Process Benchmarking

Definition:

Process Benchmarking is the comparison of practices, procedures and performance, with specially selected benchmarking partners, studying one business process at a time.

It answers the question:

What is best practice in this topic, where are the best practitioners and what can we learn from them?

Characteristics:

• Focus: a single process at a time.
• Partners: not chosen until after undertaking a thorough analysis of your own practices and performance.
• Form of comparison: whenever possible, by actually visiting the partners' places of business.
• Confidentiality: the identity of partners is known, and the exchange of information is protected by a code of ethics.

Method:

1. Choose a process to study: in process benchmarking, one process at a time is studied. If you want to study more than one process, it is best to set up separate studies for each process. Examples of processes we have helped organisations to study include customer service delivery, contract management, file processing, accounts payable, payroll processing - the list is endless.
2. Form a team: this should include representatives of all the key stakeholders in the process being studied.
3. Develop a baseline for comparison: develop an intimate knowledge of your own practices and performance. This may be via flow charts, identification of problem areas, cause-and-effect analysis etc.
4. Research and select partners: your partners should be organisations that are non-competitors and not necessarily in the same industry as you. They should have some demonstrated excellence in a process analogous to the one you are studying.
5. Compare processes: via site visits or detailed discussions, exchange information with your partners that allows both you and each partner to gain some new ideas about how the process is carried out, its performance results and what enables good performance.
6. Plan for change: as a result of what you have learnt from your partners, identify which ideas you can adopt or adapt to improve your process, and how to implement them.
7. Implement new process: put the ideas in place, monitor their success and get ready to re-benchmark them at specific intervals.

Advantages:

• Allows a focus on something that will make a significant difference to organisation effectiveness.
• Allows a customer focus as well as an efficiency focus.
• Enables a detailed examination of the drivers for success and efficiency.
• Change arising from process benchmarking is generally readily accepted by employees and management.
• Creates opportunities for both individual and organisational development.

Disadvantages:

• If done correctly, takes more time than you think it should
• Can use significant staff resources.

Pitfalls to Avoid:

• Rushing to compare with partners without an intimate knowledge of your own processes.
• Picking partners for convenience rather than for excellence.
• Not allowing enough time for the methodology to work properly.
• Selecting processes that do not have sufficient potential for improvement.

Outcomes:

• Effectively implement major improvements to the process that was benchmarked.
• May lead to other process benchmarking studies of other business processes.

Optional Approaches to Process Benchmarking with Benchmarking PLUS:

Option 1: One-on-One

Benchmarking PLUS will work with you to help identify the best topics to benchmark, train a team of your employees in how to undertake process benchmarking and help you gather the baseline data you will need in order to make comparisons with partners. We help you research, select, approach and negotiate arrangements with benchmarking partners, provide you with tools for gathering data from partners, and analyse what you observe. We help you put together a change strategy to implement the solutions you develop as a result of the visits.

An example from our casebook We helped a major health insurance company to study the Claims Processing function, working with a team of their own employees to analyse their current processes and practices, and then locating a number of benchmarking partners with whom they compared data. Several important changes to their process were implemented as a result.

Key benefits of the One-on-One option:

You are able to leverage off the experience of the principals of Benchmarking PLUS, to:

• Complete your benchmarking project in the shortest possible time;
• Choose the most appropriate benchmarking partners;
• Gain the maximum possible benefits;
• Foresee and avoid any major risks of an unsuccessful project.

Option 2: Benchmarking User Groups (BUGS) "Private"

This is a development of the One-on-One option, except that it enables you to set up several benchmarking teams to study a number of different processes at once.

There is a choice of either bringing the teams along in lock-step or allowing them to proceed at their own pace.

An example from our casebook: A large Victorian government department engaged us to train the entire staff of the Corporate Services Division in process benchmarking. We then worked with nineteen separate project teams to undertake baseline process analysis and easily identified improvements. Six of these projects then continued on to benchmark externally with non-government organisations.

Option 3: Benchmarking User Groups (BUGS) "Public"

Under this option, a group of teams from several different organisations come together, to study either the same topic or completely different topics. Over a period of eight months they meet monthly; individual progress is discussed and the work to be completed before the next meeting is carefully outlined. Under this process they receive training on a "just-in-time" basis and proceed all at the same pace.

An example from our casebook: We assisted a group of eight teams from different industries (varied from manufacturing to legal services and including both the public and private sectors) to conduct a process benchmarking project on a topic of their choosing. Topics studied included production planning, client communication, employee induction, materials management and order management.

Key benefits of BUGS (both "private" and "public" options):

• It is an extremely high value-for-money way of accessing the expertise of Benchmarking PLUS.
• You learn from the experiences of the other participating teams.
• This option caters more easily to delivery of consulting advice from a distance.
• Also caters to members of industry groups, special interest groups or regional offices of large organisations.

Related Techniques:

Process Benchmarking can be preceded by Performance Benchmarking.

It can also be preceded by a Benchmarking Strategy establishment, or followed by a Benchmarking Strategy Review process.

© Benchmarking PLUS 1999. Benchmarking PLUS, Level 6, 433 Little Collins Street, Melbourne, VIC 3000, Australia.  Tel: +61-3 (03) 9600 3216.  E-maiI: info@benchmarkingplus.com.au.

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