Benchmarking for competitiveness

​The challenge facing Zimbabwe today is that of competitiveness especially in view ​of stiff the competition from imported products and services.​This is exacerbated by a difficult operating environment characterized by:

• High operating costs

• Old equipment and obsolete technology

• Scarcity of long term funding to recapitalize

• Low disposable incomes affecting volumes

​Whilst there are many management and strategic tools available today to assist managers navigate the competitiveness landscape, ​Benchmarking is one tool which can be used by businesses not only to improve but ​also understand the competitors’ more and to be better prepared for their activities.

Benchmarking is a structured process by which a firm seeks to identify and replicate ​“best practices” to enhance its business. Dimensions typically measured are ​quality, time and cost (en.wikipedia.org)

In the process of best practice benchmarking, management identifies the best firms ​in their industry, or in another industry where similar processes exist, and compares ​the results and processes of those studied (the "targets") to one's own results and ​processes. In this way, they learn how well the targets perform and, more ​importantly, the business processes that explain why these firms are successful. It brings the self-introspection that is not always present and allows for self-criticism in a way (en.wikipedia.org)

​There are generally two forms of benchmarking, namely competitive benchmarking ​and

​world class benchmarking:

• Competitive benchmarking is where a company wishes to discover how it's performance is compared with an immediate competitor. This can be across the entire spectrum of the business, i.e., finance, products and services, organization, technology, research and development, human resources policies, etc.
• World class benchmarking is where comparisons are made with organizations in different industries, with the object of being “best in class” for critically important activities which may influence market share, costs, employee motivation and effectiveness (i.e. accounts receivable, standard costing) etc.

Competitive Benchmarking allows companies to:

a) Evaluate the competitive situation

b) Assess competitor’s strengths and weaknesses

c) Formulate the appropriate strategies

d) Respond to competitive threats

e) Improve strategic thinking and focus on action steps

f) Fine-tune strategy to break into new competitive markets

Its main benefits being that it identifies clear gaps with competitors which:

• Raises the bar - Boards expectations and in turn management expectations are generally too low. However when you fully appreciate your industry gaps, you will we improve ambitious. The bar is suddenly raised.
• Challenges the status quo - new business models may have to be developed.
• Allows management to interrogate the value chain - understand our businesses better.

For international companies, there is an element of 'built in' benchmarking. The situation with local companies is different and this requires deliberate concerted effort to achieve.

The common pitfalls in benchmarking include:-

- Worst case scenario is obviously not benchmarking at all.

- Benchmarking with the 'same lot' resulting in a false sense of security.

- Failure to adapt and implement "as is" without context being taken into account.

IIndeed, benchmarking can yield remarkable business improvements and must the a key processes in every business. Yes, benchmarking is not an event but a process.

Should your organisation require assistance with its benchmarking process, please contact my management consultancy firm on jshoniwa@nppsrecruit.com.

All the best with your benchmarking!