Without points of reference, you have no way of knowing which parts of your business are excelling and which parts are lagging. The process of benchmarking provides you with those points of reference, so that you can decide strategically where to invest in improvements. In an article for Field Technologies Online, Jamal Starr discusses the four phases of good benchmarking and how to execute them:
- Current state assessment
- Benchmarking participant identification
- Comparative analysis
- Strategic prognosis
The Process to Improvement
Before you start looking externally for data, you need to look internally to get a precise idea of the current business state. Modes of data collection will include direction observation, stakeholder interviews, surveys, operational data intelligence, and time/motion analysis. Collectively, this will paint a viable picture of the business.
The next phase is to find other businesses of comparable size and industry to benchmark, which is deceptively difficult:
Unfortunately, selecting the best benchmark comparisons is not as simple as choosing intra-industry competitors and providers of like products or services. Oversimplification of the selection process can lead to missed insights, erroneous conclusions and wasted effort. We use an in-depth methodology in selecting the appropriate benchmarks. A deep analysis of synergies, practices, and performance of benchmark organizations allows our business scientists to optimize the sample of benchmarks around the pertinent piece(s) of [the]value chain. Considerations include: product/service complexity, product/service delivery model, customer segment similarities, promotion alignment, delivery channel similarities, complexity in product realization processes and cost structure.
After that, the actual analysis of data between businesses is conducted. Having operational and financial expertise on hand will enable richer understanding of the data and its implications. This feeds into the final phase, strategic prognosis, where specific actions toward improvement are identified and taken as a result of the story told by the benchmarking data. In this phase, it is important to identify actions and processes that are genuinely doable, as opposed to too abstract or incompatible with the current shape of the business.
For more thoughts, you can view the original article here: https://www.fieldtechnologiesonline.com/doc/the-four-phases-of-successful-benchmarking-0001