Always Look Outside Your Industry When Benchmarking
Benchmarking is the practice of identifying companies with the best
practices in a particular endeavor. Business managers usually study
these companies and discern what makes them better. Subsequently, they
plan and implement strategies that close the gap between the company's
performance and their own. Six
Sigma Benchmarking is still a relatively new concept. Companies only
initiated benchmarking on a wide scale in the early 1990's, according to
"Reference for Business." That was when the American Productivity and
Quality Center (APQC) and 86 companies established the International
Benchmarketing Clearinghouse, which helps companies adopt best practices
within or outside their industries.
Starting Out
The best way to start benchmarking is to establish a partner within the Benchmarking Clearinghouse. This group represents members from all different industries, institutions and government agencies. Determine what you want to benchmark: Budgeting, finance, information technology, facility management or competitive analysis, for example. The partnership arrangement is usually reciprocal in nature. Target companies will gain insight into the operations of the company initiating the benchmarking. Essentially, they also have benchmarking needs. Therefore, most corporations choose a partner that may benefit from one of their best practices. Companies that benchmark marketing should consider benchmarking elements that are most important to their customers, such as quality, service and pricing methods.
Establishing a Team
Most benchmarking companies assign people from different functional areas to study best practices from other companies. For example, a manufacturer may send a team comprised of a plant manager, engineer, finance professional and product manager. The partner company does the same. Representatives from both companies then spend time studying each others operations.
Collecting the Data
Partners usually exchange information through reports, emails and CD-ROMs. The challenge is when companies try to do benchmarking outside a partnership arrangement. Certain activities are illegal, such as taking pictures of a competitor's manufacturing facility by air. Search the Internet for articles written by high level executives on their corporate practices. You may try purchasing a competitor's garbage without revealing an identity. Also, talk to common suppliers, customers and vendors.
Ongoing Communication
Follow up with partners after the benchmarking has been completed. Share information through newsletters, bulletins, conference calls and reports. Assign a specific employee to research companies outside the Benchmarking Clearinghouse. Establish a library of information from other companies. Target companies with similar advantages to those of major competitors. For example, a high tech company may study the engineering practices of a consumer products company. They may then use the techniques to compete with a competitor known for selling high quality products.
Categories: Six Sigma Certification