1

Benchmarkinghasbecome apopulartool among companies trying to become more competitive and striving forworld-class performance.The majority ofthem are actively engaged inbenchmarking.Benchmarkingisapart ofthe totalquality process,and anyone involved intotalquality should have asolid understanding ofthis subject.Benchmarkingwas brought to our awareness through RobertC.Camp’s 1989landmark book. In the 20odd yearssincethen anumber ofvariations have been developed onthe benchmarkingtheme.We have benchmarkingstudies,inwhich there isno contact with anoutside firm—information gained isstrictly from the public domain.There isno question that this technique canbeuseful.It issomething that the organization should bedoinganyway.Sometimes third-party firms specializing inbenchmarkingstudies are contracted for that work.There isconsiderable doubt that this isreally benchmarking,however.We also have competitive benchmarking,inwhich acompetitor’s operation isstudied from adistancewithout the cooperation ofthe target firm.The aim isto learn something that canhelp improve process orproduct quality.Competitive benchmarkinguses publicly available data,and once again,itispossible to contractthis work to specialist third-party firms.This approach,however,doesn’t fitour definition ofbenchmarking.Also inuse are the unstructured plant visits,during which the visitor firm intends to learn something that will helpwith its processes or products.This isoften called benchmarkingbuthasmore aptly beennamed industrial tourism.Such visits have some value,butthey donotcomprise benchmarking.Many othervariations exist,butthe formofbenchmarkingaddressed hereiswhat hasbeen called cooperative benchmarking,best practices benchmarking,or process benchmarking,inwhich the focus isradical improvement ofkeyprocesses.This involves acooperative effort by two firms,the benchmarkingfirm wanting to bring asubstandardprocess up to the world-class level ofthe partnerfirm’s process.

2

The misconceptions about benchmarkingassume that one party somehow takesadvantage ofanunsuspecting competitor by surreptitiously copying the competitor’sproduct or processes.Nothing could befurther from the truth.Benchmarkinginvolves two organizations that have agreed to share information about processes oroperations.The two organizations both anticipate some gain from the exchange ofinformation.Either organization isfree to withhold information that isconsideredproprietary.In addition,the two companies need notbecompetitors.

3

4

5

Benchmarkingisnotsomething one approaches casually.It requires agreat deal oftimefrom keypeople,and money must beavailable for travel to the benchmarkingpartners’facilities.Both ofthoserequire management’s approval.You expect to gain information from your benchmarkingpartnerforwhich itwill expect payment inkind:namely,information from you about your processes.This canbeauthorized only by management.Finally,the object ofbenchmarkingisto discover processes toreplace yours or atleast to make major changes to them.Such changes cannot bemade withoutmanagement’s approval.Without amandate from topmanagement,there isno point inattempting tobenchmark.That iswhy the requirement for management commitment isatthe topofthe list.If youcannot secure that commitment,proceed no further.

6

If your company isinvolved intotalquality,chances are good that you have already donesomebaselining ofprocesses because before continual improvement canbeused effectively,and certainlybefore statistical process control canbeapplied,the processes inquestion must beunderstood.Thatis,the processes must becharacterized interms ofprocess capability,their flowcharts,and otheraspects.If this hasnotbeen donebefore,itmust bedonenow.It iscritical that you understand yourown processes thoroughly before attempting to compare them with someone else’s processes.Mostorganizations think they know their processes well,butthat israrely the case unless adeliberateprocess characterization hasrecently been done.It isalso important that anorganization’s processesbecompletely and accurately documented,notjust for its own use butalso for the benefit ofeveryone associated with the process inany way.

7

The processes that are the weakest are the ones that are most detrimental to competitiveness.Theyoffer the most room for dramatic improvement,perhaps many times over.This iswhere thebenchmarkingeffort should befocused because incremental improvement would notbesufficient tobring them up to the necessary level inthe timeframe required.It canbedifficult to categorize anorganization’s processes asweak or strong.Aprocess that creates 50%scrap isanobvious choice for the benchmarkinglist.Ontheother hand,aprocess may bedoing what isexpected ofitand,asaresult,beclassified asstrong.However,itcould bethat expectations for that process are nothigh enough.It ispossible that someone elsehasaprocess that ismuch moreefficient,butyou just don’t know about it.Never consider aprocess to beabovebenchmarking,no matter howhighly itisrated.Concentrate onthe weak ones,butkeep anopen mind about the rest.If research identifies abetter process,add itto thelist.Above all,document all processes fully—even the strong ones.Keep inmind that asyou are looking atone ofyour benchmarkingpartner’s processes because itissuperior to yours,your partnermay look atyour strong processes for the samereason.If the processes are notwell-documented,itwill bevery difficult to help yourpartner.It isimpossible to compare two processes for benchmarkingif both are notfully documented.

8

9

Every team should have management representation,notonly to keep management informed butalso to build the support from management that isnecessary for radical change.

