A while ago, I blogged on why keeping statistical data for your business is beneficial and necessary if you want to improve your bottom line. Read my previous blog – Why Statistical Data is Essential to Your Business,. I believe keeping track of the non-financial data in a company is as important as the financials.
So perhaps you read that blog, heeded those words of wisdom and began tracking statistics that are pertinent to your company and industry.
It gave you empirical data that allowed you to go to your various department heads and make financial improvements to the bottom line. The average length of each call in the customer service department explained why payroll was up in that department. After a lengthy conversation with the department head, the two of you came up with ways to reduce the time spent on each call.
The high waste percentage in production helped explain why your jobs weren’t making as high a profit as other years. After discussing with your production manager and pointing out the irrefutable data, you were able to determine your current vendor was using sub-grade materials. A switch was made and waste was reduced.
As I said, keeping track of statistics is important and essential to your business.
But wait…there’s still more you can do with statistics.
You can benchmark with the same data.
What is benchmarking? According to Wikipedia:
“Benchmarking is the process of comparing one’s business processes and performance metrics to industry bests or best practices from other companies. Dimensions typically measured are quality, time and cost.”
Clearly defined, but why is it important to your business?
A couple of reasons. First, it allows you to outperform other organizations within your industry. Second, it improves your efficiency by constantly improving your performance through new ideas and procedures you learn from other companies.
Everyone wants to be the best. It gives you a competitive advantage when dealing with your customers.
Let’s say you are a racecar driver and looking for sponsors. The first thing your sponsor wants to know is how you stack up against other drivers. Because you have benchmarked yourself against other drivers, you can talk eloquently and intelligently about average race won on ovals, street courses or mile long tracks as compared to other drivers. You can discuss average finishes as compared to races won. You can discuss your top 10 finishes and laps led. All this will help you to show your potential sponsor that you are the driver to back.
It’s the same no matter what industry you are in. Benchmarking by specific industry allows you to stack yourself up against other companies and improve your organization. Who has the best sales per salesperson and how do you stack against them? Which company has the most efficient customer service department and how did it happen? The leanest manufacturing operation?
In a simplistic sense, it allows you to compare your company against others – not financially, but in best practices. Don’t get me wrong, better processes results in higher profit to the bottom line. How can it not? Each time you improve upon a process or procedure, it saves time, equipment or supplies. Less time spent on the operational end means more time available to increase revenue.
Benchmarking allows you to focus on best practices from your competitors. It allows you to get detailed comparisons between companies. It allows for a partnering of information. Most companies are more than willing to discuss their success.
Do you see? Benchmarking allows you to improve your organization by using proven methods already established. You don’t need to re-invent the wheel. Do some research and borrow someone else’s proven practices and adapt them work for your company.
In upcoming blogs, I will discuss different types of benchmarking and how to accomplish it – no matter the size of your organization.