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As turbulence in the economic and business environments continues, organisations across many industry sectors are faced

with fierce competition, shrinking operational budgets and reduced profit margins. The public sector too has been tasked to deliver greater value for tax payers, with the governments spending review in October 2010 stating that departmental budgets will be cut by an average of 19 per cent over four years.

The pressure on leaders and their teams to find more innovative ways to improve performance continues - no surprises there, but how are the more enlightened organisations facing up to this challenge? And, more importantly, where do they start from?

Benchmarking is widely recognised as a systematic process for identifying and

implementing best practice, or in simple terms it is about learning from the experiences of others. Comparing performance with organisations in either similar or dissimilar sectors enables individuals and teams to develop improvement plans and adapt specific best practices, usually with the aim of increasing some aspects of performance.

Mark Knowlton is the director of KPS Ltd., a specialist in providing support to companies undertaking improvement programmes through the deployment of lean principles, and the founder of online business improvement tool LeanBenchmark™. In this article, in which he reports on the experience of several organisations, he explains the importance of lean benchmarking and the great impact it can have on a company’s plan to achieve excellence.

How well are you

Figure 1: Example of results compared to a specific sector and all sectors.

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Lean benchmark takes this tried and tested method and applies it to a Lean Competencies framework covering leadership, customers, empowerment, communication, processes, plant, equipment and supply chain.

Benchmarking may be a one-off event, but is often treated as a continuous process in which organisations continually seek to improve their practices. Many of us are regularly benchmarking on an informal basis during normal day to day life. We do this unconsciously at work or at home where we learn by comparing our behaviour and practices with colleagues, peers, and experts within our network.

Formal benchmarking takes a more structured approach. There are two main types of formal benchmarking:

performance benchmarking and best practice benchmarking.

Performance benchmarking compares the performance level of a specific process to identify opportunities for improvement.

Best practice benchmarking, which is considered the most powerful type of benchmarking, is searching for the best way or solution by studying other organisations that are high performers in a particular area of interest (lean, for example). Benchmarking establishes the performance gap and opportunities for improvement.

Improvement teams can compare performance either by visiting an exemplar organisation or through online web based tools such as www.leanbenchmark.org

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Global Benchmarking A recent study conducted by the Global Benchmarking Network highlighted current and future trends for 20 popular business improvement tools. The research covered 450 responses across 44 countries.

Over 60 per cent of respondents stated that the main reason for benchmarking was to improve performance. Other drivers included the need to address specific strategic challenges, improve financial performance or to learn how other organisations have developed new products or gained a shift in organisational culture.

Interestingly, lean was one of the improvement tools that was analysed within research study and, whilst identified as “above average” for effectiveness, it was ranked within the bottom five in terms of future adoption. Respondents considered performance benchmarking, best practice benchmarking and informal benchmarking as the most desirable improvement tools for future adoption (you can access the full report at www.globalbenchmarkingnetwork.org).

Lean benchmarking in actionEssentially, lean benchmarking provides a ‘snapshot’ of current performance compared to other organisations. The resulting gap analysis clearly highlights the future potential and the most appropriate focus for improvements to increase performance and operational productivity.

Philipp Schuell, a lean specialist at Trumpf GmBH, used lean benchmarking at SPI lasers, a UK company the group acquired in 2008, and claimed it highlighted a number of benefits to their organisation. He says: “The benchmarking exercise gave us independent feedback on the status of our lean implementation, it also allowed

Origins of benchmarking

It has been around for over 20 years and is recognised by experts and leading organisations all over the world as a vital ingredient for sustainable, long term business success. Xerox Corporation is credited with originating the practice of benchmarking. The chief executive, David Kerns, defined benchmarking as “the continuous process of measuring products, services, and practices against the toughest competitors or those recognised as industry leaders.” Robert Camp, the logistics engineer who initiated Xerox’s benchmarking programme and who is generally regarded as the guru of the benchmarking movement, offered an even simpler definition. “Benchmarking,” says Camp, “is the search for industry best practices that lead to superior performance.”

Camp developed a very structured and thorough 12-stage approach to benchmarking which can be summarised as follows:

1. Select the subject of focus2. Define the process3. Identify potential partners4. Identify data sources5. Collect data and select partners6. Determine the gap7. Establish process differences8. Target future performance9. Communicate10. Adjust goal11. Implement12. Review and recalibrate.

