The State of Benchmarking

Ron Webb's picture

Every few years, I lead the effort here at APQC to update the State of Benchmarking research effort. This is where we look at the discipline and activity of benchmarking. We examine how it is being conducted, which areas of the organization are being benchmarked, and how the results are used throughout the organization. Here is a link to the last report from 2009.

As I prepare for this effort, I always like to gather some general voice of customer information on benchmarking to help me scope the research effort. I like to reuse previous questions to measure certain issues over time, but I also like to address new issues each time.

What I have learned so far is:

  • benchmarking is being used now more than ever;
  • it is being used in many ways; and
  • it is still a tool that business leaders value highly.

The big question this raises for me, and the one I hope you can help me better understand, is “what exactly do you call benchmarking?”.

I think APQC’s favorite definition of benchmarking still holds very true.

Benchmarking is the practice of being humble enough to admit that others are better at something and being wise enough to learn how to match, and even surpass, them at it.

But within that definition are a lot of possible variations on exactly what activities occur, what rigor is applied to the benchmarking activity, what output is expected, and how that benchmarking information is used. Here are some general statements I’ve learned over the last several weeks as I talk to anyone who will listen regarding this topic. Please comment and let me know your thoughts.

  • Interest in benchmarking is growing. We are seeing a pretty significant increase in individuals and organizations that learn about and/or are trained on benchmarking.
  • There are very few dedicated benchmarking functions within organizations today. A lot of people do benchmarking, but there isn’t that centralized or dedicated function that executes benchmarking on behalf of the organization, group, or division. It is a part of everyone’s job.
  • Benchmarks and comparative metrics are still important. Organizations still want to understand how their processes perform against relevant peer groups (usually industry peers) in the core enterprise areas such as supply chain/operations, finance, IT, and human resources.
  • Great rigor is not applied to benchmarking activities. Although we have seen significant interest in benchmarking training, most organizations are taking a pretty informal approach. They may use great rigor when doing a metric benchmarking project to compare costs or cycle time, but for the qualitative information, they rely heavily on internet searches, informal discussions with colleagues, and presentations they see at conferences to learn what others are doing.
  • Benchmarking is a tool being used within the business planning cycle. I have heard a lot of variations of this story: we are training everyone on the basics of benchmarking, forcing them to identify the key issues hampering their performance as a business unit, and expecting them to go out and find answers to overcome these performance issues.

Give me your take on benchmarking and these key concepts. Look for the latest installment of our State of Benchmarking research later this year. Also, if you want to stay updated on this project as it moves forward, keep an eye on APQC’s Website or follow me on www.twitter.com/rwebb_apqc.

2 Comments

Anonymous's picture
Good article. We, at Lycoming continuously do the in-bound and out-bound benchmarking. The activities increased especially after Lycoming winning the Shingo Silver medallion in 2008 and Shingo prize in 2010. As many would know, the Shingo prize is like winning a Nobel prize in Lean manufacturing. Jay Mankad Director of Quality Lycoming Engines
Ron Webb's picture

Jay,

We are very familiar with the Shingo prize here at APQC. It is a great accomplishment and you should be proud. We are glad to see that benchmarking plays a key role in continuous improvement at Lycoming.

I would love to have you present your story to our manufacturing community of practice if you are interested. From that presentation, we may be able to develop a case study to help you tell your story to others as they site visit you to learn about your journey to win the Shingo prize. Something for which I'm sure you get a lot of requests.

Let me know if you are interested and we can chat.

 

Ron Webb
APQC