L> Benchmarking10 actions toBest-Practices Benchmarkingby Charles J. BurkeYou have probably encountered the word "benchmarking" before.You may have actually assumed the it to be just an additional management device to it is in utilizedor rejected follow to her individual circumstance. In fact, benchmarkingin the 1990s is not a choice; that is a necessity. The method that Japan adoptedafter civilization War II to produce an financial superpower is the same that theAmerican corporate people must learn to master to survive in the increasinglycompetitive worldwide marketplace. The penalty for neglecting suitable benchmarkingis ns of competitive edge, at a time as soon as the aftermath of such a lossare much more devastating 보다 ever.The ax "bench" originates from topography and also refers come a markmade upon part object in a landscape indicating that is elevation, to it is in usedas a reference suggest by surveyors. Topographers have the whole landscapeto measure; nothing is concealed. Benchmarking in the company context involvestaking dimensions of a this firm landscape whose dimensions will probablynot be immediately apparent. To it is in successful, it requires a combinationof hard detective work, honest self-examination and also the will to innovate.Four varieties of benchmarkingThere are four an easy types that bench-marking:Internal-The process of comparing one details operation within yourorganization v another. Success in this area is a issue of "theleft hand knowing what the ideal hand is doing." inner benchmarkingis by much the easiest, both to research and also to implement. Performance improvementachieved in this form is usually about 10 percent.Competitive-The procedure of to compare an procedure with the of your directcompetitors. For apparent reasons, this is the most daunting type the benchmarkingto lug out successfully, and also legal considerations must always be keptin mind. Efficiency improvement achieved in this type is commonly about20 percent.Functional-The process of to compare an operation with the of similarones within the broad selection of your market (e.g., copper mining techniquescompared with coal mining techniques). Sensible benchmarking is relativelyeasy come research and implement. Efficiency improvement accomplished in thistype may be 35 percent or better.Generic-The procedure of compare operations from unrelated industries(i.e., ones regularly used by a wide selection of industries). An example wouldbe a film library using the warehousing techniques of one more industry tostore an ext efficiently that is catalogue that old movies. The advantage of thistype is that the problems of competition execute not apply, raising the accessto information and also reducing the possibility of legit problems. Productivityimprovement achieved in this form may it is in 35 percent or better.Best practicesThe acknowledgment of finest practices is somewhat subjective, but to increasethe "objectivity" of identify a "best practice,"here are a few guidelines. A practice, method or process may be deemed abest practice when:It produces superior results. Exceptional is characterized as 25 percent or higherresults 보다 the normal output.It is clearly a brand-new or innovative use of manpower or technology.It is well-known by at least three various references together a finest practice(that is, three or much more public domain sources have referenced this practice).It has actually received an external award because that this practice.It is well-known by their customers or suppliers.It is known by an market expert.When the organization(s) making use of it have actually a patent because that this practice.It leads to superior performance. An example here would certainly be GeneralElectric"s "Workout" practice.More than just learning what benchmarking is and also what it have the right to do, the organization"sleaders must construct a specific, organized method to implementing benchmarking.It is fine come extol the virtues that benchmarking and also encourage its use throughoutthe organization, but just like any type of other program, it should be establishedinto the company as a functioning process. The complying with 10 actions willkeep any kind of organization on track in that is benchmarking endeavors.Step 1-Determine processesto it is in benchmarkedThis step involves defining as correctly as feasible the procedure to bebenchmarked. The is the cornerstone of the whole benchmarking process. Anincorrect to know at this stage could an outcome in a waste of preciousresources at later stages. Think about the complying with questions:Have departmental priorities been established? recognize whether the departmenthas strongly characterized its overall purpose. This includes setting long-termgoals and short-term objectives.What is the level that change? Does whole system need rethinking?Perhaps a particular procedure within that mechanism needs to it is in improved. Canimprovement be accomplished by upgrading some details task in ~ the process?Has the work process to it is in selected to be flowcharted? A good very first stepin gaining an overview of the entire procedure is come flowchart it. This willhelp identify difficulty areas and also locate potential problem areas. Then establishthe an important measurements by which to compare future progress.How much readjust is possible? offered your organization"s resources and circumstances,find out whether reforming the process is affordable at the established levelof change.Have vital performance measures been determined? investigate whethermeasures have actually been identified in accordance through customer requirements.Have