10

It isimportant that abenchmarkingpartnerbeselected onthe basis ofbeing best-in-class for the process being benchmarked.In practical terms,itcomes down to findingthe best-in-class-you-can-find-who-is-willing.Because benchmarkingisaccomplishedby process,best-in-class may beinacompletely different industry.For example,saythat anorganization manufactures copy machines.It might consider potentialbenchmarkingpartners who are leaders inthe copying industry.Butif itisawarehousing process that isto bebenchmarked,the company might get betterresults by looking atcatalog companies that have world-class warehousingoperations.If the process to bebenchmarked isaccounts receivable,then perhaps acredit card company would beagood partner.If team members stay up-to-date with trade journals,they should beable to compileagood list ofpotential benchmarkingpartners.Research should cover tradeliterature,suppliers and customers, Baldrige Award winners,and professionalassociations.The Internetoffers aseemingly endless stream ofbenchmarkinginformation.Teammembers will find that the best-in-class processes become well-known very fast.

11

If the team canfind away to benefit its potential partner,the linkage between the two companies willbeeasier to achieve.Even without that,most companies with best-in-class processes are willing,ofteneager,to share their insights and experience with others,even if they gain nothing inreturn.Indeed,Baldrige Award winners are expected to share information with other U.S.organizations.

12

After the team hasselected the candidate,itcontacts the potential partnerto formanagreementcovering benchmarkingactivities.It canbeuseful to have anexecutive contact anexecutive ofthetarget company,especially if there isanexisting relationship or some other common ground.Oftenthe most difficult part ofthe process isidentifying the right person inthe potential partneringcompany.Professionalassociations cansometimes provide leads to help the team contact someone inthe right position with the necessary authority.After such acontact hasbeen made,the first order ofbusiness isto determine the company’s willingness to participate.If itisnotwilling,the team must find another candidate.When acompany iswilling to participate,anagreement canusually beforged without difficulty.The terms will include visit arrangements to bothcompanies,limits ofdisclosure,and points ofcontact.In most cases,these are informal.Even so,caremust beexercised notto burden the benchmarkingpartnerwith excessive obligations.Make thepartnership asunobtrusive aspossible.

13

The team hasalready agreed to discuss aspecific process (or processes).Observe,collect,anddocument everything about the partner’s process.In addition,try to determine the underlying factors,practices,and processes:what isitthat makes the company successful inthis area?For example,doesitemploy totalproductive maintenance,continual improvement,employee involvement,statistics,orvarious other approaches?Optimally,your process operators should talkdirectly with your partner’soperators.It isimportant to come away with agood understanding ofwhat its process is(flowchart)and its support requirements,timing,and control.The team should also try to gain someunderstanding ofthe preceding and succeeding processes because if you change one,the others mayrequire change aswell.If the team knows enough when itleaves the partner’s plant to implement itsprocess back home,then ithaslearned most ofwhat isneeded.Anything less than this,and the teamhasmore work to do.While you are inapartner’s plant,try to get afeel for its culture and howitoperates.Beopen-mindedand receptive to new ideas that are notdirectly associated with the process inquestion.Observing adifferent plant culture canoffer awealth ofideas worth pursuing.

14

With the datainhand,the team must analyze them thoroughly incomparison with the datatakenfrom its own process.In most cases,the team will beable to establish the performance gap (theperformance difference between the two processes)numerically—for example,200pieces per hourversus 110pieces,2%scrap versus 20%,or errors inparts per million rather than parts per thousand.After the team concludes that there isno doubt that the partner’s process issuperior,other questionsarise:Canits process replace ours?What will itcost,and canwe afford it?What impact will ithave onadjacent processes?Canwe support it?Only by answering these questions canthe team conclude thatimplementation ispossible.

15

Assume the team concluded that the change to the new process isdesirable,affordable,andsupportable and that the team wants to adopt the process.In most cases,implementation will requiresome planning to minimizedisruption while the change isbeing made and while the operators aregetting used to the new process.It isvery important to approach implementation deliberately andwith great care.In some cases,itmay bewise to try the new process inapilotmodel.This isnotthetimefor haste.Consider all conceivable contingencies and planto avoid them,or atleast bepreparedfor them.Physical implementation may beaccompanied by training for the process operators,suppliers,orcustomers.Only after thorough preparation and training should anorganization implement thechange to the new process.Asecond aspect ofbenchmarkingshould bekept inmind.The objective isto putinplace aprocess that isbest-in-class.If the team merely transplants the partnercompany’s process,itwill notachieve the objective,although improvements mayoccur.To achieve best-in-class,anorganization must surpass the performance ofthebenchmark process.It may notbepossible to dothis atthe outset,butthe team’s initial planning should provide for the development work necessary toachieve itinaspecified period oftime(see the Figure).

