Using the Tools in Your Performance Excellence Toolbox: Part 17 Benchmarking

Using the Tools in Your Performance Excellence Toolbox: Part 17 Benchmarking

This is the seventeenth in a series of posts on using performance excellence tools.  Benchmarking is a tool that can really help you determine the best solution to your problem.  It can point you to best/better practices.

First let’s understand what is meant by benchmarking.  “Benchmarking is the process of comparing one’s business processes and performance metrics to industry bests or best practices from other industries.”, http://en.wikipedia.org/wiki/Benchmarking

The easiest way to do this is to start by saying what it is not.

• It is not a bogey or target that you set to measure internal progress. To illustrate this, I’ll relate a story from my experience as a consultant.  Consulting for a commercial records center, I asked the owner if he had benchmarks for key operations.  He said that he did.  The company had financial benchmarks to gage progress. That is not the type of benchmarking used in process improvement.
• It is not an excuse to make a field trip.  When I was first introduced to benchmarking in the 1980s, the division that I was with had a rough time understanding how to properly use benchmarking.  Immediately people wanted to get in a car or jump on a plane and go talk to the “experts” in the field.  That was a huge waste of resources.
• It is not even identifying the best in your business and talking to them.
• It is not for the faint of heart, untrained or impatient.

Successful benchmarking requires the following steps:

• Set aside a good amount of time to complete the process.  At a minimum you are going to spend 40 hours and for big processes with big problems you can be at it for months.
• Clearly identified and documented gaps or inadequacies in the process you want to benchmark.  To do this you need to:
  • Analyze your process
  • Identify the errors
  • Identify potential solutions (this can be done before or after benchmarking)
  • Identify potential benchmarking partners.  This is the most critical point.  You are looking for the best practice for the process you are working on.  This may come from an unexpected place.  Too often people want to benchmark the best in their business not the best in the process.  Let’s return to the commercial records center for an example.

They were trying to improve their delivery process.  When I explained the need to benchmark, the owner immediately said let’s benchmark the largest in the business.  That was the wrong answer.  They needed to benchmark the best at delivery not the best commercial record center with the best delivery process.  If you are going to improve your delivery process you look to the organizations where that is a core function.  They needed to benchmark companies like FedEx or UPS.

You have identified your potential benchmarking partners.  Now comes the hard part – enlisting them.  Benchmarking partners are not always easy to enlist.  For some the reason they are the best is held as a trade secret or their key competitive advantage.  Put yourself in their position.  How willing would you be to share what has made you the best of breed?

You need to be able to answer their WIIFM (what’s in it for me).  Some potential partners are open to sharing because what you are asking does not pose a threat to them.  You may not be a competitor in their market or business.

Others may be willing if you sign a nondisclosure agreement with them.

One of the best ways to enlist a partner is to share with them your results or cross benchmark with them.

There is much more to benchmarking.  I will cover it in upcoming posts.