Benchmarking is a systematic and continuous process for evaluating your strategic plans and either validating or redefining them. Benchmarking is not about performance improvement, but about performance management. It is important not to confuse it with other activities like site visits, reverse engineering, and competitive analysis. These activities have value, but benchmarking is focused on making changes that lead to the significant improvements in Total Customer Satisfaction and competitive advantage. Like all of the management tools, benchmarking has a structure and a process. There are 5 phases involved with the benchmarking tool:
PHASE 1 - What to benchmark?
Benchmarking starts with a company's strategy, critical success factors and current distinctive competencies, and has a linkage to long-range plans. What to look for is the gap between the critical success factors and the current distinctive competencies and then focus on the one to two areas where there is the largest gap. This directs management to what to benchmark.
PHASE 2 - How do we do it?
Typically, this is the most neglected phase in the benchmarking process. You must know yourself to determine your enablers and leverage points, in order to know what to look for later in the benchmarking process. Cross-Functional Process Mapping will provide this baseline as well as many short-term improvements based on the "Should Be" map and Action Plans utilizing existing resources.
Phases 1 and 2 focus on vital internal activities; the remainder of the benchmarking phases involve the practice of benchmarking.
PHASE 3 - Who to Benchmark?
The key point regarding who to benchmark is that you benchmark functions, processes, and activities based on process leverage points, not companies. For large companies, benchmarking internal "best in class" is an excellent way to start. There are techniques to guide benchmarking teams to determine and contact benchmarking external partners and how to gather data on comparable measures.
PHASE 4 - How do they do it?
The implementation steps for this last phase are very specific:
(a) Determine the reasons for the gap between yourself and "best in class."
(b) Map the "best in class" processes and discover the "do differently" with a focus on the enablers.
(c) Develop the action plan to take you to the "best in class."
It is important that the details and quality of the plan and implementation be on par with other key operating and strategic activity in your business.
For the powerful management tool of benchmarking to be effective requires senior management involvement, a cross-functional benchmarking team, and a facilitator/coach to work with senior management in Phase 1--"What to benchmark?" and facilitate and train the benchmarking team in the other phases of the process. Also, the facilitator will assist senior management to ask the key questions of the team and keep them effectively involved.
In conclusion, it must be realized that benchmarking is a continuous journey with a focus on continuous process improvement. Effective action that contributes to total customer satisfaction is what counts. Without action, benchmarking becomes expensive entertainment with "feel good" trips and "industrial tourism."