The comparative edge

Benchmarking means identifying who's best at something (in your company, in your industry, in the world), not by guesswork or reputation but by the numbers.

Sharing "best practices"means identifying who is doing the process best and then adapting their ideas to your own operations.

There can be as much as a 10-fold difference in the quality, speed, and cost performance of a world-class company versus an average company.

The aim of benchmarking is to copy or improve upon best practices.

This will result in differentiating your company from your competitors.

Acquiring best practices Some companies benchmark only the best companies in their industry.

Other companies benchmark outside of their industry as well.

Competitive benchmarking is based on comparisons with a direct industry competitor.

Functional benchmarking compares areas such as administration, customer service, and sales operations with those of outstanding firms in any industry.According to a company executive,"The further away from our industry we reach for comparisons, the happier we are.We are seeking competitive superiority, after all, not just competitive parity."Here are some examples:Motorola needed to improve its cell phone order processing turnaround.

It selected Domino's Pizza to benchmark.

Remember the 30-minute delivery guarantee.

Motorola shaved days off its processing time.

Xerox visited L.L.

Bean in Freeport,Maine to find out how Bean's warehouse workers managed to "pick and pack" items three times as fast as Xerox workers.

On later occasions, Xerox benchmarked American Express for its billing expertise and Cummins Engine for its production scheduling expertise.

All forms of benchmarking are best applied in situations where a long-term program of continuous improvement is needed.

Benchmarking for small business These are large companies, you say but what about small businesses? Benchmarking can also be applied to small businesses.

For example: At a large dry cleaning company in Sacramento, where I had a previous affiliation, we wanted to gain a competitive advantage in a new business segment valet pick-up and delivery services at offices, hotels, and homes.

Through our industry trade publications we located other companies that were offering valet services at offices and homes.We used the benchmarking concept by visiting valet cleaners in Orange County, Santa Barbara, Los Angeles, and San Diego, Calif.

Also,we contacted a company in Florida.

In each case,we were not in direct competition so we could be open in our discussions.

During the visits we shared how we operated and brainstormed additional ideas.

The information we obtained resulted in the acquisition of best practices that we implemented.

We clearly differentiated our business and had a competitive advantage that resulted in significant market share in our new business venture.

The steps of benchmarking Benchmarking consists of four basic steps: * Planning.

Identify the product, service, or process to be benchmarked and the firm(s) to be used for comparison, determine the measures of performance for analysis and collect the data.

* Analysis.Determine the gap between the firm's current performance and that of the benchmark firm(s) and identify the causes of significant gaps.

* Integration.

Establish goals and obtain the support of managers who must provide the resources for accomplishing the goals.

* Action.Develop cross-functional teams of those most affected by the changes, develop action plans and team assignments, implement the plans, monitor progress, and recalibrate benchmarks as improvements are made.

We now work very hard to produce products and services which provide total customer satisfaction.

This customer satisfaction mentality has implications for benchmarking a means by which we can compare our processes, products, and services with the world's best.

The measurements and parameters that we use to compare ourselves against others are those which are most important to our customers.

In addition,when we determine which other organizations we want to compare ourselves against,we select these benchmarking partners according to who our customers view as "world class" or "best of breed." One achievement level that we set our sights on is being "best at everything we do." Benchmarking is the tool that tells us not only how good is best at this point in time, but it frequently tells us who is currently best and how those best groups were able to accomplish their admirable levels of achievement.

One must be prepared to mount a resourceful and committed search for best practices partners.

But how can a company identify best practice companies? A good starting point is asking customers, suppliers, and distributors whom they rate as doing the best job.

To keep costs under control, a company should focus on benchmarking those critical tasks that deeply affect customer satisfaction and company cost, and where substantially better performance is known to exist.

It is important to note that you can't just impose a best practice.

It has to be adapted to your company's own style.

Bob Jacobson is a business consultant to small and mid-size businesses in Reno- Sparks and in Northern California.

Bob is a faculty member at the University of Phoenix.

He can be reached by e-mail at RJBusMgt@ charter.net .