The Importance of Benchmarking
Benchmarking simply means comparing one’s business processes (in relation to the quality of service, business process, performance, technical competence, resource capacity, time, and cost) to those of leading industry players, as well as proven industry standards. Benchmarking considers performance gaps when measuring it against industry standards and advances the need for specific changes or significant improvements in certain day to day business functions. Effective bench marking starts with defining your business objectives and how you want to achieve them. You can then move on to assess the industry where you play; your target market and customer requirements; your competitors, what products or services they offer your market segment (customers), as well as key success factors.
Be it cost or pricing, business processes, technology, quality service, standard delivery timeline, and technical competence, defining your benchmarking objectives in line with what is both practicable and profitable is a vital step towards effective benchmarking.
Objectives of Benchmarking
- Measuring the performance of specific functions, products or services against those of industry peers, related industry or customer segments.
- Identifying performance gaps and recommend corrective actions
- Improving performance, maintaining improved performance levels in line with examples of leading industry players and proven industry standards.
- Designing and aligning internal business processes in line with the demands of specific market requirements.
- Determining key resource requirements for achieving industry-based or Product/service delivery benchmarks.
It’s one thing to establish these objectives and it’s another to implement them and maintain their outcome. It requires sheer leadership commitment and beyond that, these objectives must be well communicated and understood at all levels within the organization, for the desired results to be achieved.
An Organisation may decide to benchmark on any area that best suits its operational or competitive goals, but for benchmarking of any kind to be successful, it must be considered as an inclusive project with all hands on deck and the following internal factors are key facilitators of effective benchmarking.
Strong Leadership: Determining your bench marking objectives; measuring holistic performance against standard industry practices for improved performance along clearly defined targets, require strong leadership. In other words, the success of benchmarking, resources required to achieve it, persons responsible for specific functions and timeline for achieving each objective, depends on strong leadership commitment.
Internal Process Owners & Their Teams: Successful benchmarking projects are built on efficient business processes and as such require the effective engagement of key process owners to achieve the targeted benchmarks. For instance, in the Freight Forwarding industry, it’s very unlikely to establish a competitive pricing benchmark without engaging your Pricing/Commercial Manager who is the process owner with all the vital information and market-based data to guide such decisions.
Implementation of Improvement Actions: It’s one thing to know what, how and when to benchmark and it’s another very important step to implement targeted benchmarks to tangible proportions. If your goal is to benchmark on a standard and consistent Turn Around Time for delivery, the human, technological, financial and other important resources must be effectively deployed with expectations for tangible results attached to it. The results are then measured against what industry so that a performance benchmark can be established.
Internal Change Champions: Change Champions are not necessarily top managers. They are either passionate volunteers or proven performers who are enthusiastic about implementing and maintaining change in any aspect of the organization’s operations that require benchmarking. They are key drivers of a culture shift, capable of inspiring others towards a more productive and standardized approach to work. For instance, benchmarking on technological resources to improve on communication and response to customer request, will require the commitment of change champions who are saddled with the responsibility of achieving defined competitive or functional benchmarks.
In view of the foregoing, weak leadership, poor people engagement, poor implementation of recommended actions towards effective benchmarking and lack of enthusiasm or resistance to change can ruin the entire goal of benchmarking.
It is a vital tool for achieving and maintaining high-performance levels; effectively managing Organisational performance, and driving continuous improvement in line with globally established standards. In view of this fact, benchmarking decisions must be founded on applicable industry-based information and accurate data.
Finally, while it’s almost impossible to exhaust the many issues pertaining to benchmarking in one article, we will consider quality service, technical competence, and compliance benchmarks as individual topics in subsequent articles in our benchmarking series.
Read more: Key Competencies For Logistics Professionals