What is Benchmarking for process?

 

 

 A Benchmarking is the search, study and implementation of the best practices of other reference organizations in your company.


Such a standard, or simply put, a model, can be a competitor company or any enterprise that causes admiration. It does not matter whether in Russia or in the world.

At the same time, more often the choice falls on the company that is ready to share its secrets of success. This allows you to get truthful information firsthand, which is very important.

Interesting. The pioneer of benchmarking is the Xerox company. She took as a basis the experience of the company L.L.Bean and so became the market leader.

 

A benchmarking is a process to identify "best practices" against the two products. The production process until the product is deliver. Benchmarking provides the insights need to assist management in understanding the process and its products either by way of comparing. It to a similar Industry or with different industries. The benchmarking in the Indonesia language often refer to as Benchmarks or benchmark.

WHAT IS BENCHMARKING

Simply put, benchmarking is most often used by companies when there is a crisis or a need for change. But this does not mean that if you have everything type-top, then you do not need it. There is always time for change.

And now briefly and in the simplest language about the relevance of benchmarking, its goals and objectives, as well as about the positions that form its basis.

Purpose

The goal of benchmarking is to make the company even cooler and strengthen its high position among competitors for a long time. That is, the benchmarking technique boils down to two points:

Comparison of the indicators of the standard with own;
Analysis of other people's experience and introduction into their own practice.
You can, of course, use other sub-goals in benchmarking, for example, "Assessment of personnel performance". But here you already know your bottlenecks for comparison as well as I do.

Tasks

As with any study, the goal will be successfully achieved if the benchmarking objectives are clearly defined. Below is a list of the main ones.

• Analysis of the company's resources and search for potential;
• Analysis of competitors and search for market leaders;
• Comparative analysis with the reference company;
• Analysis of the practices of the standard and search for ways to achieve them;
• Drawing up a strategy according to the experience of the standard.

 

4 levels of study

The picture is beginning to draw a little, so now I will show you a diagram of the main functions of benchmarking. There are four of them.

Functions

Most often, companies use only one. And maybe that's right. That's just the general picture will not be superfluous. Especially when you're saving for a Ferrari ;-).

Rules

Phew... And finally, to the rules. I give a diagram to make it clear on what principles benchmarking is based.

Principles

In an ideal picture of the world, all these mechanisms should be executed when benchmarking. But, for example, "Reciprocity" already creates a big problem. Not all companies want to share purely in kindness. Therefore, we try to take the maximum, but adequately.

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The main aim of Benchmarking is to understand and evaluate the process or product is currently so find a way or a "best practices" to improve the process as well as product quality. Benchmarking can be complete for production process, product, service or system within an organization.

Stages of The Process Of Benchmarking

Process Benchmarking is a process by which look out (other products, other organizations, other systems) to find out how other people reach the level of their performance and understand the work process that they use. Thus, the Benchmarking can explain what's going on behind the performance of either the process or the product comparison. If apply correctly, Benchmarking can help an organization in improving the performance of the organization or of the production process.

There are 4 phases are important in applying Benchmarking:

1. To understand in detail, the production process or product at this time.


2. Analyzing the process of production or other products that are performing well.


3. Comparing the production process or the product with its own production process or product that performs well.


4. Implement the improvement measures require to approach the production process or product that performs well.

In the description, benchmarking Methodology consisting of 12 stages, namely:

1. Choose A Subject


2. Determine The Process


3. Identify potential Partners for comparison


4. Identify data sources


5. Collect data and select partners to compare


6. Define the gap


7. Establish process differences


8. Performance targets are expect.


9. Do Communications


10. Adjustment of Goals


11. Apply


12. Review and adjustment reset

Types of Benchmarking

If you do not delve into the textbooks on the classification of benchmarking and explain what it is, in simple words, then in the process of this analysis you can compare both your own company and partners.

In total, there are two main types of benchmarking, then we will consider the features of the application of each of them.

View 1. Internal

In this case, the activities of different departments of the same company are compared with each other.

