Benchmarking training - UK Consultant
Benchmarking Training
Benchmarking for competitive advantage
There has been a progressive increase in the topic of benchmarking - but for all that there is still a great deal of ignorance about what it actually is. It has taken its place as a management buzzword along with BPR, TQM, Change, EVA and many others - but its true nature is poorly understood. Some see it as stealing (or 'borrowing') ideas; others as a mechanism for comparison with a competitor; whilst others view it as a form of industrial espionage. In fact it is all of these and none of these at the same time, but instead involves understanding strategic gaps; cooperation; hard work; a willingness to question and where necessary to change fundamental precepts (sacred cows) and also - giving.
This paper will address several issues including: what benchmarking is; when it should be used; and the benefits from using it; how to approach a benchmarking initiative; and how to optimise a benchmarking project.
What is benchmarking?
The term benchmark comes from surveying where it was used to denote a notch or mark representing a given altitude and against which other heights could be calibrated or 'benchmarked', since when it has come to mean any standard against which something is compared; and some of the leading exponents in business include Xerox and GE. In business terms there are numerous definitions of benchmarking, but essentially it involves learning, sharing information and adopting best practices to bring about step changes in performance. So, at its simplest, benchmarking means:
'Improving by learning from others - i.e. - benchmarking is simply about making comparisons with other organisations and then learning the lessons that those comparisons throw up'
Another definition is:
'Benchmarking is the continuous process of measuring products, services and practices against the toughest competitors or those companies recognised as industry leaders (best in class)'
Robert Camp's definition :
'A positive, proactive process by which a company examines how another company performs a specific function in order to improve how it performs the same, or similar function. Operational processes must be comparative or analogous if the highest degree of knowledge transfer between benchmarking partners is to be achieved'
Benchmarking allows you to discover the gaps in your performance when compared with someone else. Nothing will happen, however, unless you actually do something to close the gap - or surpass it. The real payback comes from changing what you do to improve your operations - and as we all know change is difficult - actual benchmarking is the easy part! 
Once a gap has been identified the key question is: 'How much of the gap do you wish to close?' Do you wish to improve a little, a lot or become best-in-class? i.e. what is the benefit from each stage of change and what will it cost? Some areas will need greater effort to change than others but all must be compared to probable benefit/return for that effort (e.g. revenue, cost efficiency or customer satisfaction). It may not be cost effective to go the whole way and in some cases best-in-class may be a step too far! But it may act as a stretch target to which you aspire - or re-visit later.
- In practice, benchmarking usually encompasses:
- regularly comparing aspects of performance (functions or processes) with others;
- identifying gaps in performance;
- developing performance improvements to close the gaps thus identified;
- implementing the improvements;
- monitoring progress and;
- reviewing the benefits
The key questions on which successful benchmarking turns are:
- How do we do it? and
- How do they do it?
- in other words a comparison of your processes with (a) more successful organisation(s) to establish exactly where the differences lie - and then taking steps to use the knowledge to close the gaps.
What it is not
Although benchmarking involves making comparisons of performance, it is not:
- just competitor analysis - benchmarking is best when it involves collaboration
- comparison of league tables - the aim is to learn about the circumstances and processes that underpin superior performance
- a quick fix, done once for all time - benchmarking projects may extend over a number of months or even years, and it is vital to repeat them periodically so as not to fall behind as the background environment changes
- catching up - in rapidly changing circumstances, good practices become dated very quickly and anyway you want to gain competitive, or possibly prime mover, advantage
- copying - the fact that others are doing things differently does not necessarily mean they are better
- spying or espionage - openness and honesty are vital for successful benchmarking
The underlying reason for benchmarking is to learn how to improve your business processes and thereby increase your competitiveness. Organisations choose to benchmark outstanding companies whose business processes are analogous to their own - even if they are in different industries! Benchmarking allows you to identify those practices that have facilitated those successful companies' superior performance and that can be adapted to your own business. Accordingly, benchmarking is an operational process involving continuous learning and adaptation which enables you to improve your organisation's competitive position.
~ Neil Jones ~
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