Getting Started with Benchmarking

An excerpt from The Handbook for Quality Management (2013, McGraw-Hill) by Paul Keller and Thomas Pyzdek

The essence of benchmarking is the acquisition of information. The process begins with the identification of the process that is to be benchmarked. The process chosen should be one that will have a major impact on the success of the business. The rules used for identifying candidates for business process reengineering can also be used here (see Chap. 2).

Once the process has been identified, contact a business library and request a search for the information relating to your area of interest. The library will identify material from a variety of external sources, such as magazines, journals, special reports, etc. You should also conduct research using the internet and other electronic networking resources. However, be prepared to pare down what will probably be an extremely large list of candidates (e.g., an internet search on the word benchmarking produced nearly 20 million hits). Don’t forget your organization’s internal resources. If your company has an “intranet,” use it to conduct an internal search. Set up a meeting with people in key departments, such as R&D. Tap the expertise of those in your company who routinely work with customers, competitors, suppliers, and other “outside” organizations. Often your company’s board of directors will have an extensive network of contacts.

The search is, of course, not random. You are looking for the best of the best, not the average firm. There are many possible sources for identifying the elites. One approach is to build a compendium of business awards and citations of merit that organizations have received in business process improvement. Sources to consider are Industry Week’s Best Plant’s Award, National Institute of Standards and Technology’s Malcolm Baldrige Award, USA Today and the Rochester Institute of Technology’s Quality Cup Award, European Foundation for Quality Management Award, Occupational Safety and Health Administration (OSHA), Federal Quality Institute, Deming Prize, Competitiveness Forum, Fortune magazine, and United States Navy’s Best Manufacturing Practices, to name just a few. You may wish to subscribe to an “exchange service” that collects benchmarking information and makes it available for a fee. Once enrolled, you will have access to the names of other subscribers—a great source for contacts.

Don’t overlook your own suppliers as a source for information. If your company has a program for recognizing top suppliers, contact these suppliers and see if they are willing to share their “secrets” with you. Suppliers are predisposed to cooperate with their customers; it’s an automatic door-opener. Also contact your customers. Customers have a vested interest in helping you do a better job. If your quality, cost, and delivery performance improve, your customers will benefit. Customers may be willing to share some of their insights as to how their other suppliers compare with you. Again, it isn’t necessary that you get information about direct competitors. Which of your customer’s suppliers are best at billing? Order fulfillment? Customer service? Keep your focus at the process level and there will seldom be any issues of confidentiality. An advantage to identifying potential benchmarking partners through your customers is that you will have a referral that will make it easier for you to start the partnership.

Another source for detailed information on companies is academic research. Companies often allow universities access to detailed information for research purposes. While the published research usually omits reference to the specific companies involved, it often provides comparisons and detailed analysis of what separates the best from the others. Such information, provided by experts whose work is subject to rigorous peer review, will often save you thousands of hours of work.

After a list of potential candidates is compiled, the next step is to choose the best three to five targets. A candidate that looked promising early in the process might be eliminated later for any number of reasons, including poor performance, a lack of commitment to sharing information or practices, low availability, or questionable value of information (Vaziri, 1992).

As the benchmarking process evolves, the characteristics of the most desirable candidates will be continually refined. This occurs as a result of a clearer understanding of your organization’s key quality characteristics and critical success factors and an improved knowledge of the marketplace and other players. This knowledge and the resulting actions tremendously strengthen an organization.