Benchmarking really exciting futures

Benchmarking allows you to know how good you really are.

What is benchmarking and how to get started?

The term benchmarking was first used by cobblers to measure people’s feet for shoes. They would place someone’s foot on a bench and mark it out to make the pattern for the shoes. If you are not benchmarking and comparing important aspects of your business performance with that of your competition. You will soon find yourself falling behind rather than forging ahead. Your customer base will start to desert you because of a better experience they find elsewhere. Consequently lowering your revenue and profits.

Are you are regularly comparing your performance with that of your competition. Look for such things as gross profit margin, business efficiency, stock turnover, wages and customer satisfaction, Because if you don’t you can quickly find yourself struggling. Benchmarking main benefit is that it can quickly value add, simply because it compares to others your actions and experiences.

Benchmarking allows businesses to develop plans on how to make improvements or, adapt specific best practices since Benchmarking uncovers them. Usually benchmarking has the aim of increasing awareness while addressing aspects of your performance. Benchmarking may be a one-off event but is often treated as a continuous improvement process due to the fact that businesses continually seek to improve their practices.

Typical benchmarking areas

  • Customer service.
  • Pricing strategies.
  • Operational practices.
  • Process management.
  • Sales performance.
  • Marketing practices.
  • Innovation.
  • Product sources.
  • Inventories.
  • Financial.
  • Product performance.
  • Strategic direction.
  • Functional areas of the business.
  • Best-of-breed.
  • Energy usage.

Benchmarking is the process of comparing a business processes and performance metrics to industry best and/or best practices from other industries. Dimensions typically measured are processes, time, cost and quality because these are the important levers used for improvement. Improvements from learning mean doing things better, faster, and cheaper. Benchmarking has been called a relentless strategic discovery process. It is a search for identification, understanding, adaptation and implementation of solutions leading a business to far superior performance, All Benchmarking should be focused on finding and maintaining best practices.

Benchmarking is a process of discovery

Benchmarking has been called a relentless strategic discovery process. It is a search for identification, understanding, adaptation and implementation of solutions leading a business to far superior performance, All Benchmarking should be focused on finding and maintaining best practices.

The first thing benchmarking involves is identifying the best businesses in your industry. It can also be used for any other industry where similar processes exist because it is the improvement in processes that you are looking to discover. Then comparing the results and processes of those studied to your own results and processes. You learn how well they perform and more importantly, how they do it.

Benchmarking is most used to measure performance using a specific indicator, Such things as cost per unit of measure, productivity per unit of measure, the cycle time of x per unit of measure or defects per unit of measure. This results in a metric of performance that is then compared to others. If you are feeling frustrated with your business, benchmarking might be your answer because it will give you better information on which to make decisions.

People don’t know what they don’t know and as a result, it brings out their frustrations. You rarely change things by defending and fighting the existing way you do things. Sometimes you know what you need to do, but don’t know how to do it.

The following is an example of a typical process

Also referred to as ‘best practice benchmarking’ or ‘process benchmarking’, it is a process used in management. A process in which managers evaluate various aspects of their processes in relation to best practice business processes. The key trend you will notice amongst smaller organisations is their lack of time to undertake the process well, because they have not looked at the benefits. They are not able to reap the full benefits from a systematic approach to improving their business. Sometimes they undertake quick Benchmarking without properly following a methodology, as a result, this can reflect poorly on Benchmarking.

  1. Identify your problem areas.
  2. Look at other industries or businesses that have similar processes.
  3. Identify organisations that are leaders in these areas.
  4. Survey organisations for measures and practices.
  5. Visit the ‘best practice’ companies to identify leading edge.
  6. Implement new and improved practices.

Benchmarking has a big future

Informal benchmarking will continuously be used, enhanced by new social media and other technology. Social media can help you to establish ‘world best practices’ by helping you to find benchmarking partners for formal benchmarking of some of the best businesses in the world. Why are you doing what you do without measuring your performance against others?

Structured your efforts could well need to be given more emphasis. Thanks to social media, ‘The Internet of Things’ and the global marketplace, interaction in order to learn and share details of best practices that can be implemented through effective and learned change management, is now a cheaper reality.

Emphasise the role of people in benchmarking because it is people who need to access others’ knowledge and experiences. They need to do it such a way that they can adapt what they find to their specific needs, culture and systems. Technology still can’t do everything. Benchmarking can help smaller businesses with social, economic, political, environmental or technological changes. Things that are likely to influence a wide range of their activities, processes and perceptions.

