What Can Be Benchmarked?

Introduction:

It can be argued that only two main areas can be benchmarked - quality and productivity—as time will always be a part of either quality or productivity. Benchmarking must be a continuous process with the extent and scope of the project being dependent on the resources that the company has available.

Types of benchmarking and what can be benchmarked:

A superior level there are three answers to the question ‘what can be benchmarked?’ These three answers are

1. Quality  

2. Productivity

3. Time.

However, it can be argued that only two main areas can be benchmarked - quality and productivity—as time will always be a part of either quality or productivity. When we have chosen time, despite this fact, as a special area which can be benchmarked, the reasons are the following:

1. The time concept is simple and easy to understand and is thus easily accepted by all employees.

2. The time concept is by definition related to processes and will thus automatically force the participants to focus on processes and process relations. Consequently, it will, by definition, invite a better co-operation between processes and departments.

3. Reduction of times (e.g. times of delivery) means increased productivity and increased quality perception by customers.

Times used for benchmarking: Examples of times used for benchmarking are listed below:

1. Turn-around times, e.g. time from order taking to delivery.

2. Time of development for new products.

3. Installation time.

4. Time for debugging.

5. Time for handling of claims.

6. Time for handling of inquiries.

7. Time for dealing with employees’ suggestions for improvements.

8. Punctuality of deliveries in percentage terms.

A common productivity measure:

The application of this productivity measure in connection with benchmarking is often applied by analyzing the results of the following three steps:

1. The ordinary net profit per employee is calculated as described above. The potential benchmarking partners can be identified by means of this measure.

2. A breakdown of the ordinary net profit per employee into its components is made, i.e. the following key figures are calculated:

a. turnover per employee

b. purchase per employee

c. costs per employee

d. interest per employee

e. Depreciation per employ

3. A further breakdown of the key figures of step 2 is made, if possible. The aim is to minimize the number of benchmarking partners further and to increase the possibility of identifying the relevant processes for benchmarking.