Benchmarking is the process of drawing meaningful comparisons between a company’s performance and the performance of identified best practices. For many companies, these known best practices can become a beacon for continuous improvement, pointing employees to better ways to get things done.
Internal benchmarking is looking within a firm to find your own pearls of wisdom to leverage across the organization rather than looking outward to other companies or other industries. Today’s companies want a quick return on investment, and internal benchmarking can help reduce the amount of time to do benchmarking. In addition, it is often much easier for employees to buy in to a best practice when they can see the practice being demonstrated within their own company.
Internal benchmarking goes beyond helping to identify best practices; it can also foster a culture of learning and innovation spurred on by internal competition. A company with a healthy sense of competition among divisions or business units will be a company that experiences innovation at all levels. Internal benchmarking also helps a company promote idea sharing and increased communication among departments and business units.
Companies can identify internal best practices from multiple sources. This is especially true for midsize and large companies with multiple divisions, warehouses, or business units. For example, if a company is benchmarking a customer fulfillment process, employees involved in the effort may look across various warehouses to identify which one of the warehouses performs the best.
At most companies, internal best practices remain unidentified simply because methods for extracting and communicating these potential best practices don’t exist. To be effective at internal benchmarking, a company needs to implement a process designed to promote idea sharing. Here are four simple steps to help you get started:
1) Identify which processes to benchmark. For example, receiving, picking, or order management.
2) Organize the benchmarking effort. This can be as simple having one or two people from each warehouse conduct one- or two-day site visits at each of your warehouses with the goal of discovering the pearls of wisdom each warehouse might have.
3) Prioritize the ideas the team finds and turn them into projects with timelines for adopting the best practices you have found. This is important because your team will likely find several areas of improvement, and prioritizing ideas into a project will help you realize your improvements faster than taking a shotgun approach.
4) Implement and begin to realize the benefits. In the most basic terms, if warehouse X is identified as the best at receiving, then your team should spend time learning the underlying circumstance that propels excellent performance in warehouse X and begin to translate those practices to the circumstances in the other warehouses.
Process performance improvement can be a long and difficult journey. Internal benchmarking is one tool that you could help you in your journey. In today’s business environment there is no excuse for not leveraging these pearls of wisdom.
Kate Vitasek is president/founder of Bellevue, WA-based consultancy Supply Chain Visions.
This article was originally posted in 2006 and is frequently updated