In a continuous process improvement program, benchmarking is the regular, systematic measuring of an organization’s own products, services or processes against those of the recognized best practitioners in the world. The information collected about a company’s own processes analyzed in relationship to the best-in-class practices provides insight into the actions the company can take to improve its performance. Indeed, benchmarking analysis can even provide metrics by which an organization can measure its success in adding value to its business and work processes.
Benchmarking is a management tool for process improvement that takes into account an organization’s performance measurement. It also is an internal learning and sharing tool that continually improves processes by motivating culture change based on the idea that the company can be among the best in the world.
In any benchmarking process, it is essential to follow a systematic and structured approach. It is best if the project is carried forward by trained and dedicated cross-functional teams so that all aspects of the process are properly discussed at all phases and analyzed for any opportunities, and improvement actions can be initiated.
Four phases are involved in a normal benchmarking process – planning, analysis, integration and action. And in the four phases are 10 practical steps that can help any Lean Six Sigma practitioner involved in a benchmarking a process.
Being the initial phase, this is a most important phase. Any mistakes, errors or incompleteness in this phase generally affects the rest of the phases. Sufficient time and attention has to be devoted during the phase to ensure that planning becomes as error-free as possible, and hence makes the rest of the phases more effective and efficient.
Step 1: Identify Opportunities and Prioritize (What to Benchmark) – The involvement of top management in this particular step is crucial. Top management must decide which processes are critical to the success of the company. This should be the top down approach of selecting the projects from the processes. Once a shortlist of processes to be benchmarked is ready, the processes need to be prioritized as per a predetermined set of criteria to fulfill the requirements of all customers, especially the end customer. Customers’ ciritcal-to-quality (CTQ) requirements are studied properly to prioritize the processes.
Step 2: Deciding the Benchmarking Organization (Whom to Benchmark) – The next step in the process is to decide the organization whose processes will serve as the benchmark. Obviously some companies, such as direct competitors, will not be available as places to gather certain types of benchmark data. Several organizations should be selected for study. Information on their processes should be gathered from various sources and the most suitable organization selected. It is always important to ensure that more detailed information about the selected organization will be accessible and that comparison with the organization’s process will be relevant and useful.
Step 3: Studying the Superior Process – This step is perhaps the most important, most difficult and most time consuming activity in the total process of information collection. Many times the information on processes and procedures followed at another company are confidential, and it is not always easy to gather authentic information, even after making a planned and approved visit at another organization. The preparation for collecting necessary information has to be planned in such a way that either one visit or a proper authentic data collection source can provide all the details, within a reasonable time period.
The following questions can be asked to review the planning phase of a benchmarking effort:
This phase, comprised of two steps, involves the analysis of all the information and data collected in the Planning phase. All the people closest to the process selected for benchmarking should be deeply involved in this phase.
Step 4: Finding Reasons and Devising Improved Processes – The project team should find out the reasons for better results from the benchmarked processes. This has to be done after the information from the best-in-class organization has been collected and analyzed. Based on the analysis, an improved process should be developed.
Step 5: Goal Setting for Improved Processes – The project team’s next step is to set goals for the improvement of the company’s existing process. These goals can, and probably should, be stretch goals that will result in a process even better than the other organization’s best-in-class process.
The review points for this phase are:
This phase also comprises two steps. This phase is a connector between the earlier two stages, planning and analysis, and the final phase, action. This phase moves forward only if the results of earlier phases have been accepted by management. This phase also secures the commitment of the management on the recommended action plan. Because acceptance of proposed process revisions by the company is necessary for the success of the project, this phase is obviously important.
Step 6: Communicate Findings and Gain Acceptance – The proposals for the improved processes should be presented to senior management and the head of the departments to gain approval of the proposed changes. Unless total approval and commitment is secured, there will be hindrance in the implementation of the actions plans.
Step 7: Establish New Functional Goals – When the proposed revisions to the processes are accepted, the acceptance of the revised functional goals is the next big logical step.
The questions to be asked in this phase are:
The last phase in the process has three steps. This phase is where the improvement parts have been taken into consideration. Ultimate benefit to a company from benchmarking is judged by how well this particular phase has been carried out. The last step of this phase, “Keep the Process Continuous,” implies this.
Step 8: Develop Action Plan for Implementation – After the improved process is accepted by all concerned or likely to be affected by it, a detailed action plan is drawn with all key activities taken as inputs. The detailed action plan should carry the important things like a time line, individuals responsible for carrying out the tasks, any short-fall in the completion of tasks and what stretch targets are taken to compensate the short-falls. Those responsible should be committed enough to ensure that the tasks and assignments are completed on time.
Step 9: Implement Specific Actions and Monitor Progress – While those who must complete assignments on schedule have a responsibility, so does senior management. They must be committed enough to ensure proper coordination of various activities, monitor the progress of implementation of the plan and work as a barrier-remover in the implementation process. When the revised process is in place, a complete report has to be prepared, showing the benefits of the revised process compared with the expectations at the time of approval of the proposed revision of the process.
Step 10: Keep the Process Continuous – The successful completion of one project can lead to an important milestone for the organization. The next step would be bringing in additional and more ambitious projects and benchmarking with the best approach. While carrying out the total activities, a mechanism or a system has to be built in to review the performance of the improved process periodically to ensure that the benefits are retained. The process has to be a continuous one and should move at a constant speed and should never be neglected.
The review points for this phase are:
One of the biggest advantages of benchmarking is the extent of improvements the organization makes by learning from the processes of others. A better and proven process can be adapted, with suitable modifications for company requirements, with less time invested for inventing new methodologies. Benchmarking also uncovers new ways of improving a company’s own processes by motivating actions learned from studying and experiencing those organizations with best-in-class processes.