the measures been express in terms of a proportion or percentage? Arethere other measures and, if so, which measure has actually priority?Has a project description been written? Make sure the summary includesthe following:1. A factor for the project2. Goals and also objectives3. The cost and also duration of the project4. Critical measures5. Potential gains6. The project"s affect on the entire organizationGather proof the the job is necessary in regards to potential expenses againstpotential benefits.After you"ve completed step 1, girlfriend will have a sharply focused, clearlydefined procedure that tells monitoring what demands to be changed, just how muchchange have the right to be accomplished within provided limitations and how to measure accuratelyyour processes against those of others and versus your very own future projections.Step 2-Determine organizations to be benchmarkedThis action determines which organizations should be studied by identifying"the best of the best"-organizations whose practices can be adaptedto your requirements. An incorrect selection could result in electing partnersthat room not true benchmarks because that the selected process, that room uncooperativeor whose practices are not compatible or irregularity to your needs. Considerthe following questions:From which sources can an efficient partner list most most likely be created?Research which released sources (industry periodicals, yearly reports,etc.) would certainly yield the many useful, accurate and up-to-date information.Find out which reliable people or groups (industry experts, watchdoggroups, etc.) can be consulted to increase the list. A good source come consultis a library, either corporate or public. Librarians usually room eager tohelp in such efforts.Which that the preliminary institutions selected space really "the bestof the best"? identify which prospective partner truly room the benchmarksfor her organization.Are the solution of the selected establishments really comparable? Selectthe establishments with practices that room the most compatible with yours.Is sufficient and also accurate data obtainable? decide which prospective partnerswould be supposed to develop the most reliable information. Then see whichorganizations (e.g., foreign entities) would existing the fewest logisticalproblems as soon as gathering data. Also, number out which establishments wouldbe the least likely to present legal problems when collection data. Fromwhich organizations would participation most likely be obtained?When you"ve gone through action 2, you will have compiled a huge list fromwhich to choose organizations to contact as potential partners, based onthe superior high quality of your processes.Step 3-Gather dataThis action involves creating a setup for collecting data from selected targets,conducting website visits and creating a site visit report. The exactly implementationof this action will result in data that have the right to be used directly to boost yourorganization"s performance. Untrue implementation the this action couldresult in data that is useless or inadequate to your purposes. Considerthe complying with questions:Has an enough data-collection arrangement been created? recognize what arethe simplest data sources and the most difficult. Then number out whichdata would have actually the many value. Various other important determinants are the time andcost constraints of collecting data.Which space the ideal sources of exercise data? decision which combinationof the four varieties of sources-internal, published, external or initial research-wouldyield optimal results.Have the ideal internal sources been consulted? great sources to consultare your organization"s library and other internal teams or teams.Have the best published resources been consulted? interior publications(e.g., annual reports, quarterly reports) that the target organizations shouldbe studied as well as any periodicals and also directories comprise informationabout the target organizations. Proper data bases can likewise lead topertinent information.Have the ideal external sources been consulted? friend can obtain significantinformation from skilled organizations taking care of the organization ofyour target organizations. Friend can also gain beneficial information by contactingindustry experts and independent consultants.Has initial research been lugged out? identify the appropriate contactperson of each benchmarked organization. Make certain to notify all contactsby telephone, explaining the their organization has actually been selected together apotential benchmarking partner. Describe the objective of the process in clearlanguage.Proceed by preparing a preliminary survey from a checklist of topics tobe covered. Perform the concerns emphasize process and customer-satisfactionmeasures? Fifteen or fewer questions are typically appropriate. Do surethey space objective and presented in an ideal format (preferably multiplechoice).Then send the preliminary inspection to the contact person. Whereby appropriate,conduct phone call interviews. Perform personal interviews v target personnel.After choosing the most suitable benchmarking partners, decision whereto conduct website visits.Have the ideal preparations been created your website visits? Prepare asite visit plan and send a review of the topics that will be extended tothe call person. Recognize which concerns to ask, maintaining in psychic thequestions the are an ext important than others because that a certain target. Itis ideal to have actually the concerns reviewed by an internal source to confirmtheir relevance.Has the proper procedure been