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What is Benchmarking and why bother?

Benchmarking is a systematic process for identifying and implementing best practice – or in simple terms it is about learning from the experiences of others.

Comparing performance with organisations in either similar or dissimilar sectors enables individuals and teams to develop improvement plans and adapt specific best practices, usually with the aim of increasing some aspect of performance.

Benchmarking for some may be a one-off event, but for those more motivated and enlightened individuals  it is a continuous process in which organisations continually seek to improve their practices.

There are two main types of benchmarking Informal and Formal.

Informal Benchmarking

Many of us do this unconsciously at work or at home where we learn by comparing our behaviour and practices with colleagues, peers, and experts within our network.

Formal Benchmarking

There are two types of formal benchmarking, Performance benchmarking and Best Practice benchmarking:

Performance Benchmarking

This compares particular areas of performance such as Financial, Energy use, Environmental, Safety, Productivity or the the effective application of Lean Principles.

Benchmarking establishes the performance gap and opportunities for improvement.

The most powerful type of formal benchmarking is Best Practice benchmarking. This is where improvement teams compare performance either by visiting an exemplar organisation or through online web based tools such as Lean Benchmark which compares performance across a number of industrial sectors. (Sample Benchmark Report)

Best Practice Benchmarking

Robert Camp (who wrote one of the earliest books on benchmarking in 1989) developed a very structured and thorough 12-stage approach to benchmarking:

1. Select the subject of focus – 2. Define the process – 3. Identify potential partners – 4. Identify data sources  – 5. Collect data and select partners  – 6. Determine the gap  – 7. Establish process differences  – 8. Target future performance  – 9. Communicate  – 10. Adjust goal  – 11. Implement  – 12. Review and recalibrate.

Camp and Anderson noted in a 2004 study that the trend at that time was towards use of Best Practice Benchmarking for improvement (Source: Current Position and Future Development of Benchmarking; Robert C Camp and Bjorn Anderson; Feb 11 2004).

Best Practice benchmarking is still considered by many improvement gurus to be the most powerful form of benchmarking, studying high performers that excel within a particular functional area or process can deliver significant benefits.

Leading organisations in the field of performance improvement such as such as GBN (Global Benchmarking Network) BPIR (Business Performance Improvement Resources) and BQF (British Quality Foundation) offer a broad range of information and resources to those seeking to improve performance through the application of best practice and benchmarking.

Trends in Benchmarking

In a recent study by GBN, the key trend noticed amongst people in organisations is their lack of time to undertake benchmarking well and hence they are not able to reap the benefits from rigorous benchmarking. Sometimes they undertake quick benchmarking without properly following the methodology and this gives “benchmarking” a bad name. This response is reflected in the GBN Survey of Improvement Tools in 2008. The majority of the 450 organisations responding to the survey were not deriving substantial improvements from benchmarking. The survey indicated that this is because they were not undertaking benchmarking properly. Those organisation that were undertaking benchmarking properly were reaping substantial improvements in business outcomes as a result. At the same time, the survey also revealed that benchmarking is a tool for the future, and will be one of the most commonly used improvement tools.

Useful Free Resources

Online Benchmarking Tool      FREE Sample Lean Benchmark report

Lean Jargon Buster

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