For example, to maintain its market position, Hewlett-Packard conducted analysis in its R&D business units. As a result, a new 6 Sigma methodology has emerged.

Benchmarking can be complete internally that compares the performance of some groups or teams within your organization. Or externally that compares the performance of an organization with other organizations or between industries. The benchmarking can be differentiate into several types, among which are:

• Strategic Benchmarking, i.e. Bench-marking who observe how another person or organization outperform the competition.


• Process Bench-marking, i.e. Bench-marking that compares the work processes.


• Functional Bench-marking, i.e. comparison that does Bench-marking on specific work to improve Functional on the operational functional.


• Performance Benchmarking, i.e. Benchmarking that compares the performance of products or services.


• Product Benchmarking, i.e. Benchmarking that compares competing product with the product itself to reconnoiter the strength (Strength) and weakness (Weakness) of the product.


• Financial Benchmarking, i.e. Benchmarking that compares the financial strength to know power competitiveness.

Subspecies Description Example

Historic Comparison of performance and performance of your own company in the past and present The situation is familiar to every company: for example, the indicators for 2018 and 2019 are compared.

General Comparison of indicators and results of one unit / department / branch, etc. with another The Novosibirsk branch of the company has significantly succeeded in comparison with the Moscow one. Then Moscow finds out what is better in Novosibirsk, and uses the experience at home
Business Process Comparison of business processes and implementation of best practices The wholesale department has a CRM system 

that simplifies the transaction process. A positive experience was also suitable for retail, using benchmarking technology (that is, the implementation of CRM), the process of tracking and analyzing transactions has become easier

 

It compares the activities of your own company with the indicators of competitors.

So, for example, having discovered that millions of people watch the video on the unboxing of the iPhone on the YouTube channel, some businessmen and manufacturers have created products that can also be unpacked for a long time. And they really went to the consumer.

LET'S MOVE ON TO PRACTICE

Benchmarking tools, of course, are more suitable for large-scale business. But, if you are not Gazprom, you can go the other way.

Let's call it the "benchmarking on the knee" method. The bottom line is that you can analyze reference companies with improvised methods and steal chips from them or use their practice in your company.

Of course, when using this method, the essence of benchmarking is slightly distorted and has both its pros and cons. You can find information without leaving the office, but the outcome of events is unknown, and the data will be inaccurate.

Well, we will still move on to benchmarking the company in the form in which ideally it should be.

Step 1. Selection of indicators

We determine the indicators necessary for comparative analysis, while taking into account what they should be:

1. Minimal. We focus on maximum informativeness. Do not overload the assessment system with a large set of meters;
2. Useful. Both non-financial and financial indicators should complement each other and give a holistic view of the situation;
3. Stable. If necessary, the scorecard can be improved, but in general it should work stably and provide high-quality data;
4. Complete. Indicators should reveal and reflect the dynamics of ongoing processes that fully suit your organization.
5. Indicators should not be few or too many, so create a balanced system. And we can go further.

Step 2. Compilation of evaluation criteria

Evaluation criteria for each indicator you choose should be both maximum and minimum.

Next, we determine the boundaries of indicators, the so-called benchmarks. These will be the very guidelines by which the reference company is chosen, as well as your vector of development.

This can be visualized as follows:

Step 2. Compilation of evaluation criteria

Evaluation criteria for each indicator you choose should be both maximum and minimum.

Next, we determine the boundaries of indicators, the so-called benchmarks. These will be the very guidelines by which the reference company is chosen, as well as your vector of development.

This can be visualized as follows:

.

Step 3. Choosing a company

Here we directly choose the right company, which we will look up to (and maybe do better than in it), that is, a cooperation partner.

Let me remind you that partners can be: competing companies, industry leaders or firms that inspire. And then we make a list of these companies.

After that, the criteria for determining the standard are selected and the STC-analysis (skim, trim, cream) is carried out:

S – superficial analysis of partners' indicators;
T – collection of information and detailed description of data;
C – choosing the best partner.
 

The benchmark is selected, and the partner companies agree on cooperation and the procedure for collecting and processing information, guided by the "Benchmarking Code".

