Quality Benchmarking

BENCHMARKING

Benchmarking is one of the new vogue subjects, along with a raft of quality related initiatives. What can be so difficult about examining how other organizations have achieved improved performance? The answer is NOTHING, but "examining" others is a world away from really learning HOW they achieved the improvement.

Many organizations publicize what they have achieved, but it is unusual for them to be lucid on the more mundane facts of how this transformation was made to work.

Benchmarking is one of the most effective means to identify improvements which can make a significant difference to your organization. Within this article I will explain how benchmarking should be performed in order to provide maximum benefit to those who seriously seek improvement.

First, let us define improvement as providing increased customer satisfaction in the most effective manner.

Second, if we are to perpetuate an improvement process it must be recognized as successful..... work within "the art of the possible". We may want to climb Mount Everest, but we are more likely to achieve it if we succeed in smaller stages as part of a steady journey to the summit.

Third, Benchmarking is Not New. We all perform it to some extent every day....... and never give it a second thought, let alone spend time describing it as benchmarking.

For example, we may realize that our colleague has found a quicker route to work. The majority of us will be keen to learn how this improvement has been achieved, so we ask. We get the maps out and clarify exactly the route taken, and implement the action to achieve the improvement. Until an even better route is identified. Improvement is a never ending journey.

How do you identify a suitable activity to benchmark ?

As with all improvement activities, it is better to start with a known problem area that is able to be defined, or an activity where improvement will provide maximum benefit (the 80/20 rule works everywhere). Nobody can really grasp an intangible goal like "we want to achieve excellence".

You may not be able to see the need for improvement by looking internally. Look for opportunities in the widest context, e.g. what are your customers expecting now, what are your competitors achieving ?

The Massachusetts Institute of Technology and JD Power and Associates published a survey in 1991 illustrating differences between car plants in Japan, USA and Europe, showing that European plants had significant opportunity for improvement. Productivity (in hours to produce a vehicle) was 16.8 in Japan and 36.2 in Europe. The European producers probably believed that a 30% would be a significant achievement.
However, this would still have still left them [miles] behind the Japanese. The Japanese could have been viewed as the best in the world, i.e. world-class.

This example illustrates what was achieved but not how. Fortunately the survey also looked at supporting areas such as training time for new workers, absenteeism, defects per vehicle, which provided signposts to the primary areas of consideration.

Once the subject activity is identified, spend as much time as possible defining it. The more clearly you know your problem, the easier it will be to identify the differences that will lead to major improvement.

How do you identify a suitable benchmarking partner ?

Primary Competitor(s). Yes it is a valid comparison, but probably the most difficult to achieve as competitors are unlikely to provide a wealth of factual information allowing you to "catch up".

Internal. In larger organizations, you could benchmark against similar activities within other divisions.

World Class Performers in the activity. These companies are normally recognizable and will be willing to share information with a non-competitor.

It is important to recognize that you have identified an activity to benchmark - it does not need to be benchmarked in your own industry. For instance Xerox decided to benchmark its distribution functions against a world class performer....L L Bean.

Find out as much as possible about the company from other sources (e.g. customers, suppliers, published data, consultants, trade associations, databases), so that you can maximize knowledge gained from direct contact with the partner.

How do we encourage them to "tell all" ?

We are all proud of doing a good job and are more than pleased to discuss these achievements with others...... provided that there is a professional exchange and the chance of mutual benefit. Are we not all keen to learn ?

Some guidelines:
always be totally honest and open
clarify your areas of interest (to check that the partner can really help)
stress the benefits of a mutual exchange between professionals
be prepared to provide more information about your activities than you are willing to receive in return
know your own situation, in great detail, including the performance measurements used
clarify confidentiality and any restricted areas (on either side)
Identify sensitive areas (before you step on them)

How do we gather the information required ?

1. Develop a Questionnaire
i) Draft a questionnaire with all of the information you want to obtain.
Remember to phrase the questions to gain maximum comparative information (as you will want to compare the outcome from a number of partners). Absolute values are meaningless without all of the supporting details. Examples of useful questions are:
Open questions - How, Where, When, Who, What
Scaled Answers - very important, important or not important

ii) Review the questionnaire with a team of others. Change it to improve.

2. Complete the Questionnaire - for your own organization

This is a good test of the questions and also ensures that you can respond to similar requests for information from your benchmarking partners.

3. Write Down the Reason for Asking Each Question

Again, this will test if all the questions are really necessary, and will provide you with a ready made answer when the partner asks "Why do you want to know that !".

4. Talk to the Benchmarking Partner

Clarify the areas of interest
Clarify the objectives
Ask if these areas have been covered before (the information may already be available)
Outline the primary questions
Provide the questionnaire if it will aid clarity
Arrange a visit (eyes are as useful as ears - so double the chance of learning)

How should a visit be performed ?

Prepare thoroughly - check all prior knowledge on the partner company and your own organization
Use a small team (2 ideally) and nominate a leader
Clearly define the purpose and objectives
Memorize the questionnaire
Do not take copious notes. Retain key points and write them down outside of the partner's sight
Provide any information required by the partner (providing that it has been reciprocated)
Thank the partner (again and again)
Debrief as soon as possible after the visit.

What do we do with the information gained ?

Use it to compare the similarities and differences, in order to clearly identify improvement opportunities.

Share the knowledge with all interested parties in you own organization, and TAKE THE IMPROVEMENT ACTION !!!

Monitor the improvements and benchmark again and again. The information becomes outdated rapidly and improvement is a continuous process.

Some key guidelines:
Benchmarking alone will not tell you what customers actually want. If your product or service is obsolete, no amount of improvements in production processes will make it competitive.
Benchmarking is only of benefit if the improvement actions are implemented.
Always seek to find out "how" a company has improved its performance, this normally comes from the people not the management (who will tell you "how much" performance has improved but not necessarily "how").
Always clearly identify your specific key areas of interest and stay focused on them.
Plan thoroughly in advance - prepare detailed questionnaires to ensure that none of the key elements are missed.
Be prepared to give a benchmarking partner more information than you receive.
Remember improvements are continuous and benchmarks go out-of-date quickly. Your competitors' performance will probable continue to improve in advance of you own.
Always remain honest and thoroughly professional - and you will be welcome to return for more information in the future.

This is the text of an article published by Peter Griffin


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