NEW ORLEANS — The definition of benchmarking is, in a nutshell, a company comparing and contrasting key metrics against internal and external metrics.
The purpose of benchmarking is to not only look at how a business, like a laundry and linen service, is performing, but also to try and improve that performance.
Kevin Martlage, senior consultant for .orgSource, a business management consultant based in Riverwoods, Ill., shared his expertise on benchmarking during the Clean Show session Consistent Benchmarking for Competitive Analysis here in June.
“Benchmarking can take a lot of different forms, and you can take a lot of different approaches to it,” says Martlage. “If you look at benchmarking, you can go across the industry that you’re in and there’s a lot of different information out there.
“You can’t just say I’m going to do benchmarking and it’s going to be the same for everybody. It has to be very specific with what you’re trying to do and what you’re trying to compare when you’re trying to adjust.”
WHAT IS BENCHMARKING?
Martlage says benchmarking is something that serves as a standard by which others may measure or judge. It’s also a point of reference from which measurements may be made, and it’s a standardized problem or test and serves as a basis for evaluation for comparison.
“What are some common false impressions about benchmarking?” he asks. “That’s all about the numbers. It’s copying. It’s spying or espionage. It’s a one-time event.”
Martlage points out that laundries can use benchmarking as an industry and as an organization. The company not only compares itself to others in the industry, but it also helps build those alliances across the industry.
“There’s obviously things that you’re not going to want to share about your organization, or your company, publicly, but for the most part if you’re looking at how you can improve the industry how you can continue to professionalize the industry and grow the industry, there’s a lot of different things you can look at as an organization that can help you collaborate and work together,” he shares.
The biggest point of confusion, Martlage says, typically arises from the classification and an understanding of the different types of benchmarking.
“Again, you can’t just say, ‘I’m going to do benchmarking,’ and it’s going to be the same for everybody,” he says. “It has to be very specific with what you’re trying to do and what you’re trying to compare when you’re trying to adjust.”
The key objectives of benchmarking, according to Martlage, are performance improvement and understanding.
“It’s going to help you identify opportunities within your organization,” he shares. “It’s going to help assist you in setting goals for your organization, your company. It’s going to help provide some discovery, prioritization and ultimately you’re trying to identify a target you wish to compare and to set targets against that to achieve a goal.”
Benchmarking can be a very powerful tool for numerous reasons, says Martlage. Uses can include business development, process improvement, competitive advantage, marketing plan development and many more.
Martlage says most scholars agree that Xerox was the pioneer that started benchmarking in the ’70s, and it did that to compare itself to competitors in relation to manufacturing cost and product features.
“They found out that they were falling behind their Japanese competitors in several different areas and actually losing market share,” he shares.
Over time, Xerox developed its benchmarking strategy, focusing on internal process improvement and competitive advantage, examining more than 200 performance areas.
“So, that is a huge undertaking, and you might sit there say how do you go about doing that?” Martlage acknowledges. “Xerox basically went through some steps that started with planning.”
The Xerox strategy included identifying what was being benchmarked, identifying best performers for comparison, determining data collection methods and then collecting the data.
“So, you can’t just go in and say I’m going to go focus on this metric; you actually have to do some planning with your executive team or with your leadership team to identify what specifically you need to focus on to make the biggest impact,” Martlage says. “You have to do some planning. You have to then analyze that to determine the current performance gap that you have.
“So, you’re collecting the data, then comparing that to yourself and how you’re doing, and you’re going to project future performance levels.”
Martlage says laundry management has to communicate its findings and gain acceptance among the team that’s going to be in charge of reaching the goal.
“And you have to establish functional goals, with functional being key,” he says. “It’s always good to have stretch goals, but you have to be realistic about what you can obtain between now and that point in time.”
Then, Martlage says the laundry has to develop action plans, implement the plans and monitor progress—and recalibrate the goal as necessary.
“I don’t know how many times we put some action plans in place and we’d have to change it a month down the road because we didn’t think about that, we didn’t think about how it was affecting our customers,” he shares.
“We didn’t think about how a decision would affect our members. We didn’t think about how that decision would affect the hourly employees coming in on third shift. So, you have to be able to be open and honest with yourself and change when necessary to recalibrate.”
Then comes what Martlage calls “maturity.” That means putting action plans into practice, along with documenting results to create sustainable change.
“You’re not going to just implement whatever based on this benchmarking, and then it’s not sustainable or we’re going to forget about it and six months from now we’re looking at it again because you forgot about it,” he points out. “So, you have to make sure that you’re integrating these things in your standard practices, and you’re making sure those are documented.”
Finally, Martlage says a company needs to celebrate successes.
“Once you obtain that goal, you need to celebrate that with your team because the next time something comes up they’re going to be understanding, ‘Hey, remember that project, and we went through and we obtained it? Let’s do it again,’” he says.
Check back Thursday for the conclusion on key steps and a linen industry example.
ALM Introduces Laundry Industry Benchmarking Platform, June 23, 2019