.
· Conduct your data collection.
· Collate and report data to determine the current performance gap.
2. The Learning and Sharing Stage
· Analyze report to examine comparative strengths and opportunities for improvement.
· Team visit your chosen partners to find best practices to facilitate learning and sharing. This visit will result in the knowledge exchange required for development of a plan recommending improvements.
· Team report findings.
3. The Recommendation Stage
The team draw up a plan for improvement in consultation with the sponsor and stakeholders to ensure that the plan has support and approval. The implementation plan will be part of the business case, which also includes a proposed evaluation plan.
The team present the plan to the senior executive of the organization for approval of implementation.
4. The Implementation Stage
Stage four requires the implementation of the recommended changes to bring about the improvement.
5. The Review and Monitoring Stage
After the implementation stage there is a need to re measure performance to determine the success of the improvement strategies and processes implemented.
THE BENCHMARKING STAGES back to top
Some tips for success in benchmarking activities
1. Choose the right area.
2. Be committed to implement the results.
3. Choose and empower the right teams.
4. Know your own process first.
5. Choose the right partner.
6. Know and abide by the Benchmarking Code of Conduct.
7. Have basic knowledge of benchmarking and follow a benchmarking process.
8. Prior to initiating contact with potential benchmarking partners, determine what to benchmark, identify key performance variables to study, recognize superior performing companies, complete a rigorous self-assessment, and be willing to share information.
9. Develop a questionnaire and interview guide, and share these in advance if requested.
10. Work through a specified host and mutually agree on scheduling and meeting arrangements.
11. When the benchmarking process proceeds to a face-to-face site visit,
· Provide meeting agenda in advance.
· Be professional, honest, courteous and prompt.
· Introduce all attendees and explain why they are present.
· Adhere to the agenda.
· Use language that is universal, not one's own jargon.
· Be sure that neither party is sharing proprietary information unless prior approval has been obtained by both parties, from the proper authority.
· Share information about your own process, and, if asked, consider sharing study results.
· Offer to facilitate a future reciprocal visit.
· Conclude meetings and visits on schedule.
· Thank them for their time and sharing.
12. In benchmarking with competitors, establish specific ground rules up-front, e.g. "We don't want to talk about things that will give either of us a competitive advantage, but rather we want to see where we both can mutually improve or gain benefit."
13. Do not ask competitors for sensitive data or cause benchmarking partners to feel they must provide data to keep the process going.
14. Use an ethical third party to assemble and "blind" competitive data, with inputs from legal counsel, in direct competitor comparisons.
15. Benchmarking Partners should check with legal counsel if any information gathering procedure is in doubt, e.g., before contacting a direct competitor. If uncomfortable, do not proceed, or sign a security / non-disclosure agreement.
16. Any information obtained from a benchmarking partner should be treated as company confidential".
For more information on Benchmarking please contact:
Productivity Promotions Department
c/- TPAF
PO Box 6890
Nasinu, Fij
Email:
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TPAF website: www.tpaf.ac.fj
Te: 3392000 ext 202 or 281
Fax: 334 0184
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Benchmarking