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us to compare and highlight strengths and weaknesses with others in the lean community and analyse our current status.” Schuell went on to describe what was learned from the lean benchmark report: “The gap analysis offered useful suggestions for improvement projects. The assessment also focused on cultural and organisational transformation rather than just the individual uses of lean tools.”

Ailsa Kaye, managing director at Onsite Insights, which has been delivering best practice visit programmes for over 10 years, says: “Benchmarking and sharing best practices between companies has proven highly successful in improving productivity and performance. An independent survey undertaken by the DTI on Inside UK Enterprise showed that each year the visit programme delivered £135m in improved productivity.”

Genzyme, one of the world’s leading biotechnology companies, used lean benchmarking at its UK facility as part of its lean transformation programme. Lesley Coombes, lean transformation manager, explains: “The benchmarking process has enabled us to consider how well we are doing and where we need to focus next. It wasn’t just about seeing how well our score compared

Lean benchmarking provides a ‘snapshot’ of current performance compared to other organisations

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to others (although obviously this was very interesting). The recommendations within the report meant we could identify what we needed to do next. We have now started to build our lean road map with lean objectives linked directly to the business’ goals.”

Whilst lean has its origins within the manufacturing industry, it is now being applied successfully across many service-based sectors including healthcare. Progressive NHS hospital trusts have lean transformation programmes covering clinical activity, support functions and back office administration.

Dr. John Coleman, director of Alturos Ltd, a specialist in providing support to companies going through transformational change, has used lean benchmarking as part of the framework with which the company develops lean projects with clients. Dr. Coleman notes that there are two, immediate benefits of lean benchmarking: the first is the strategic view of ‘where to start in lean’ (in this sense a benchmark helps the senior management team assess the organisation’s readiness and highlights key areas for development, particularly the vital areas such as leadership and organisational culture for lean 5), the second is represented by operational and tactical views. A lean benchmark will help operational staff create specific measures for Plan-Do-Study-Act cycles, and so gauge the degree of success of improvement projects. In particular, Alturos often applies benchmarking during its initial Change Agent training programme with clients. Dr. Coleman concludes: “It is important to understand the different perspectives people have as to where the organisation is on its lean journey. This helps us adapt our approach accordingly. We encourage teams to develop their views until they have reached conclusions, based on data such as benchmark results and having

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understood how well lean principles are embedded across the organisation.”

Susan Whitaker, who heads up a lean improvement programme for the Bedford Hospital NHS trust, describes how lean benchmarking has contributed to their lean transformation programme: “When starting on a lean journey it is difficult to know how far you have come as an organisation, especially in terms of measuring the impact of lean on the organisational culture, the mind-set and empowerment of staff. A few successful projects do not necessarily mean that lean is embedded throughout the organisation - it may be that we are successfully delivering results on projects but in reality we are only tinkering around the edges with a selected few. Lean benchmarking provides a useful tool for monitoring how far you have travelled on your lean journey. It provides a snapshot at a given moment in time and helps to identify gaps, open up dialogue and refocus on your organisation’s lean or change management strategy and priorities. It is also useful to compare your organisation with others - not that it’s a competition!”

Those of us who have been involved in lean transformation for a number of years

recognise that every organisation has its own unique set of cultural and operational challenges. Whilst lean benchmarking is not the panacea for achieving world class performance it can be an effective approach to kick-start a new lean programme, reinvigorate a stalled lean journey or inspire well motivated improvement teams to strive for even greater performance.

A FRee Advanced LeanBenchmark™ account and personalised benchmark report valued at £99 is being offered to the first five LMJ readers to apply.

email info@leanbenchmark.org for a unique online voucher code.

For further information about either individual company of multi site benchmarking contact mark@knowlton.org.uk E N D

References for further readingRobert C. Camp, Benchmarking: The Search for Industry Best Practice that Lead to Superior Performance (Milwaukee, WI; Quality Press, 1989).

Various authors, Global Survey on Business Improvement and Benchmarking (Global Benchmarking Network, www.globalbenchmarkingnetwork.org).

Mark Knowlton, J. R. Coleman, T.W. Franklin and others, A Mountain Top View of Lean (Conference Paper presented at the 5th Annual International Benchmarking Conference in December 2010 in Kuwait).

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