Effective Management of Benchmarking Projects

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Taylor and Francis Imprint: English Number of pages: Benchmarking for Best Practice. How to write a great review.

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Close Report a review At Kobo, we try to ensure that published reviews do not contain rude or profane language, spoilers, or any of our reviewer's personal information. Would you like us to take another look at this review? Process benchmarking is where the bulk of benchmarking activity takes place, it is about finding out how good performance is achieved and learning about best practices in order to put together action plans capable of closing any likely competitive gaps. Very often, process benchmarking necessitates visits to partners and thorough preparation is required.

Very often, this approach may not require company visits and is conducted through consortia studies and with the facilitation of consultants and third-party involvement. It has to be said that particularly for strategic benchmarking and performance benchmarking, the involvement of key competitors is very often to be expected.

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When one talks about competitive benchmarking there is a thin dividing line between legitimate, public domain-based information and industrial espionage. Archer [ I ] indicates that there is a wide spectrum of information which can be obtained either easily and legitimately or through devious means or only legitimately through the practice of benchmarking Figure 3. A lot of information can be gathered from company reports, market research, surveys, etc.

Very often, information relating to innovation and pricing strategy is much harder to gather. In fact the practice of benchmarking is somewhat determined by the quality information sought and therefore the level of preparedness to incur costs. Real knowledge and learning Increasing real costs Figure 3.

While internal benchmarking can have a wide variety of benefits, it does suffer from limitation. Generic benchmarking, on the other hand, offers the best venue but has different issues associated with it. Very often the following factors are cited as the major obstacles encountered. There are, however, very good ground rules to subscribe to when doing bench-marking. In addition to the international code of conduct which is described separately, it is important to ensure that the following issues are addressed: In other words, the learning potential has been assessed and identified.

There is definitely a need to demonstrate to partners that they stand to benefit from the exercise and that the feedback will be of great value to them. The process of benchmarking needs to be clearly demonstrated to partners i. Agree on formats and performance measurement strategy so that outcomes are comparable and benchmarks can be established. It could well be that they would like to tackle a different area from the one suggested to them. This is reported time and time again as a key prerequisite and is often the first step in launching a benchmarking project. A typical approach widely recommended is performing a strategic review of key processes and gauging their importance in delivering critical success factors and their degree of effectiveness.

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This is covered in another part of the book. But nonetheless the broad generic methodology for this is to relay the importance of each project against its effectiveness and all those critical processes which fall short of being truly competitive can be considered as contenders for benchmarking Figures 3. Rover recognizes that this step is necessary, even if the processes are not of world-class standard. Sharing of internal information is thought to be a useful step before going outside. This is encouraged as an option to consider, even though it is recognized that access may be difficult and complications are necessarily likely.

For generic processes such as logistics, accounting, recruitment, etc. Within Rover Cars, benchmarking teams are encouraged first to carry out initial research prior to directly contacting potential partners. This is thought to be important for two reasons: To understand the performance of the process in question in terms of metrics To understand exactly how the process works practices. A proforma for this purpose is illustrated in Appendix 3.

This stage is so cntical since it provides a focus on the selected partners. As stated in the Rover benchmarking guidelines: Direct contact should be used to fill in the picture, not to get initial information about companies. In addition to a comprehensive methodology and specific guidelines Rover has the following prompts for its benchmarking teams to make the experience very worthwhile. Comparisons need to take into account: Methods involved Policies and procedures affecting the method Geographical and physical layout Management responsibilities Skills and training levels Investment and operating costs The relationship between the specific benchmarked process and the rest of the business - how it fits into the big picture.

As far as potential partners are concerned, the following sources need to be considered: Companies with excellent financial results Feedback received from internal and external experts, customers, suppliers and business partners. In order to arrive at a comprehensive and effective list of benchmarking partners, IBM uses a methodology based on a matrix which matches potential benchmarking partners to best-of-breed or world-class requirements. Through a questionnaire the results are plotted on the matrix and the best performers according to the set criteria can then be considered further as potential partners.

