KNOWLEDGE BANK - Benchmarking
Wisdom that has time travelled over centuries is the CEO’s most potent tool for leaping to world-class standards today. It is, on the surface, a disarmingly uncomplicated concept. To improve, set your sights on a standard of attainment far above yourself. Measure the gap. And then, bridge it - or, even better it, beat it. Benchmarking in this precision-engineered algorithm, is as the formal definition states, "the process of identifying, understanding and adopting outstanding practices and processes from organisations anywhere in the world to help your organisation improve it’s performance." Don’t be lured by the lucidity into believing that it is a well-greased process that, once begun, cruises on auto-pilot until it delivers the gigantic improvements that it is supposed to. For, successful benchmarking begins in the mind, with the acceptance of being a pupil - not a master. To the CEO who can really glean it’s benefits, benchmarking, according to the unauthorised definition, is "the practice of being humble enough to admit that someone else is better at something, and wise enough to learn how to match, and even surpass, them at it."
What makes this technique, which would have been dismissed as industrial espionage in another era, so powerful is it’s ability to catalyse a concentration of best practices from around your company, your industry, around every other industry, and around global businesses - big or small. A structured route for learning from, even imitating, great ideas legally, benchmarking will enable you to seek out the best - standard set by business in everything that your company does. Crucially, it doesn’t mean following the practices of just one or two companies ; all the world’s businesses can be your teacher.
WHAT IS BENCHMARKING
Benchmarking is the process of identifying , understanding and adapting outstanding practices from within the same organisation or from other businesses to help improve performance.
This involves a process of comparing practices and procedures to those of the best to identify ways in which an organisation can make improvements. Thus new standards and goals can be set which, in turn, will help better satisfy the customer’s requirements for quality, cost,product and service.
In this manner , organisation can add value to their customers and distinguish themselves from their competitors.
WHY BENCHMARKING IS NEEDED
Benchmarking helps organisations focus on the external environment and improve
Benchmarking promotes a climate for change by allowing employees to gain an understanding of their performance - what they are achieving now and how they compare to others - in order that they become aware of what they could achieve.
THE BENEFITS OF BENCHMARKING
Benchmarking brings many advantages to an organisation.
o It sets performance goals.
o It helps accelerate and manage change.
o It improves processes.
o It allows individuals to see ‘outside the box’.
o It generates an understanding of world-class performance.
Benchmarking is an ongoing process which requires a systematic approach.
The objective of this phase is to prepare your plan for Benchmarking :
o What is the subject area to be benchmarked ?
o Identify the Benchmark companies / partners ?
o Finalising the data collection method ?
o Collecting the data ?
This phase looks at :
o What is the current competitive gap ?
o What is the projected competitive gap ?
The objective of this phase is to use the data gathered to define the goals necessary to gain or maintain superiority and to incorporate these goals into your formal planning process :
o How are the result of the analysis to be communicated into the organisation
o What are the name goals ?
During this phase, the strategies and action plans are established, implemented and assessed.
o What are the action plans ?
o Are you achieving the plans ?
When you have attained a leadership position and Benchmarking has become an essential, ongoing element of the management process.
TYPES OF BENCHMARKING
There are four types of benchmarking which can be undertaken by an organisation :
The continuous effort at establishing good practices uniformly and company wide by comparing what takes place in all the various operations of business.
Centre Parcs, the leisure company,benchmarks its facilities in the UK with 11 continental sites. When one unit shows a significantly better performance, the others learn how this was achieved.
Aims at comparing specific products, functions and processes with main competitors.
ICL benchmarks more than 20 of its competitors both on company performance and on product technology. The information it gleans is distributed throughout the company to ensure that every function is aware of how it compares.
Compares specific functions with the best in the industry and best in class.
BAA administers seven British airports. In addition to benchmarking itself against foreign airports, it has learned from companies in similar industries with similar problems, for example, Wembley Stadium and Ascot racecourse. All of these organisations must move, park and feed thousands of people in a confined space within a short period.
Perhaps the ultimate in terms of Benchmarking application. It applies to all areas of business operations. It is the comparision of cross-functional,core business processes with those best in the class.
The Rover Group recognises the opportunities gained by looking outside at world-class practices in all fields to expand the organisation’s vision of what is possible. The need for benchmarking, prevalent throughout Rover, has been highlighted by a number of factors, including the increasingly competitive world market and the introduction of Japanese car plants across Europe.
STEPS FOR A GLOBAL BENCHMARKING EXERCISE
STEP 1 : IDENTIFY YOUR PROCESSES.
STEP 2 : IDENTIFY WHAT AND WHO TO BENCHMARK.
· Knowledge about Benchmarking
· Knowledge about the Benchmarked Processes
· Ownership towards the exercise
· A strong Team
To acquire the above, the following are essential :
· Benchmarking Training Programme.
· Selection of Teams for each of the identified benchmarked processes
STEP 3 : COLLECT THE DATA.
After the teams have undergone training they should chalk out the manner in which they want to proceed with the exercise.
· They should decide on the sources of information.
· Who will collect the information - when.
· They should prepare questionnaires and checklist for data collection.
STEP 4 : ANALYSE DATA AND IDENTIFY GAP.
STEP 5 : PLAN AND ACTION IMPROVEMENTS.
STEP 6 : REVIEW.