complied with before, during and after the sitevisit? once notifying the contact person in ~ the target company of theimpending visit, confirm that the call person understands the purpose.Make certain to send the contact the essential information (questions, etc.)in advancement of the meeting.On arriving at the site, the team have to repeat the mission to the contactperson. Obviously the proper questions have to be asked throughout the visit,and the team have to personally watch the procedure to be benchmarked. Instructthem to make substantial written observations of the procedure and come documentobservations as soon as possible after the visit. The agenda need to allowfor equal time for both benchmarking teams.Has a website visit an introduction report been prepared? The report should accuratelyreflect the documentation of the site visit.Have the ideal ethical issues been considered? In obtaining informationfrom a competitor, avoid any type of possibility of misrepresentation. Constantly approachconsultants or previous employees that the target organization with full candorand in an ideal manner. Be mindful to recognize whether any of theinformation prepared might be considered proprietary (e.g., insider trading).Upon finishing step 3, your organization will have actually complete, precise andrelevant data with which to to compare its very own processes with "the bestof the best."Step 4-Analyze for gapsThis step involves evaluating the data collected, learning to what degreepresent power lags behind the ideal in each area and also combining thebest functions from the ideal practices into an ideal process. The correctimplementation the this step will an outcome in a clear picture of her processesin comparison through others in your company or industry. The untrue implementationof this action could an outcome in vague info that would not ultimatelybe beneficial in enhancing your operations. Take into consideration the following questions:How deserve to the data compiled in action 3 be most properly analyzed? Makesure to appropriately analyze the outcomes of the benchmarked organization(s)in terms of output and customer satisfaction. Additionally analyze extensively theresults in regards to the job-related practices causing them. Express both resultsquantitatively.How walk each best practice compare through your organization"s practicefor each procedure involved? produce a chart that compares the benchmarkedorganization"s exercise with your own. Have actually the correct steps been employedfor to compare (e.g., cost, speed, ease of use)? has the distinction betweenthe benchmarked organization"s practice and your very own been express in quantitativeterms?How deserve to the ideal practices from these resources be combined? The ideal practicefor every of the procedures connected should be an unified into a single idealprocess. How can the all at once output of the process be projected? friend mayfind that some procedures need to be eliminated since of expense or otherconsiderations.After you"ve accomplished step 4, relevant functions from each of the bestpractices will incorporate into perfect practice that deserve to be enforced withinbudgetary and also other constraints of her organization.Step 5-Determine future trendsDuring this step, her team will research your organization"s previous performancein relation to that competitors, forecast potential change in her industryand project future performance, both with and also without the proposed benchmarkingchanges. The exactly implementation of this step will give management aclear idea that its choices and allot it a realistic conception the the potentialbenefits the adopting the benchmarking practices. An incorrect implementationof this action will provide management an incomplete or inaccurate picture ofits options. Think about the adhering to questions:What have actually been the market trends that the current past? determine the measure(e.g., revenues, productivity), related to the practice being benchmarked,by which your organization can most accordingly be contrasted to others.Based ~ above this measure, figure out the benchmarked organizations" recentperformance, and your organization"s performance.What is the existing performance gap? Compare her organization"s currentperformance through the benchmarked organization. Is the gap widening or narrowing,according to recent trends? uncover the reason, based upon the data analyzedin action 4, for the gap and also its increase (or decrease).What will be the future performance void if no benchmarking alters areimplemented? through projecting previous trends into the future and allowing foranticipated changes, discover what the benchmarked competitors" position willbe within the next specified time period. Decide what her organization"sposition will be if no benchmarking changes are made. Will certainly the gap widenor narrow?What will certainly be the future performance void if all proposed benchmarking changesare implemented? If the suggest benchmarking transforms are implemented, determineyour organization"s position, in comparison through its competitors, withina specified time period. Has the readjust been expressed quantitatively (e.g.,dollar amounts, percentages)? has the potential benefit of the adjust beencompared with the estimated price (e.g., equipment, production delays, etc.)of the implementation?Upon completing step 5, you will certainly have established the quantitative benefitsof implementing the propose benchmarking changes.Step 6-Reveal resultsand offer the processThis step involves connecting the benchmarking results and their implicationsto