I have heard a lot of my friends complain about the state of affairs in our clime. They are always full of lamentations about how things fail to work despite the enormous human and natural resource God has bestowed on our country.
I don’t blame them because their anger is borne out of the desire to see a great and prosperous Nigeria. Most of them, including yours truly use advanced countries as a point of reference of what an ideal society should look like. Even those who haven’t travelled out of Nigeria are not left out of this, as they use the foreign movies they’ve watched as a threshold for comparison.
What my friends have done is called Benchmarking. Though, the process only took place in their subconscious minds.
In business, benchmarking is a process of setting standards or targets for products, services or work processes with reference to organisation that are recognised as models of best practices. A benchmark is an organisation that provides the best practice for comparison. Benchmarking is also the process of gathering data about targets and comparators that permit current levels of performance to be identified and evaluated about best practice. Adoption of identified best practices should improve performance. The purpose of benchmarking is to identify measures that need to be taken to improve or change , so that the organisation becomes as good as, or better than, the benchmark.
It began with the Xerox Corporation in the US in 1982. Xerox, a manufacturer of photocopier machines, was in financial difficulties and losing market share to Japanese competitors, who were selling high- quality photocopiers at a much lower price. Xerox set up a management team that identified key performance indicators for operations such as order fulfilment, production costs, retail selling prices, distribution and product features, and compared the performance of Xerox in each of these areas against those of its most successful competitors. Other companies followed the example of Xerox, and benchmarking became an established practice for performance measurement and process improvement.
Benchmarking could be internal, competitive, process and customer. Internal benchmarking uses a benchmark inside the organisation itself. Other parts of the same organisation are compared with the benchmark. For instance, an organisation might have several regions. The best performing region can be used as a benchmark, and other regional offices are compared with it. The benchmarking exercise should identify reasons why each region has not performed as well as the benchmark. When the reasons for the worse performance are recognised, plans can be made to deal with problems or challenges towards achieving improvements. Competitive benchmarking tends to use a successful competitor as the benchmark. The main purpose of this is to see reasons why the competitor is more successful. When the reasons are identified, plans can then be made to improve competiveness, either by replicating what the competitor does, devising new systems or products that are even better than those of the competitor. The only snag in this form of benchmarking is that the organisation may lack detailed knowledge about the competitor. It may also be very difficult to study the competitor’s methods of operation and systems in detail. A rival company will not be allowed to examine these systems as business secrets are meant to be confidential.
Process benchmarking is the most common method of benchmarking. It simply involves a comparison of the performance of the organisation in one particular activity or process with that of another organisation in a different industry. This type of benchmarking seeks to identify best practice anywhere, by looking at organizations with a reputation for excellence. An organisation can compare its own practice in an aspect of its operations with those of a benchmark organisation that is in an unrelated industry. For instance, a company may compare its warehousing and distribution systems with a benchmark organisation, its customer call centre operations or its IT systems maintenance arrangement. It can be agreed between two organisations, which share information about their systems and compare their performance.
Customer benchmarking is quite different because the customer is used as a benchmark. This is achieved by trying to establish what the customer expects and wants. By doing this, a gap can be identified between customer expectations and realities and the organisation can look for ways to close the gap. Benchmarking can be used as an approach to improving quality.
For a benchmarking exercise to be success, especially when business partners are used for process benchmarking, the collaboration should be honest and open. It should also be seen as a continuous process and not a once only exercise because competitors are like a moving train. You don’t expect them to be stagnant or stand still in a particular.
It can also be replicated in our personal lives and even by the government as it makes it possible to gain competitive superiority rather than competitive parity.
In this period of recession, we just have to move to the next level.
Adeniyi Bamgboye is an advisor on accounting, audit, tax and business. He holds an MBA in financial management and a member of Association of Certified Chartered Accountant (ACCA-UK), Institute of Chartered Accountants of Nigeria (ICAN) and the Chartered Institute of Taxation of Nigeria (CITN) Contact Adeniyi Bamgboye on 08060603156 (Text only) bamgboyeadeniyi@yahoo.com.