Some of the key questions which can be used in this process, include the following: For what quality process or results is the company especially known? What is your evidence that it is an industry leader in the area of interest? Has the company made any contributions to the state of the art in its industry through papers presentations? The internal process for preparing for benchmarking includes the following key steps: Compiling the characteristics distinctive elements of the process or business area. Listing best-of-breed or world-class criteria for the business area or process of interest.

Listing of currently inhibiting factors for the process or business area to fulfil their function. Preparing the open-ended questions for assessing best-of-breed and worldclass factors. Developing a list of benchmarking partners. It has some key characteristics which are worth considering: A system for monitoring in- and out-bound benchmarking requests 80 Effective Management of Benchmarking Projects A system for preparing the teams prior to official company visits taking place. Data may cover cycle time, cost, quality, etc. Further, an indication is required of who is involved in the benchmarking expedition, what questions are likely to be asked and finally, a confidentiality agreement Appendix 3.

In order to select the most appropriate benchmarking partners: The key trigger for selecting partners is the process in question, and in the case of competitors, product range is a very applicable criterion. On the question of a competitor, if the match is perfect and the exchange is going to be strategically beneficial, the final selection is going to be determined by anti-trust laws and legal and ethical factors. As above, some partners could still be a low-priority choice because even though a cultural affinity may exist, organizational differences may automatically rule them out.

The best category for selection are those partners that have not only analogous processes and similar organizational types, but also similar cultural affinities. Further, they fit the criteria that Rank Xerox desires and are committed to a full exchange. The issue of partner selection therefore is not straightforward. On the other hand, difficulty of access should not deter teams from pursuing what is important for the business, what is right to do and if the project team subscribes to all the principles covered in this chapter, most partners targeted would feel privileged and happy and therefore obliged to share information on a win-win basis.

J Potential partner Function. Rover Cars approach to information collection Instruction: Develop a list of resources as per example. Assign responsibility for each and set time goals for the completion of all research. Tick each item as it is completed. Checklist of benchmarking requirements at American Express Recommended benchmarking requirements checklist Prior to conducting a benchmarking study with an outside organization, the following information should be available from American Express.

Check all that are available. High-level, cross-functional description or map of the area to be benchmarked, including: Detailed flowchart s of specific area s to be benchmarked. American Express performance data, including, but not limited to: Cycle time measures Cost measures Quality e. Partner selection 85 Appendix 3. Benchmarking Site Visit Brief description of general area or process reviewed: Dates data collected Abstract of results paragraphs or attach trip report.

I have read the memoirs of his generals and his leaders. I have even read his philosophers and listened to his music. I have studied in detail the account of every damned one of his battles. Patton American General Not everything that counts can be counted; not everything that can be counted counts Albert Einstein Nothing is good or bad but by comparison Thomas Fuller To compare is not to prove French proverb 4.

It is a legitimate, systematic, overt and ethical process of bringing about effective competitiveness. The myth that you can only compete well if you know what your competitors are doing and you have to be able to copy what they do to succeed, has been broken. Learning is generic, management is universal and best practice is not a privilege that only a few organizations have. Unlike industrial espionage, benchmarking is in an overt fashion, a win-win principle. It is concerned more with finding out about ideas on managing 88 Effective Management of Benchmarking Projects processes and therefore achieving superior performance rather than with gathering sensitive information on cost, pricing, etc.

After all, anti-trust and anti-competitive legislation was brought about in the first place to: Encourage and promote high quality To ensure there is a variety Low prices Innovation and efficiency. There is therefore a clear dividing line between benchmarking and industrial espionage Table 4. Industrial espionage is a deliberate, unethical, devious, obsessive way of obtaining information at any cost. It is about breaking the rules of fair competition, wanting to sabotage, perhaps drive competitors out of business and even to mislead customers in order to create a win-lose scenario.

Those advocates of unethical principles who claim that benchmarking is no more than a cleverly packaged approach to industrial espionage are totally mistaken and do not really understand the way benchmarking works. Furthermore, as has been discussed time and time again, benchmarking does not represent an obsession with competitors. There are more than enough reasons to justify that an obsession with competitors is not perhaps the best way of enhancing competitive performance: It could be a deliberate attempt to foil plans, sidetrack competitors or totally mislead them.

