Process benchmarking

Many organisations turn to process benchmarking because, by focusing on specific critical processes and operations, it offers the best chance of quick wins in terms of performance improvement.

Process benchmarking, rather than focusing on the business as a whole, concentrates on specific operational or production processes. This makes it easier to identify areas of improvement, and limits the amount of time and resource devoted to a study.

By analysing their existing processes and comparing them to best practice, managers can identify performance gaps and implement actions to improve their overall process efficiency. Performance is improved by learning from others.

In short, process benchmarking consists of a mechanism for identifying specific work procedures that could be improved by copying, and appropriately adopting, external examples of excellence that can be regarded as the best standard in the industry.

Examples of process benchmarking might include the following:

  • A professional service firm which examines its client billing process to that of leading accounting, legal, consulting firms etc.
  • An ecommerce firm benchmarking its average fulfilment and delivery speed compared to key competitors;
  • An airline benchmarking operational metrics such as customer satisfaction against its major rivals;
  • A hotel seeking to compare its housekeeping service or customer care program against other hotels in the same city.

A key challenge in process benchmarking is finding similarity of processes, or identifying the means of making external processes comparable. This is critical if you are to translate best practice into a set of actionable recommendations that can be applied to your own processes or operations. Failure to do so will irrevocably undermine the entire benchmark exercise.

Context is key; without it a business practice may not transfer well. Toyota’s production system, for example, has been widely lauded, and its practices adopted successfully by many companies outside of manufacturing. But blindly copying Toyota without acknowledging the unique needs of your business and specific challenges of your industry will lead to failure.

Contextualisation is important then, as is the need to have a performance plan in place. Seeing how Company X performs and deciding to imitate them lock, stock and barrel is no recipe for success. Every firm has its own culture, core strengths and capabilities which it is impossible to replicate. It is a waste of time trying and, in doing so, will cause you to overlook the key values and competencies of your own organisation.

Instead, what you should be doing is compare processes and operations, identify and understand why and how they work better than your existing procedures or operations, and then translate that into a set of improvements which will work within your own organisational framework. You are trying to learn from the best, not imitate them.

Despite these reservations, process benchmarking offers a number of benefits to organisations looking for better performance, including:

  • A process benchmarking exercise often gives an organisation a better understanding of how its own internal processes currently work, a necessary starting point for any change initiative;
  • A process benchmark gives an organisation a measure as to how it rates in terms of operational performance compared to peers and industry leaders, and highlights those areas which offer the greatest potential for short and long term process improvement; and
  • A process benchmark provides empirical evidence that can be used to support a resource request or build a business case for process improvement initiatives.

Process benchmarking can be an effective means of delivering both short and longer term performance gains if approached correctly. This means learning from, but not imitating, the best, contextualising and adapting key teachings to your business and industry, and translating them into suitably actionable recommendations.

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