Now you can finally do the most interesting thing - to see what is so good about the partner company.

Step 4. Collection of information

Here, small companies can giggle viciously, since in this step I have specifically allocated a separate chapter for them. Let's just start with the official ones.

4.1 With mutual consent

With proper benchmarking, information about the standard is issued voluntarily, although only in those volumes that were provided for by the cooperation agreement. Obviously, there are different methods of collecting information, for example:

• Visit to the cooperation partner company;
• Telephone interview;
• Questionnaire-survey via the Internet;
• Industry conferences, seminars;
• Membership in industry benchmarking clubs;
• Conclusion of a contract with consulting firms.

Please note that the survey must be conducted in detail and with all the smallest details: how success was achieved, what difficulties were encountered on the way, what worked / did not work, etc.

- 4.2 Espionage

Well, if you are not a gazprom, and you still want to erase information and experience, then I suggest that you return to our method "on the knee" and get the necessary information in more ridiculous ways.

• Study of open sources (sites, reviews, etc.);
• Conducting the "Mystery Shopper" method;
• Introduction to competitors as a new employee;
• Hiring old competitor employees;
• Purchase of information from third-party companies.
• And if you want to know the prices of competitors, choose the parser of the online store in the selection

Spying, of course, no one forbade. But still, whatever the competition, remember that it must be fair. Do not go to the extreme, just learn from the experience.

benchmarking espionage
That's it!
By the way. In search of inspiration, you can visit the website of one of the "industrial dating bureaus" to then conduct benchmarking on the example of other companies
 

Step 5. Analysis and adaptation

On this section of the path, data are compared and conclusions are drawn based on the results of benchmarking. They fall into two categories:

• Evaluation of the organization's activities – what has already been achieved;
• Analysis of tools and means of achieving high positions by the partner company.
• We do not touch the first point, since we are already on a par with the standard. But the second one needs to be worked on. Therefore, having studied all the data and making a conclusion, it is necessary to create a strategy for the development of the company.

In the strategy, it is necessary to prescribe the main points:

• What expertise of the benchmark will be used;
• What indicators need to be improved;
• How to apply this experience for your own company;
• What is the set of measures to achieve the goals.
• By the way, it is necessary to re-apply benchmarking and track the effectiveness of the implementation of experience in 3 years according to exactly the same algorithm.

 

 Oh, my! We finally got to the final point of our journey – it remains to talk about the key points of benchmarking.

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BRIEFLY ABOUT THE MAIN THING

Now you know what benchmarking is, and how it helps the company to get out of the crisis, solve the urgent problem and achieve a specific goal.

Of course, learning from experience is not always easy. Each expert has his own view, reasoning and actions on the same situation.

Therefore, the main thing here is to understand the principle and cause-and-effect relationships. Study the conditions in which the company was, and what it did to overcome the crisis.

 


At the end of my article, I want to talk about the advantages and disadvantages of benchmarking.

• Ready-made solutions. That is, the practice of other organizations, which can be implemented in their own business;
• Image borrowing. Creation of the image of the reference company, which sets trends, which is oriented;
• Economic development. The emergence of a quality management system approved at the legislative level;
• Improvement of business processes. Search for the best solutions, development of scientific and practical activities;
• New activities. The emergence of new activities, new professions, competencies, standards;
• Avoiding failure. The benefit is not only information about successes, but also about the unsuccessful experience of other companies.
• Outlay. It is necessary to understand the ratio of the cost of implementing the solutions found and the potential benefits from them;
• Resources. They may not be enough for the continuous improvement of all areas;
• Differences. The difficulty of implementing someone else's experience due to differences in the external and internal environment;
• Perception. Not always the practice of even your own enterprise will be positive in other markets;
• Search for a partner. It is difficult to find a partner in the Russian market: entrepreneurs are reluctant to share their practice;
• Time. Not suitable for solving short-term tasks, as it takes a long time.
•  

And let me remind you that benchmarking should be regular, you should not stop at one practice. There is a risk of a second crisis. So use benchmarking again and evolve.