The quality of the information itself may be in question. This therefore could lead to an organization abandoning its own plans and Table 4. There is always a perception that if competitors are doing something differently, this therefore means it is better. Of course, without any specific evidence which is very hard to obtain it should not be accepted that change for the sake of change is the best way forward. If therefore benchmarking is to greatly assist by delivering the desired breakthroughs, some lateral thinking needs to take place by breaking the mould and looking outside the industry.

The literature is flooded with examples of benchmarking learning and Eureka phenomena, which have assisted many organizations in making the gigantic leaps forward. The best quoted example is perhaps the classical benchmarking experience of Rank Xerox with L. Competitive benchmarking is, however, still very possible as an ethical, overt, reliable way of learning from and about competitors. It takes place in a variety of ways: Public domain reports, papers, books, etc. Involvement in industrial associations Participation at conferences, symposiums, etc.

Third party facilitated consortia Role of consultants Participation in major studies Business schools. Failing to do that can mean swift reaction from the courts, severe penalties, reprimands for anti-competitive behaviour, plus the tarnishing of corporate image through poor media coverage. As defined in one of the guidance manuals on competition law, produced by the Post Office in the UK, competition law is a set of rules that regulates business contacts to avoid unfair agreements or oppressive conduct. These unfair agreements and oppressive conduct can fall into two main categories: Contrary to what people might think, competition law is not restrictive to good business practice.

It rather guides actions and practices in the right direction and avoids embarrassment and problems. Competition law can help warn senior managers of any possible infringements of the law and give possible guidance on how to deal with uncertainties. Through a continuous process of monitoring compliance, problems can be picked up very early and dealt with very efficiently.

As far as authorities handling competition law issues are concerned. Competition law sets the ground for long-term, effective, deserving, ethical and sustainable competitiveness through model behaviour. Business taking high-risk short cuts, acting unprofessionally and driven by short-term gains will, in the long term, be caught and severely punished. Competition law can be used proactively to break into new markets or product areas or even open up anti-competitive cartels.

Regardless of organizational size, the degree of abundance in resources, the type of market, industrial sector, etc. The wide range of powers that the authorities might exercise could, for instance, include: This penalty could, of course, be very substantial in the case of large businesses. Similarly to the UK scenario, agreements can be invalidated if there is a breach of the law.

Commercial contracts can be rendered illegal if there is non-adherence to competition law.

Among the various penalties to be considered are: The need perhaps to have to pay compensation to plaintiff companies thought to be harmed by illegal, unethical conduct The cost of legal suits, periods of uncertainty, commercial problems and psychological burdens Expense to compensate image through adverse press Having to be supervised, controlled and told what to do by the Competition authorities.

Benchmarking and competition law go hand in hand. They are not contradictory and it is certainly not true to suggest that competition law can stifle the practice of benchmarking. In addition to understanding the process of benchmarking and the technical aspects of information exchanges, there are other principles that individuals and project teams involved in external activities need to know about.

Such information must be communicated to third parties without the prior consent of the benchmarking partner who shared the information. When seeking prior consent, make sure that you specify clearly what information is to be shared, and with whom. Know and abide by the European Benchmarking Code of Conduct. Have a basic knowledge of benchmarking and follow a benchmarking process. Prepare a questionnaire and interview guide, and share these in advance if requested.

Possess the authority to share and be willing to share information with benchmarking partners. Work through a specified contact and mutually agreed arrangements. Provide a meeting agenda in advance. Be professional, honest, courteous and prompt. Introduce all attendees and explain why they are present. Adhere to the agenda. Be sure that neither party is sharing proprietary or confidential information unless prior approval has been obtained by both parties from the proper authority. Share information about your own process, and, if asked, consider sharing study results. Offer to facilitate a future reciprocal visit.

Conclude meetings and visits on schedule. Thank your benchmarking partner for sharing their process. Benchmarking with competitors The following guidelines apply to both partners in a benchmarking encounter with competitors or potential competitors: Always take legal advice before benchmarking with competitors. When cost is closely linked to price, sharing cost data can be considered to be the same as price sharing. Do not ask competitors for sensitive data or cause the benchmarking partner to feel they must provide such data to keep the process going.

