We know that data within your department can be used for analysis. But it can also be used for benchmarking the processes within (or outside) your company.
Benchmarking provides the avenue to benefit from process improvements that others have implemented and can stimulate new ideas. Furthermore, benchmarking helps companies determine where they stand when compared to similar entities, enabling them to resolve problems, identify and address “pain points” and opportunities that can improve their performance.
It’s important to identify the data components that are pertinent to the business P2P process area. Some considerations for any analytics or benchmarking process are included below and organized into the following components—general cost and payroll/overhead.
To make recommendations for change suitable to its environment and increase the likelihood of success, the participants should ask the following questions about the study:
There are several important benefits to implementing a benchmarking project and data analysis project which include the following results:
Key Point: Here are the lessons learned:
- Builds confidence that objectives can be reached. We can achieve these objectives with the right direction and roadmap.
- Eliminates non-value adding activities. Why should we continue with non-value added processes?
The implementation process is comprised of three steps:
The objective of benchmarking is to improve the bottom line by getting, adapting, and improving the successful ideas of others.
Find examples of superior performance and understand the processes and practices that drive that performance. Companies improve their performance by tailoring and incorporating those best practices. Imitation does not work. Adaptation of and innovation on those best practice principles are keys to long-term success.
As an example, an accounts payable director, may be convinced that he/she can lower costs by aggressively expanding electronic invoicing. He or she identifies the benchmarks that will drive that goal to reality. The metrics to be considered for electronic transactions include number of suppliers, supplier size, percent of centralized purchase transactions, and percent of purchase order transactions.
An individual can perform benchmarking, but using a team approach leverages differing perspectives and skill sets, as well as allowing for distribution of the process improvement activities for faster implementation. Team members profit from group dynamics by learning from and brainstorming with others.
Oftentimes, a consultant facilitates these groups. It is important to understand the difference between a survey and a benchmark. A survey provides good general information. A benchmark process must provide good comparative information.
An important trait for a team member is the motivation to improve the process. Benchmarking team members need to be change-agents; they should not be afraid to upset the status quo, nor should they have a desire to protect their turf.
It is best to select team members who understand the current process, welcome change, and will be responsible for implementing the proposed improvements. An ideal team size is between five and seven people. Team members should bring different perspectives to the team.
Key Point: It’s important to establish a benchmarking process for each specific process and to include the Subject Matter Experts (SMEs) from those areas. As an example, the suggested team for the accounts payable process is included below:
- AP manager
- AP supervisor or team leader
- AP process improvement agent
- Internal audit manager
- IT staff member
- Receiving/Distribution manager
- Purchasing manager
- Internal controls manager
There are two types of resources to obtain external benchmarking data from: independent organization sponsors & ad hoc collaborative groups.
A company should be confident that another organization, with which it collaborates, will be candid about their performance and will freely exchange information. Sometimes, taking the lead and opening up will elicit a reciprocal response, as frequently happens in personal relationships.
Benchmarking is just one of the ways that the data in your department is leveraged for results and productivity.