Benchmarking is a continuous process by which the products, services or work processes of leading companies are taken as a reference, to compare them with those of your own company and later make improvements and implement them.
It is not about copying what your competition is doing, but about learning what leaders are doing to implement it in your company by adding improvements. If we take as a reference those who stand out in the area we want to improve and study their strategies, methods and techniques to later improve and adapt them to our company, we will achieve a high level of competitiveness.
Types of benchmarking
There are different types of benchmarking: competitive, internal and functional. The common goal of all three types is to help managers look outside their departments, their organizations, their competition, or other industries where there are best-in-class companies.
Competitive benchmarking seeks to measure the products, services, processes and functions of the main competitors to make a comparison with our company and to be able to detect and carry out improvements that exceed those of our competitors.
Perhaps it is the most complicated of the three types to carry out, since the analysis and study as I have already mentioned are carried out on the main competitors. Considering your direct competition, in the vast majority of cases they are not interested in collaborating. Does this mean that if they do not collaborate we cannot carry it out? Of course not, but obviously more resources will have to be used in collecting the necessary data, and therefore it will be much more expensive.
Internal benchmarking is carried out within the same company. It is usually carried out in large companies that have different departments or also with business groups that are made up of several companies. In the process, a department or area is identified that is an example to follow due to its good results in order to carry out a benchmark with the other internal departments of the company.
It is the easiest to carry out within companies with structures of a certain size, and it is also usually the one that requires the least resources to carry it out, since the information is obtained from the company itself.
Functional benchmarking identifies the best practices of a company that is excellent in the area that it wants to improve. It is not necessary that this company be a competitor or even belong to the same sector.
It is normally very productive, given that since they are not organizations that are not direct competitors, there is no confidentiality problem and the information necessary for the study is usually offered.
Stages of Benchmarking
To correctly design and carry out a benchmarking process in your company, I recommend following the following steps: planning, data collection, analysis, action and monitoring.
The main objective of this first stage is to plan the research to be carried out. At this stage we have to answer three questions:
-What do I want to measure? All research must have a reason, and this must be related to an area of our company that we want to improve.
-Who am I going to measure? To answer this second question, we have to ask ourselves what kind of benchmarking we are going to follow: competitive, internal or functional. Once we have made the decision, we will know if we will compare ourselves with our own department or with a company inside or outside the sector.
-How are we going to do it? To carry out the project we have to create a work team to be responsible for the organization and direction of the project.
Data collection is essential for benchmarking, the success or failure of the entire process will largely depend on it. We can obtain data from different sources: internal, professional associations or own research among others.
Once we have collected the necessary information, we have to analyze the elements that cause the differences between our company and the companies studied, in order to identify opportunities for improvement.
Once we have identified the magnitude of the differences, it is time to propose the improvements that we will carry out. It must be taken into account that we will only select those improvements that, due to size, resources and infrastructure, are feasible to carry out by our company.
The next step after analyzing the information and having selected the reference aspects in the selected companies, is the time to adapt them to our company but always implementing improvements .
In other words, after analyzing the information and identifying the best aspects of the companies that we have selected, we take them as benchmarks to adapt them to our company but always adding some improvement or some advantage that adds value to our clients. .
5.Monitoring and improvement
In this last stage, a report should be made with all the important information of the process. This will help you get back to work on later projects. The idea is that it becomes an exercise of the company sustained over time to adopt continuous improvement.
One of the best examples that has been carried out in recent years is that of Starbucks. Economic instability and the commitment to boost coffee sales by fast food companies such as McDonalds, have led Starbucks to initiate a benchmarking process.
What did you decide to improve to alleviate this situation? One of the vital aspects for its business model is the time of preparation of its coffees. As we have seen before, you need a leading company to look at to later implement the improvements. The chosen company: the Japanese car manufacturer Toyota. Without a doubt, a great example to follow in optimizing the manufacturing time of your products.
Apparently 30% of the time spent preparing the famous Starbucks coffees is wasted on the time spent by employees bending, walking or choosing ingredients. After conducting an analysis of the benchmarks, they implemented an action plan based on the optimization of the processes to prepare their coffees, a redesign of the workspace, along with a new arrangement of the utensils and machines necessary for the preparation of their coffee. products. Aspects apparently as simple as bringing and improving the arrangement of the most used ingredients in their coffees, led to an improvement of almost 20% in the elaboration time of their products.
Xerox Corporation was the first company to use benchmarking . In the early 1980s, companies such as Minolta, Ricoh and Canon, among others, broke into the North American market for photocopies and print management with retail prices that were much cheaper than Xerox’s own production costs. The problem was obvious.
To resolve this situation Xerox decided to analyze methods, processes, materials and products of its Japanese affiliate Fuji – Xerox. The result indicated that there was a great delay in all the areas studied. Xerox was able to react quickly, setting new targets and KPIs to track properly. In the following years Xerox adopted benchmarking as a continuous improvement strategy.