ONLINE EXCLUSIVE: Benchmarking: Learn to Excel Through Change
By Ron Webb and Bill Baker
Change is inevitable. A key strategy for organizations that embrace change and excel through it: benchmarking to identify and transfer best practices into their business systematically. In many of these organizations, benchmarking nets significant bottom‐line savings.
Texas Instruments avoided the cost of building a $500 million wafer fabrication plant by benchmarking processes internally, then leveraging the knowledge and best practices that already existed within the organization. A large professional services firm used APQC benchmarking and best practice information to help its client, a major European bottling company, identify $30 million in savings through a process efficiency analysis and feasibility study of moving to a shared services model for finance and human resources operations.
Designing new processes using successfully demonstrated practices, ideas, and insights from others not only reduces costs and cycle time but ultimately provides marketplace competitive advantage. Benchmarking gives organizations what they are looking for: an idea of where their performance stands in relation to other relevant peer groups and insight into how they can raise their performance.
Hundreds of benchmarking studies conducted by APQC since 1992 reveal a variety of reasons that organizations benchmark:
- Improving profits and effectiveness
- Accelerating and managing change
- Setting stretch goals
- Achieving breakthroughs or innovations
- Creating a sense of urgency
- Overcoming "not invented here" complacency
- Gaining a new perspective
- Making improvements to address Baldrige National Quality Program criteria.
Benchmarking supports change and facilitates the process of transforming a business process by involving key stakeholders and process owners who can initiate change based on related "learnings," surfacing performance gaps. It identifies key improvement opportunities through process analysis, reveals others’ processes and practices that can serve as improvement models, reduces barriers through demonstrated success, and fosters adaptation of best practices.
Benchmarking takes businesses to new heights by providing data organizations use to enhance performance of specific processes and, ultimately, of the entire organization. A major challenge: Just like change, it isn’t easy!
Support High Performance
World-class organizations recognize that benchmarking must go beyond taking simple benchmarks or gathering numbers for comparison. These random acts might be easy, but they don’t offer significant learning for lasting, consistent improvement. Benchmarking encompasses understanding the quantitative side of performance. It also must include examining and adapting enabling factors that support high performance. It is a continuous learning process.
Effective benchmarking focuses on how to make data useful, as opposed to focusing solely on the data. Developing project plans that include a business case for change, resources that support the change, and the actions/milestones for implementation will enable real process change. Yet benchmarking’s reward is elusive in many organizations.
Aligned with Company Strategy
Organizations typically encounter three main pitfalls during their benchmarking journeys. They are:
1) difficulty accessing reliable data and information;
2) failure to follow through with the project to its completion; and
3) neglecting to plan for the time, costs, and other resources involved in benchmarking.
Here are some suggestions for sidestepping common benchmarking challenges:
• Align your benchmarking plan with company strategy. Any work activity not aligned with the organization’s stated or understood direction is a drain on productivity. Several tools help ensure alignment. It could be as simple as regular discussions between the benchmarking team and key management-level stakeholders.
• Involve process owners. This involvement is essential to effective benchmarking. If the deep, rich, process-related information from the benchmarking effort only reaches management, translation to action will likely suffer. Process owners must make needed changes for sustainable improvement; they should learn best practices first-hand.
• Understand your own process. The information you don’t know about your process is astounding. Process owners usually have a wealth of information on the inefficiencies of their operational processes. Many times they lack the vision or mandate to make requisite changes. Before spending time and other resources learning externally, start with mapping and understanding your processes. You will immediately find improvement opportunities and gain clarity about what you want to learn during your benchmarking activities.
Benchmarking basics, converting best practices to effective action plans, and sharing knowledge in the organization will be covered in three future articles. If you are interested in more information on benchmarking and related topics, AME and APQC offer a Community of Practice , which provides guidance and resources.
Ron Webb is the executive director of membership and research at APQC. Bill Baker is the Association for Manufacturing Excellence (AME) vice president of alliances.