Do not ask competitors for data outside the agreed scope of the study. Any information obtained from a benchmarking partner should be treated as you would treat any internal, confidential communication. They are both geared to the promotion of quality, innovation, value added and, above all, competitive enhancements. Competition law protects the interest of all through principles of fairness and benchmarking provides opportunity for all through principles of learning through sharing. Words like confidentiality, secrecy, sensitivity can be effectively dealt with through a structured approach and through abiding with and subscribing to the European Benchmarking Code of Conduct.

On the other hand, managers need a lot of persuasion and convincing when it comes to the introduction of change. Industrial visits can be extremely beneficial if there is a final process to manage them and capturing the outcomes in a meaningful way. This is the best way to deal with this predicament, to ensure that the cost of visiting other organizations is well justified and that real outcomes can result from the various visits.

The whole process of making industrial tours worthwhile will be described through a case study, feflecting the experience of Elida FabergC Ltd. Prior to that, however, the key steps to be observed are covered in the following section. This is the most critical step in the whole process of conducting visits. Companies need to clearly highlight The value of industrial visits 2 3 4 5 91 the objectives of the visits and the desired outcomes. This will create focus, give structure and lead to positive action. From the point of view of the host organization, it provides the opportunity of preparing, pulling in the right people and getting the information ready for the visitors.

Selecting team members for the visits: By allocating roles and responsibilities,the visits can then be managed very effectively. Selecting a mission leader: This is another critical step.

More importantly, they have to be in a position to answer any questions in relation to their business operations and be able to provide a strategic and complete perspective. The team leader must be someone with a senior position. It is advisable that a proper presentation of the organization is prepared, using video and other means.

The host organization will be interested to learn about the visitors and their organization. The process of benchmarking has to reflect mutuality, reciprocity and the development of proper ongoing links. There are various ways and means for choosing potential partners. Essentially the approach has to be based on: What is the area of interest? What are the key objectives of the visit? What are the expected outcomes? The likely list of potential hosts will be based on: Organizations with world-class practices Organizations whose core business is reflected by the areas sought to be examined Winners of quality awards and accolades Most-admired companies Existing contacts.

There has to be a categorizing of the potential list based on: Most-preferred list Desirable list Convenient list No-go list. The criteria to be used for the prioritization process should include: Ease of access 98 Effective Management of Benchmarking Projects Quality and value of learning Geographical location Time convenience cost.

Normally one would expect a useful list not to exceed five or six companies. The potential hosts have to be contacted once the list is drawn up, clearly stating the aims and objectives of the visit and enclosing background infonnation. A very important note is that the visits can be reciprocated and the same level of sharing can take place.

Once the replies are received, a decision could be made on whether to approach alternatives in the event that there are rejections. There has to be a process for asking all the relevant questions, and also capturing the learning. This vehicle is critical since action plans can only be put together, based on the level of leaming achieved. All the team members need to be properly briefed on the host organization, and background information needs to be prepared and circulated to all the members.

Organization size, turnover, etc. Type of industry, product range Business imperatives Quality initiatives, innovation. Using the session on questions and answers and the various logbooks, a comprehensive list of points, issues and action can be put together at the end of the visit. Preferably individual roles and responsibilities can be identified in order not to lose momentum and to ensure that the project is going to result in the effective implementation of change. The host partners have expectations. It is therefore important to write back to them, thanking them but also giving them feedback on: Most impressive parts of the visits Likely issues that could have arisen Offers of assistance, help and advice in specific areas.

An open invitation also needs to be included, to reflect the spirit of reciprocity and mutuality. In some instances visits can be better managed through the involvement of a third party, such as consultants. Facilitate contacts through their large networks The value of industrial visits 99 Help to design the brief for the project Work closely with other consultants representing the host partners Facilitate the briefing and the debriefing processes. Sales turnover in was f98 million at NPS the price the manufacturer receives , which represents an Of total sales, deodorants and female body sprays represent 26 per cent, hair products 22 per cent, skin care 11 per cent, oral care 7 per cent, and 34 per cent is accounted for by male toiletries.

