Quality Management: Seat of benchmarking unveiled: Firms in Britain that wish to test whether they are using best practices can take advantage of a new centre
Sunday 27 February 1994
The opening of the Benchmarking Centre at Hemel Hempstead, Hertfordshire, has provided a base for companies informally practising benchmarking or interested in starting. It offers expertise, support, partnership introductions and networking. Equally important, it is spreading the gospel of benchmarking, which emphasises collaboration and the sharing of information rather than traditional secrecy.
With a training programme and five common interest groups in place, the centre hopes to double its membership in 1994. Most of the 30 members are blue chip, such as Rover Group, whose managing director, John Towers, said: 'Benchmarking ensures that we know what we need to achieve in order to be world competitive, and that we understand the processes to achieve this.'
Benchmarking takes several forms: internal, against other sites or functions in a large organisation; functional, conducted with non-competitors to compare companies performing a similar function (for example, a hospital wanting to improve ward management could benchmark with a hotel chain's management department); and generic, focusing on processes common to any business, such as finance, human resources and marketing.
Real innovation, however, is generally found by looking at organisations that are not in direct competition, according to the Benchmarking Centre. This also avoids any legal risks that might arise in an information exchange set up with a direct competitor.
The benchmarking concept is built on a free exchange of information to the mutual benefit of the participants. Members sign a code of conduct on certain principles, particularly confidentiality.
The Hemel Hempstead centre emerged after Tim Bassett, managing director of Status Meetings, which arranges conferences, and a colleague, Tom Brock, detected an interest in benchmarking through their involvement in clients' programmes. They then had meetings with Robert Camp, benchmarking manager at Xerox and author of a best- seller on the subject.
'We realised benchmarking had become established in the US because organisations are devoted to it - and we identified a need here,' said Mr Bassett. Research suggested that probably seven out of 10 companies practised the principle in some form, often by 'feeling their way'.
The centre has eight founder members: British Aerospace Regional Aircraft, IBM, Dexion, Carnaud- Metalbox, ICL, GKN Sankey, Royal Mail and SmithKline Beecham. Its chairman is Bob Hollier, a Umist professor. Barry Povey was seconded by IBM to manage the project for the first six months.
The centre is not the only venture in this area. Price Waterhouse, the accountants and management consultants, has a benchmarking centre that is carrying out a survey of customer management practices at leading companies and helping them to compare their practices against the best and worst in Europe.
Whatever the organisation, though, those involved stress that benchmarking is not a separate activity but must be part of the total management system, along with process improvement.
An organisation should first decide which processes take priority for attention, then analyse them. Benchmarking should then identify performance gaps and show how to make improvements to gain competitive advantage.
To attract smaller businesses, the annual subscription of pounds 3,750 plus VAT may be graded: the Hemel Hempstead centre believes large and small enterprises can learn from each other. So far the smallest has a turnover of about pounds 50m .
'Smaller firms think laterally and have experience outside their own industry,' said Mr Bassett, a director of the centre. 'But they also have a lot to gain. Most adopt new techniques from their customers. Ford, for instance, encourages its suppliers to benchmark, to drive costs down.'
Members tend to be in manufacturing, financial services or pharmaceuticals. Power generators and distributors are showing interest, and the centre is discussing with Reading University how benchmarking could help the building industry. Membership is not solely corporate: it includes Leicester Royal Infirmary and the NHS 'value for money unit' in Wales.
The centre has an international stance. It is affiliated to the US Strategic Planning Institute Council on Benchmarking and is recruiting in Europe, which should benefit British companies. Future functions include an IBM symposium next month in Belgium, followed by events in the Midlands, Zurich and London, which will examine benchmarking in the financial sector.
'Benchmarking is a very powerful tool for best practice, and has strong links with total quality management,' said Mr Bassett.
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