BPI Technique - Benchmarking BMK

Description

Benchmarking is the continuous process of making quantitative comparisons both internally and between companies on key performance areas/measures. This technique differs from the Best Practice Comparison deliverable, in that it provides information for quantitative versus qualitative performanc. This benchmarking information is used to identify problem areas by identifying measures, assessing the gaps compared to industry leaders and determining the impact to the client.

When to use

This technique is typically used at the beginning of the BPI project, while the prescriptive, best practice comparisons occur during the design. Benchmarking is used to establish goals (both for the organisation in general or for individual processes) and to serve as an aid in prioritising potential design opportunities. In later phases, benchmarking is a very important mechanism for the ongoing performance measurement of processes, after they have been implemented.

Approach

• Benchmarking can be conducted both internally and externally: internal comparisons can be across divisions, subsidiaries or over time, and external comparisons will be with best-in-industry peers and/or best-in-functional-area experts (e.g. companies do not have to be in the same industry to make meaningful comparisons. For example, a manufacturer can use a warehouse operation as a benchmark for their order- fulfilment process).

• The traditional approaches of surveys may be used to gather information, or an actual partnership with other companies to share information may be established. Benchmarking can also be found through other sources, including industry associations, third party benchmarking clearinghouses, internal databases or studies sold by consulting/research groups.
• In all cases, it is important to use balanced metrics, inputs, outputs and quality to tell the whole story (For example, if a process is faster at performing a function, it is also important to know if the quality is still appropriate. Otherwise, faster may not be better.

1. Identify areas to benchmark.
2. Identify comparative candidates.
1. Identify internal groups or external companies (competitive or functional areas).
2. Contact, screen and recruit partners.
3. Identify existing benchmarking within Implementation Consulting Organisation (see Reference).
4. Determine data-collection methods.
1. Develop surveys or form partnerships to target information and solicit input.
5. Conduct and analyse data.
6. Determine gap and impact analysis.
7. Summarise information, and draw conclusions.
1. Do this through workshops or other focus groups.
8. Project future performance levels based on comparisons.
9. Communicate benchmarking findings.

Guidelines

Problems/Solutions

• Be aware that getting buy-in to the results of the benchmarking is often difficult, especially when the information reflects poorly on the company. Ensure that this is considered in the presentation of the information, and anticipate the qualifiers that the client will make.

Tactics/Helpful Hints

• Be careful of “apples to oranges” comparisons. When conducting quantitative benchmarking, data needs to be qualified and if possible scrubbed to confirm comparability. Determine what is meaningful in the data, and recognise inherent differences such as regulations, unionisation, geographic market, etc. The data also should be normalised such as using a common denominator, adding in hidden costs and using estimates where necessary. Qualitative information may be needed to complete the picture.
• Since confidentiality of data is very important to all companies, abide by all the rules of confidentiality even to the point of not sharing particular findings with the client.
• Often results can be positive for the client. Consider this in the presentation of the results, so as to not limit the goals of the client. In “re-engineering” projects, it is the objective to break out of and far surpass current performance levels and not to just meet the best performance.

Reference

Knowledge Manager- Services- Organisation - Benchmarking

Tools

• Surveys
• Excel or other graphing tool (bar charts, scatter diagrams, etc.)