Elida FabergC Ltd employs people, of whom are directly involved in manufacturing or production activities. Elida Fabergt Ltd sells over 30 branded products and has significant shares in four core markets: Our aim is to delight all customers with every product and service we offer. Its major customer base is to the large retail multiples such as Asda, Boots, Safeway, Sainsbury, Superdrug and Tesco.

As a learning organization, we encourage shared responsibility for personal development and training programmes which meet individual and business needs. Through this, we seek to empower our employees as the basis of our growth and success. The aims and objectives of the visits were therefore: To study the application of self-assessment for business excellence To benchmark the Elida Fabergt Ltd approach against other models To learn about benefits and the strategic importance of self-assessment To document how self-assessment can drive a TQ culture.

Based on expressed interest, an initial list of five potential companies was drawn together and four were eventually visited: Following agreement for the visits to take place, scheduled programmes were put together and agreed between the parties concerned. A programme for briefing the teams was also included prior to conducting each visit Appendix 5.

Part of the briefing process was to present together a logbook for capturing the key learning outcomes from each visit and to enable each individual to enter their own action plans Appendix 5. The debriefing process for each visit took place for the purpose of developing an action plan and to highlight key learnings and any issues which may have arisen.

In all, a comprehensive range of useful learning points did emerge from the visits and these formed the basis of various action plans. Feedback was given to all the hosts as part of the whole process, together with indications on possible future areas of exchange in order to keep the momentum of benchmarking going.

The value of industrial visits 5. The major benefits of industrial tours are various: Background information on the host partners Visit to D2D 1. D2D changed its mode of operation from a cost centre into a profit-making centre D2D is in the business of subcontracting technology deals with some direct competitors of ICL as well D2D uses a permanent core workforce and also temporary staff A wholly owned subsidiary of ICL which is owned 85 per cent by Fugitsu. D2D tries to be a full turnkey provider a complete service which includes: Five sites occupying 40 acres.

Strategy Complete electronics manufacturing solutions Ten to fifteen strategic partners Leading and emerging companies: The value of industrial visits Customer interface Dedicated account management. Effective competitiveness as defined by the customer is based on price and total cost ofownerskip. Two and a half years ago Compaq started to lose market share and their strategy was sourcing from outside by buying cheaper components and assembling their computers to differentiate their products through price.

They realized that technology and its functionality is the same. This made them realize how important it is to drive costs down. Quality processes Strategic business model Self-assessment and continuous improvement Zero defects Customer care philosophy Quality the D2D way. This period also coincided with the amval of new blood, from Texas Instruments, for instance, and their style of leadership was better communications, wider involvement, etc.

Harmonization in working conditions - single-status canteens - favourable working conditions - focus on the business had to be right - making ICL a market-driven business as opposed to a tradition of being engineeringfproduct focused there was a tradition of over-engineering.

Used Phil Crosby approach to launch quality The whole organization were put through formal training employees. ICL has gone through a 1O-year revolution programme. The establishment of the customer-supplier concept was a big challenge. This meant that there has to be a new approach with customer care, strategic quality and deciding where the next steps are. This led to the consideration of self-assessment. The approach used widely now is the strategic business model, based on the EQA model.

D2D found that this is a complete business model. This was a revelation in the sense that people started to realize that there is a lot of scope for improvement and perceived performance is well below what is revealed by the assessment exercise. Non-ICL business is going to grow to over 50 per cent. Actual tprnover - f million. The value of industrial visits B. Up to 32 layers. Taking the strain Proving new manufacturing technologies Process development and control Design for manufacturing and test Inventory management Responsiveness Flexibility Economies of scale.

Employees who control the process are given various pieces of information including prices of components, margins per unit. This enables them to work out how much rework needs to be canied out if there is a need, in order to break even and maintain the margin. The continuous improvement process was started back in for the following reasons: Individual skills training Personal improvement plans Career devekcinent Apprai..

The above factors are drivers and the following list are the things that have been done to deal with the drivers: Investing in people AS Figure A5. The Delta innovation scheme, to encourage ideas, people who enter at least two or three ideas per month can have their names put in a draw and they could win a prize. There are two sets of objectives: CONC is measured and compared with percentage of revenue.