16

17

18

The intent ofbenchmarkingisnotonly to catch up with the best-in-class butalso tosurpass,thereby becoming best-in-class.This isaformidable undertaking becausethose with best-in-class processes are probably notresting ontheir laurels.They toowill constantly strive for continually better performance.However,you are nowapplying new eyes and brains to their processes,and fresh ideas may well yield aunique improvement,vaulting your organization ahead ofthe benchmarkingpartner.Should that happen,your organization will besought out asabest-in-classbenchmarkingpartnerby others who are trying to bootstrap their performance.Whether that happens or whether the benchmark isactually surpassed,theimportant thing isto maintain the goal ofachieving best-in-class.Benchmarks mustbeupdated periodically.Stay intouch with the best-in-class.Continue the process.Never becontent with agiven level ofperformance.

19

20

If your subject process isunsatisfactory and you cannot benchmark for any ofthese reasons,you mayhave to resort to reengineering.You should becareful to consider the reasons the process isunsatisfactory.It may simply bethe wrong process for the job,or itmay beout ofstatistical control.Reengineering will notsolve either ofthose problems.Besurethat the process isappropriate and thatitisincontrol first.If itisstill notproducing the desired results,suggesting that itissimply notcapable,then redesigning itthrough reengineering isagood approach.One disadvantage with processreengineering isthat there isno guarantee that after spending the timeand resources,you will have acompetitive process.That issue does notexist with benchmarking.With benchmarking, you will haveobserved acompetitive process inaction.

21

1.Discover and define:This involves first identifying aproblemor unacceptable outcome,followed bydetermining the desired outcome.This usually requires anassessment ofthe business need and willcertainly include determining the processes involved,including the scope,identifying processcustomers and their requirements,and establishing effectiveness measurements.2.Establish redesign team:The team should comprise asaminimumthe following:• senior manager assponsor• steering committee ofsenior managers to oversee overall re-engineering strategy• process owner• team leader• redesign team members.It isgenerally recommended that the redesign team have between five and tenpeople;represent thescope ofthe process (that is,if the process to bere-engineered isacross-functional,so isthe team);only work onone redesign atatime;and ismade up ofboth insiders and outsiders.Insiders are peoplecurrently working within the process concerned who help gain credibility with co-workers.Outsidersare people from outside the organization who bring objectivity and canaskthe searching questionsnecessary for the creative aspects ofthe redesign.Many companies use consultants for this purpose.3.Analyse and document process(es):Making visible the invisible,documenting the process throughmapping and flowcharting isthe first crucial stepthat helps anorganization see the way work really isdoneand notthe way one thinks or believes itisdone.Seeing the process asitisprovides abaselinefrom which to measure,analyse,testand improve.Collecting supporting process data,includingbenchmarkinginformation and ITpossibilities,allows people to weigh the value each task adds to thetotalprocess,to rank and select areas for the greatest improvement,and to spotunnecessary workand points ofunclear responsibility.Clarifying the root causes ofproblems,particularly those that

22

cross department lines,safeguards against quick-fix remedies and assures proper corrective action,including the establishment ofthe right control systems.4.Innovate and rebuild: In this phase the team rethink and redesign the newprocess,using the same process-mapping techniques,inaniterative approachinvolving all the stakeholders,including senior management.5.Re-organizeand re-train:This phase includes piloting the changes and validatingtheir effectiveness.The new process structure and operation/system will probablylead to some re-organization,which may benecessary for reinforcement oftheprocess strategy and to achieve the new levels ofperformance.Trainingand/or re-training for the new technology and roles play avital part insuccessfulimplementation.Peopleneed to beequipped to assess,re-engineer and support –with the appropriate technology – the key processes that contribute to customersatisfaction and corporate objectives.Therefore,BPRefforts caninvolve substantialinvestment intraining butthey also require considerable topmanagement supportand commitment.6.Measure performance:It isnecessary to develop appropriate metrics formeasuring the performance ofthe new process,sub-processes,activities and tasks.These must bemeaningful interms ofthe inputs and outputs ofthe process,and interms ofthe customers ofand suppliers to the process.7.Continuous redesign and improvement:The project approach to BPRsuggests aone-off approach.When the project isover,the team isdisbanded and businessreturns to normal,albeit aradically different normal.It isgenerally recommendedthat anorganization does notattempt to reengineer more than one major process atatime,because ofthe disruption and stress caused.Therefore,inmajor re-engineering efforts ofmore than one process,asone team isdisbanded,another isformed to redesign yetanother process.Considering that Fordtook five years toredesign its accounts payable process,BPRonalarge scale isclearly along-termcommitment.In arapidly changing,evermore competitive business environment,itisbecoming more likely that companies will re-engineer one process after another.Once aprocess hasbeen redesigned,continuous improvement ofthe new process bythe team ofpeople working inthe process should become the norm.

22

23