Benchmarking best practice

Ways to monitor your progress and efficiency.

At Ling Phipp we can provide businesses in the Nottingham area with assistance and advice on a wide range of business issues. The following is a guide to best practice benchmarking…

A profit-driven organisation must be committed to continuous improvement and always strive to be the best in its field. One way to achieve this is through best practice benchmarking.

In essence, benchmarking entails:

  • Establishing standards that will help you achieve the best relationships with your customers and the best results on your bottom line  
  • Observing how others, either outside your organisation or elsewhere within it, attain these standards  
  • Applying the knowledge gained to achieving and maintaining those standards yourself

Benchmarking is not about copying others' successes but about learning from them. If you want your firm to be a world leader you need to be constantly researching the best practices and adapting them to your own situation.

Benefits

Clients who benchmark on a regular basis report beneficial results, including:

  • Improved understanding of your customers' needs
  • More satisfied customers and improved customer retention
  • Greater insight into your competitors
  • Greater emphasis on innovation and continuous improvement
  • Less waste, fewer rejects, fewer quality problems
  • Better firm reputation and increased marketing power

All of these benefits, of course, eventually trickle down to the bottom line and show up as improved profits.

Commitment

Benchmarking takes time and energy and you need to commit the necessary resources and empower the right people. If you restrict the process to a few key areas to start with you will soon come to see it as an investment rather than an expenditure.

Customer impact

Benchmarking works only if you can measure the activity in some way and compare like with like. You might start with areas that directly impact the customer such as quality of product, accuracy of invoicing, timeliness of delivery, or speed of service.

The best way to gather this information is to ask your customers directly through questionnaires and other feedback mechanisms. Analysing complaints and warranty claims will also reveal useful data in these areas.

Internal processes

You might also begin to benchmark internal processes such as stock levels or stock turnaround times, quantity of waste or rejects generated, cost of sales or sales per employee.

You might not have this data ready to hand and some adjustments might need to be made to your management accounts to enable you to monitor these areas.

Smaller firms especially can have difficulty in finding the equivalent information about other firms with which to make comparisons, especially if the other firm is a competitor, But you do not need to source the data directly from the other firm. There is a surprising amount of such information available in magazines and newspapers, trade association reports, and various publicly accessible databases.

Creative thinking

To benchmark successfully, however, it is not always necessary to compare your performance with that of a competitor. Comparing certain procedures with businesses in parallel industries or even in completely unrelated industries can often be very revealing and lead to creative, lateral thinking, a key element in the process of innovation.

Often the most useful benchmarking is achieved by comparing procedures between different parts of your own business. Besides facilitating continuous improvement, this also helps to create a culture of settling for nothing but the best within your organisation.

If you are in the Nottingham area and would like professional assistance from experienced accountants and business advisers, contact Ling Phipp.

Try a site search

About us

Ling Phipp was founded in 1974 and nowadays has two partners, five managers plus trainees and support staff.

We serve clients in the East Midlands and all over the UK. Our out-of-town location, with easy parking, close to the M1 junction 25 (Nottingham/Derby - A52), is very convenient.

Company details

0115 949 6838

Ling Phipp, Cliffe Hill House, 22-26 Nottingham Road, Stapleford, Nottingham NG9 8AA


© 2018 Ling Phipp. All rights reserved. We use cookies on this website, you can find more information about cookies here.

Registered to carry on audit work in the UK and Ireland and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales. Details about our audit registration can be viewed at www.auditregister.org.uk, under reference number 6424855. This is the firm number provided by the Institute of Chartered Accountants in England and Wales.