far-reaching audiences in the organization and motivating them to carryout changes. The correct implementation the this action will result in a completeunderstanding by the target audiences of the necessity for alters in theprocesses involved and also a desire to bring them out. Incorrect implementationof this step will leaving both management and employees confused or inadequatelyinformed, reduce the potential for efficient change. Consider the followingquestions:Which audiences must be addressed? decide whether the organization"sentire management needs to be "sold" ~ above the alters or just somemanagers. Education those department that should be educated around the changes,and educate the entities outside the company (e.g., customers, suppliers)that must be informed.How is the report to be written? identify what sort of publication (e.g.,full-length report, newsletter, video presentation) would be many appropriateto interact the benchmarking results, based ~ above the nature of the organizationand that goals. Refer the objective of the benchmarking procedure in the appropriatemanner. Has emphasis been put on the outcomes of the study, rather thanmethodology? Has emphasis been inserted on fact rather than opinion?Has understanding and commitment been acquired from the target audience?Check the feedback indigenous the report to check out whether it indicates that thetarget audiences recognize the necessity for change. Gain management approvalfor the concept of one implementation program. Likewise ensure that nonmanagementemployees are totally "on board" because that the changes. Do the outsideentities associated understand just how the changes will advantage them?Step 6 will certainly ensure the the advantages of readjust have been explained tothe parties involved in order to motivate them to bring it out.Step 7-Achieve consensuson modification goalsThis step requires revising purposes to close the performance void determinedin step 5 and achieving consensus on those goals. The correct implementationof this action will develop realistic and unambiguous brand-new standards because that theprocesses involved. Not correct implementation that this step could create poorlyunderstood or unrealistic requirements that would certainly only increase the frustrationlevel that both management and also employees. Think about the complying with questions:Have operational purposes been effectively and also realistically revised? Determinewhat form of readjust (e.g., simple goal priorities, measure units, quantityor frequency of units processed) need to be implemented. All goals must beexpressed in quantifiable, easy-to-measure terms. The degree of readjust shouldalso it is in realistic based top top benchmarking findings.What impact will the modification goals have within the organization? Somedepartments may need to be reorganized, and also some employees" positions willneed to it is in redefined, created or eliminated. Also, part lines that authoritymay should be altered. Analyze exactly how the revised objectives will affect departmentsnot targeted for change. How will these alters be justification to the partiesaffected?What influence will the revised goals have outside the organization? Tryto ascertain what result the transforms will have on customers and also suppliers.Then decision in what detail they must be educated of changes and how topresent the changes to generate support rather than anxiety.Has management committed come the details revised goals? monitoring mustunderstand the proposed goals and totally support them. And management mustcommunicate the purposes to all influenced employees in together a way as to obtaintheir full commitment.Step 7 establishes clear-cut objectives that management has actually approved and thatall employees understand.Step 8-Establish activity plansThis step establishes the step-by-step plan designed to bring around thegoals created and also approved in action 7. Untrue implementation of this stepcould an outcome in vague steps which would certainly either it is in rejected by managementor would prove unworkable if approved. Consider the adhering to questions:In what order have to work methods be implemented? pick the factors(time, cost, software, etc.) that are most critical in identify priorities.Discuss the pros and also cons of each factor. Then analyze all determinants so thata schedule of action can be determined. Job future power basedon the schedule the action.Has the procedure to be prepared? breakdown all tasks into comprehensiblesteps, with stated results. Then placed the work in sequence. Determinewhich sources are needed to attain the tasks.Has management approved the procedure? plainly articulate the plan"s elements(task breakdown, costs, etc.) come management.Have individuals been empowered to manage the process? recognize the appropriatelevel of management for the procedure (e.g., heat manager, administration team,process owner). Select the employees and give castle the training and also authorityto regulate the process.Has the implementation arrangement been printed and displayed? create the completeplan in published form. Display screen the plan so the tasks, responsibilities anddeadlines deserve to be plainly seen and understood.Upon completing step 8, management has approved the special, of the plan,appropriate individuals have been empowered to lug it out, and every individualknows what transforms in his or her occupational procedure space expected.Step 9-Implement plans and also monitor resultsThis step entails executing the authorized best-practice procedures and also theday-to-day security of changes. The correct