For example, for employee attrition, cost of training is measured. Achievement to forecast Flexibility and responsiveness to service request Ease of doing business Delivered quality Failure analysis and corrective actions Cost competitiveness Technical support. Each criterion is weighted: At each point of interface, people introduced their own scorecard. The customer owns the scorecard for example, throughout the supply chain.

The results are compiled every month to review performance and also to review overall targets set. EQA Model D2D considers this to be the missing link between continuous improvement and business results. The value of industrial visits Why was EQA used? Today, Britvic is owned by Bass, Allied Domecq and Whitbread which have a joint 90 per cent share, the remaining 10 per cent being held by Pepsi-Cola International.

Bass is, however, the major shareholder. Britvic has a turnover which exceeds f million and supplies 20 per cent of all carbonated soft drinks consumed in the UK. Britvic is part of an FMCG highly competitive and growing market. In the UK alone, more than 8 billion litres of soft drinks are sold, and this gives a market larger than wines and spirits, milk, tea and coffee. By the end of the century, this is expected to rise to 10 billion litres.

Britvic sells million litres of ready-to-drink soft drinks annually in nearly different flavours, shapes and sizes. They produce eighteen leading brands and supply more than OOO retailers. The company has, over the years, produced very successful advertising, with investment of up to f40 million per year.

Some of the most famous ads include: Effective competitiveness for Britvic is assisted by a big distribution centre National Distribution Centre based in Leicestershire, which opened in This centre can handle up to 70 per cent of the demand truck-loads of soft drinks per day. It was launched in Britvic juice is the product for which Britvic is best known, sold in pubs.

Other brands include Liptonice first carbonated ice tea launched in by Britvic Soft Drinks, Pepsi and Van den Bergh Foods; Pepsi was invented in and sold in countries around the world; R. Whites is a clear lemonade made with real lemon juice; 7UP is the leading lemon and lime carbonate brand and manages to outsell its nearest competitor by 5: The operation More than half of its employees work in operations, managing and controlling the supply chain.

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Over f 1 million is spent daily on raw materials, goods and services. There are six factories throughout the UK, each specializing in specific products of particular types of packaging. Company operates on Just-in-Time basis, working closely with all its suppliers. Some materials are sourced from around the world. Quality Assurance procedures are in place to monitor production lines which operate at a rate of cans per minute.

All production and distribution sites have I S 0 accreditation. Company has heavily invested in new technology and people skills. Employee reward systems at Britvic are linked to personal performance. Britvic operates on a more or less flat organizational structure. Its training budget annually exceeds f 1 million. He meant TQM to mean a complete change in behaviours and attitudes and the starting point, therefore, was to seek opinions and views and to generate corporate commitment: We shall become a company that aspires to match world class performers in terms of Brands, Service and Value and overall business.

It was to inject a visionary approach to strengthen their competitiveness and follow the footsteps of model organizations such as Rank Xerox and Rover Group. Britvic wanted to learn from the best. In order to tap into the various opportunities, Britvic recognizes that its culture must: Create a common understanding of problem-solving techniques and provide training to enable Britvic to improve its way of working. Encourage employees to generate ideas and implement the vast majority of them. Form functional teams and working groups to maximize progress. Understand what customers will want five to ten years from now, and how to exceed their expectations to achieve total customer commitment.

Work together to achieve quality, cost efficiency and profits. At Britvic it is strongly believed that people involvement will make the difference in succeeding with business excellence and changing the culture positively. There are already many initiatives which have been linked to the business excellence programme, such as: People involvement Investors in people Quality management system Leadership training.

It is represented by six key elements. Management leadership Human resource management Business process management Customer and market focus Quality support and tools Business results. A rating of 4 is the threshold for a sound system and is based upon the three interrelated dimensions of results, approach and pervasiveness. The diagram below provides refinement and precision in gauging performance and improvement potential. The process itself is described in Figure A5. As far as the rating scale is concerned, the scoring is done on a scale of , and conducted from the point of view of the approach, deployment and results, Figure 5.

It provides information technology hardware, software solutions and services to customers throughout the world. The organization is driven by four key committees:

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