Best Practices in Developing the Benchmark Function
Understand optimal structures for benchmarking, successful approaches to prioritizing research requests, methods for building buy-in for benchmarking as a concept and ways to track process improvements resulting from benchmarking efforts. Learn how successful companies structure, launch and maintain high-performing benchmarking efforts. This Best Practices Benchmarking® Report includes best practices to help companies create optimal structures for benchmarking, successful approaches to prioritizing research requests, methods for building buy-in for benchmarking as a concept and effective ways to track process improvements. When well executed, benchmarking initiatives help companies compare their processes, identify gaps in performance and discover proven tactics for closing those gaps. Successful companies harness the power of benchmarking to lower cost positions, increase productivity and drive greater competitiveness.
Best Practices, LLC was recently cited as benchmarking experts in Treasury & Risk Management magazine.
Jonathan Tanz, director of research at Best Practices LLC, a benchmarking and consulting firm in Chapel Hill, N.C., says that a typical benchmarking costs $70,000 to $150,000, while a high-end one might cost as much as $300,000. But the potential savings that can be identified by a benchmarking dwarf those costs, he says. “Typically, finance organizations can save 20% to 30% of their total costs. That comes in at about $3 million to $5 million of annual savings per $1 billion of revenues,” Tanz says. “The ROI on benchmarking is absolutely clear.”
He adds that the potential return from benchmarking is related to its scope, with work on broad-based processes likely to produce bigger savings. “If you have processes like order management, sales contracting and credit that cut across multiple functional silos, you have a huge opportunity not just for cost savings, but also improvement in the business itself and the speed at which business can happen,” he says.
Business Operations > Benchmarking and Quality
Pharmaceutical; Consumer Products; Telecommunications; High Tech; Manufacturing; Aerospace; Financial Services; Service; Electronics; Internet
AstraZeneca; Eastman Kodak; PSEG; BT Group; IBM; Raytheon; CSAA; Intel; Department of Veteran's Affairs
Best Practices, LLC assembled a benchmark class of nine world-class companies to answer the following questions:
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- Creating a Benchmarking Infrastructure: What is the optimal structure for benchmarking? What benchmarking models will yield the best results?
- Building Buy-In for Benchmarking: What tactics are successful for launching or introducing the benchmarking function to win organizational support? What are the best methods for continually promoting the benchmarking function?
- Prioritizing Benchmarking Requests: What tactics are used to match the level of service provided by the core function to the importance of an internal benchmarking request? What evaluation factors are effective for determining if external requests have significant value and are worth pursuing?
- Managing Benchmarking for Optimal Business Results: What processes are effective at transforming research findings into process improvements that drive superior financial and operational performance?
- Leveraging Technology To Enable Benchmarking: What technology and approaches are advantageous for archiving best practice knowledge within an organization? What self-serve benchmarking resources should be available to employees?
Companies seek to tap into the great potential that benchmarking offers as a tool while avoiding costly pitfalls. Consequently, companies seek to identify optimal methods for structuring, launching and maintaining a high-performing benchmarking function. Through research with the benchmark class, Best Practices LLC analysts identified critical success factors for successful benchmarking efforts. Top recommendations from this study are to:
Develop a plan for the launch and ongoing promotion of the benchmarking function to generate widespread support. To gain support for benchmarking efforts, savvy companies create a launch and ongoing communication plan. This report looks at the elements of such a plan as well as critical success factors for building support for the benchmarking function.
Differentiate benchmarking service levels based on opportunity’s alignment with company goals and in order to effectively allocate resources. Successful benchmarking functions align resources with the strategic goals of the company. Projects and improvement activities that fit with company needs receive high priority in terms of money, time, focus and expertise. This report includes details on the processes that top companies use to prioritize internal and external requests for benchmarking resources.
Embed implementation planning and management into the benchmarking methodology to drive performance improvements. Companies need to implement top findings for a benchmarking effort to be considered a success, but implementation represents one of the trickiest aspects of benchmarking. The report details critical success factors for embedding implementation planning to benchmarking efforts.
Download the free report summary to learn more about the key project findings.
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