Benchmarking helps you and your business identify processes, products, and functionalities that are both critical and practical. It involves comparing your company to either itself (internal benchmarking) or another (external benchmarking) in an effort to gain competitive analysis. Such information can then be utilized to discover industry trends, set goals and areas for growth, and gain insight on competitors.
Benchmarking results in insights that can impact the actions you are taking for continuous improvement of your products and processes.
Which Widget Works Well?
Recently you’ve wondered how your business could improve and how other manufacturers are doing with their widget production, even though you have years of experience and your business is doing well.
Your team produces 100 blue widgets per hour. Doing so takes three employees, each at a salary of $15 per hour. The widgets cost ten cents to make. You sell them for $3 apiece.
Is this a good price? Is an hour to make 100 blue widgets good timing? What innovations are others making to their widgets? What is the most effective way to get answers to your qualitative and quantitative business questions, and make sure you are enlisting best practices for success? In order for a business to relate within their industry, they often dissect their own processes, or research other companies doing the same or similar things. Start doing your benchmarking homework!
An Internal and External Look
Internal benchmarking evaluates processes within and limited to what your company is doing. With control over the inputted data, internal benchmarking allows for discovery of processes that can be improved. How do sales numbers compare between your yellow and blue widgets? Does the blue widget team produce more or less than the yellow widget team? Utilize internal benchmarking to give your business a little ‘self’ reflection.
External, or competitive benchmarking, compares your business practices against others in the industry. What are the reviews about your competitors? What are their processes? Your yellow widgets weren’t well received in the market, however, your competitor is selling them faster than they can be produced. Measuring the difference in widgets, the manufacturing process, and the selling process as compared to your competitor may provide information that will help you and your yellow widgets going forward.
Benchmarking 101
When evaluating your company, whether internally or externally, there are four main benchmarking categories to consider.
1. Performance Benchmarking – This is often the first step in uncovering how a product, service, operation, or process is performing against your own criteria or that of your competitors. It assists in:- Determining growth potential
- Identifying gaps and weaknesses
- Developing metrics
- Recognizing threats
Is the production of 100 widgets per hour using three employees a reflection of good or poor performance?
2. Product Benchmarking – Whether your company manufactures a physical product or performs a service, benchmarking at this level allows you to see how things are doing. This step involves market focus as related to a narrowed or specific product or service.- Is the product or service meeting user expectations?
- How is the performance as compared to that of peers and competitors?
What do the reviews indicate related to widget usability?
3. Process Benchmarking – This provides your company with the opportunity to see how it compares in operational performance per best practices and/or peers within the industry. It gives feedback on short and long-term improvement potentials on a specific process and where you need to focus your energy. Evaluating your operations in this way will engage your business in:- Outlining goals and roles
- Determining and encouraging areas of improvement
- Seeing how your business compares to peers and leaders
- Stimulating ways to fill gaps
What processes can you enhance to increase your production to 150 widgets per hour?
4. Strategic Benchmarking –This level of benchmarking focuses on future goals and ways to achieve them. It compares what your company is doing to what has proven successful in the industry. Obtain a big picture, future-focused perspective with strategic benchmarking by diving into forward thinking while considering the past.- What processes and initiatives have been successful?
- Can your business embark on a chosen or desired initiative with good result?
- Which areas are foremost to strategize while keeping best practice in mind?
Where do you see your widget in six months? Is there a feature that can be added to better its performance? What would be the best next color choice?
Expert 'Benchmarkers' Can Help
Rest assured that there are resources that can help your business to regularly evaluate and improve systems, products, and overall business practices. Oftentimes, a new perspective from an outside entity can reveal things that your team has unintentionally disregarded. Enlist a partner provider to help determine the current state of your business and ways to get things where you want them to be. With the ability to access industry professionals and conduct one-on-one interviews, knowledge gathers are at the ready to assist you in gaining perspectives, information, and solutions.
How do other companies manage their widgets? The ‘Widgets-R-Us’ website sells them at a two for one value. How can you lower the time and expense involved in your widget production to promote a package deal? Partner with a team who will assist you with your benchmarking reviews and strategies, allowing you to focus on the here and now, and the implementation of new initiatives.
The Big Reveal
Your widgets are flying off of the shelves and your company couldn’t be happier! Taking action with benchmarking is producing bottom line results, allowing you to improve your systems, interest your consumers, and entice your competitors.
Are you producing enough, high-quality widgets with the best utilization of your equipment and your employees? Comparing your business process and practices and how they perform both internally and externally can reveal more than you anticipated. Enlist benchmarking to help get your measures for success.