Examine the potential use of rapidly evolving social networking technology, combining some of the features of social networking.  Examine the integration or connectivity of benchmarking and other improvement tools and approaches such as innovation. Business excellence  and best practices could be leveraged to improve your business. Businesses working in networks and clusters are better positioned to take advantage of benchmarking.

Working in isolation is becoming too difficult

Some businesses and organisations are coming together in Clusters for commercial or other reasons. This is an ideal opportunity for them to benchmark each other by sharing best practices and to improve together. Businesses working in isolation generally lack the motivation and imagination so necessary in good benchmarking. With the advent of ‘The Internet of Things’ more opportunities are being opened up than any one business can handle. Benchmarking will help you to make wiser choices.

Find opportunities in your mistakes

If your customers don’t like your product and your sales aren’t heading in the direction you’d like. Benchmarking will help you learn from it. Commit to some benchmarking and find out why. Benchmark your customer service with an expectation of improving revenue. Feedback from customers can be extremely helpful.

Think of benchmarking as a huge opportunity for you to grow your business in a way that really matters. Insights revealed from benchmarking offer unprecedented opportunity to make discoveries and deliver better services and customer experiences.

Find opportunities in ‘big data’

Business innovation demands insights into how to do business and understand the marketplace better than your competitors. Evolve with advanced benchmarking because it will keep up to and be doing better than your competitors. What opportunities could your business drive if the right data was surfaced at the right time? How much more efficiently could your operations perform?

The potential for transformation with insights gained by applying benchmarketing to big data is huge. The ‘flooded rivers’ of data, information and knowledge span every industry and you need to be able to gather better , more useful bits than competitors. For many early adopters, big data is already reshaping their businesses. Through new discoveries, improved products and services or better customer experiences. Moving from traditional business intelligence practices to more advanced analytics, it enables better benchmarking to reveal better insights.

Don’t underestimate the value of your culture

Define your business culture according to your personal values, beliefs and attitudes and benchmark them against your competitors. Don’t just organise your culture according to what other people or your competitors do, or what you ‘think’ will be successful. Once you start benchmarking you will uncover opportunities to make your culture and values  a competitive advantage.   Creating your business according to your own values is likely to keep you happy, and it also lets other people know the type of business you run.

Create your business according to your own values because this can help you to stand out from the crowd. This will not only keep you happy, it also lets other people know the type of business you run. Make a point of including the benchmarking of the marketing of your culture and values, to further differentiate your organisation.

An important downside with a huge benefit

A key difficulty faced in benchmarking is to encourage businesses and small non-profit organisations to start undertaking the work required. Most are afraid of the potential consequences and wasting time and valuable resources and of losing their competitive advantage or intellectual property. These people ignore the benefits that can far exceed any risk of potential losses.

In many cases, businesses and non-profits really ‘don’t know what they don’t know’ because of their lack of understanding about benchmarking. They have not experienced the far-reaching potential of benchmarking. Those who undertake to benchmark represent only a small percentage of businesses, they are only the tip of the iceberg. This, of course, affords the opportunity of progressive businesses to improve their competitive advantage.

Most businesses see social media and technology developments generally as enhancing best practice. They expected software tools to be more readily available to analyse and report information. The cloud and analytics are playing a major role in simplifying methodologies while substantially reducing the costs involved.

Benchmarking is very useful when buying and selling a business

It makes great sense to compare the performance of a business you are thinking of buying with others in the same industry.  Compare the operating results of a business you are considering buying with that of other businesses. This provides valuable information in assessing the business’s viability and value.

This practice is also invaluable if you are looking to sell your business, simply because you want to get the best deal and find the business with the greatest potential. By knowing what the best-performing and most profitable businesses are achieving in an industry or a given area, you are in a stronger position. You can work on your business to make it a more attractive proposition for a potential purchaser. Particularly if they have options for other businesses to purchase.

Quotable quotes

“You build benchmarks like you build a house. One brick at a time”. Peter Sergeant

“I tell young entrepreneurs to use the leader in their industry and as a benchmark as they work to create their own brand. Don’t look at what your competition is doing. If you emulate the leader in your industry, you will achieve a higher level of engagement with consumers and make their buying experience richer”. Steve Stoute

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