Be careful what you ask for -- you might get it. And it could help.
One of the more popular management maxims making its way through corporate America today is the idea that it's often necessary to look externally in order to improve a company's internal processes. Executives are realizing that this formal benchmarking process can steer their companies to new levels of accomplishment.
But talking about it and doing it are two entirely different things. Many benchmarking efforts fail because their advocates don't appreciate how difficult it is to collect relevant data and apply it to their companies.
Tony Vercillo, president of International Fleet Management Consultants, has put together a thoughtful guide based on the numerous benchmarking studies he has done for his clients. Vercillo defines benchmarking as "the process of defining and searching for best practices that will lead to superior performance and recognition as an industry leader."
Why benchmark? There are a number of reasons. It determines how you stack up in the real world. It uncovers competitive intelligence. It spurs a company to take action to improve its operations and, properly implemented, provides a game plan for establishing a key strategic advantage in the marketplace.
Before beginning a benchmarking effort, Vercillo recommends taking steps to improve internal operations -- particularly in private carrier operations. Unless that is done, all benchmarking will do is point to potential weaknesses and ratchet up the pressure to outsource the fleet.
A solid benchmarking study begins with a thorough understanding of your company's performance, making sure the key indicators that drive your business are clearly identified. You may have to look at your business in new ways to make meaningful comparisons with other businesses. Decide what part of your operation you want to study, and determine how that information can be collected. Common indices to use in benchmarking include rates of pay, cost per mile, percent of sales, vehicle utilization, backhaul efficiency, and the application of technology.
After getting your arms around your own operation, you can begin the search for appropriate benchmarking partners. You want to make sure that factors such as operating environment, lengths of haul, size, transportation mode mix, equipment, and senior-level support are similar. Don't forget to get help from outside sources like industry organizations to put the information in perspective.
According to Vercillo, many fleets neglect to develop a glossary of terms so that everybody understands what goes into each number before benchmarking candidates are contacted. Giving concrete examples will help eliminate ambiguity and ensure valid data.
Once the data is collected, make sure you present it to top management in a way that links it to a strategy of improvement -- or what Vercillo calls "recalibrating the operation."
Keep in mind that much of the information gathered may well cast your operation in an unfavorable light. At the same time, remember that the purpose of benchmarking is not to grade past performance, but rather to develop a program of strategic improvements tailored specifically to your organization.