implementation the this stepwill an outcome in a closely watched procedure in which deviations native the planwill be corrected and the ultimate objectives achieved. Incorrect implementationof this step could result in inaccurate or spotty measurement, top topoor regulate of the process and disappointing all at once results. Considerthe following questions:Have timeline charts been created? Make certain that the charts accuratelyreflect the aspect to it is in measured over the selected period of time.Have manage charts been created? Charts have to accurately measure up the factorto be managed (e.g., unit cost, quantity per hour) over the selectedperiod of time.Has any variance indigenous the setup been faced effectively? Appropriateaction needs to it is in taken as quickly as deviations are detected. Keep linesof communication open come all influenced parties, providing feedback on theprocess.Has final evaluation to be made that the benchmarking process? Accuratelyrecord the results, and also determine even if it is acceptable goals have been achieved.Prepare a final report, consisting of which facets of the included changesshould it is in rejected and also which have to be accepted as irreversible practices withinthe organization.Step 9 establishes procedures to enable close security of the changes andtracking of results so that, end time, successful aspects of the brand-new practicescan it is in retained and the less successful ones eliminated.Step 10-Recalibrate benchmarksThis action ensures the organization remains ~ above the advanced by continuouslyevaluating the benchmarked practices and also reinstituting the benchmarkingprocess once necessary. The correct implementation of this step preventscomplacency by developing the habit of assessing procedures for their potentialfor improvement. The not correct implementation (or nonimplementation) ofthis action fosters the illusion that any kind of successful benchmarked practicecreates a irreversible improvement, causing a false sense of securityand feasible future loss of competitive edge. Consider the complying with questions:How frequently do the processes must be recalibrated? The duration betweenbenchmarking studies must be realistic in regards to the nature and also goalsof the organization. The organization might be to plan systemic transforms thatwould make new benchmarking necessary. The level of client satisfactionmust constantly be monitored because that the potential must recalibrate. Also,management should commit completely to repeating the 10-step process when necessary.Has a setup been developed for recalibrating? The need for routine recalibrationshould be connected to every levels of the organization. Decision whetherthe new benchmarking process will be complementary come the vault one orwill represent a new area the improvement.What additional factors space relevant? inspection what market changes(systemic, technological) have arisen since the front benchmarking processthat would influence a brand-new one.After completing action 10, the organization will recognize when and also howit needs to recalibrate benchmarks and will never ever put itself at threat bybecoming complacent.The success the a benchmarking procedure depends ~ above the organization"s permanentcommitment to the process. A certain benchmarking adjust will regularly betemporary. Come sustain sector leadership, however, the habit of benchmarkingmust be a permanent part of the organization"s culture.Benchmarking StudiesBenchmarking engagements might commonly involve:Benchmarking process Improvements: The most extensive form of benchmarkingservices, these studies are not restricted to competitors or functions. Theytypically require from 90 days to a year to complete, consisting of implementationtime.Competitive Benchmarking: Identifying finest practices among directcompetitors. These research studies can generally be perfect in 60 to 120 days.Benchmarking Lite: Short-term study that entails collectingkey metrics indigenous a number of participating organizations. In general, thesestudies deserve to be perfect in 60 to 90 days.Best practices ExampleA vivid example of a ideal practice is prove by SRC in Springfield,Missouri. Persuaded that anyone is responsible because that the company"s success,SRC"s monitoring team trained every employee in "cash flow management,"a tool that has enabled the firm to create double-digit development everyyear due to the fact that its establishing 12 years ago. SRC has grown in 12 years from onecompany the 100 employee to 12 employee-owned companies in 16 sites with750 people. SRC has been named the "Entrepreneurial company of theYear" by Inc. Magazine for the last three years. The currentturnover price is less than 1 percent.The 10 measures of Benchmarking 1.Determine procedures to be benchmarked. 2.Determine organizations to it is in benchmarked. 3.Gather data. 4.Locate deficiencies. 5.Determine future trends. 6.Reveal results and sell the process. 7.Achieve agreement on revised goals. 8.Establish procedures. 9.Implement procedures and also monitor results.10.Recalibrate benchmarks.About the author . . .Charles J. Burke is a benchmarking consultant through KPMG Peat Marwick LLP in Dallas, Texas. The is responsible because that assisting the firm v internalbenchmarking activities and client engagement opportunities.Burke is committedto assisting institutions with your understanding and use the benchmarkingand various other quality tools and processes that lead to significant productivityimprovements.Reprinted v permission native Benchmarking Handbook.
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