BENCHMARKING FOR PROCESS IMPROVEMENTS

Process improvement is a systematic approach that helps an organization optimize its underlying processes and
achieve more efficient results. Process improvement includes a series of actions by a process owner to identify, ana-
lyze, and improve existing business processes within an organization to meet new goals and objectives such as increas-
ing performance, reducing costs, and improving cycle times.

An overwhelming majority of respondents conduct benchmarking to set the stage for process improvement within
their organization or department (Figure 1).

Benchmarking for Process Improvements

Figure 1

WHAT THEY ARE BENCHMARKING

The primary purpose of APQC’s study is to Benchmarking Practices for Process Improvements
examine how benchmarking provides value
to core business activities like process im-
provement. Hence, the respondents were
asked the purpose of their benchmarking
activities and which functions were the tar-
gets of their benchmarking efforts (Figure
2).
Benchmarking at its core is about providing
contextual information on performance and
understanding what practices or activities
others are conducting that can be leveraged
for improvements within an organization.
This holds true for the survey results, partic-
ularly in the context of process improve-
ment efforts.
Figure 2
When compared to the 2014 results, very
little has changed. The primary purpose of benchmarking continues to be to identify improvement opportunities
through performance benchmarking and use practice benchmarking to find methods for improvement. Given that

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benchmarking plays such a large role in improvement efforts, it was surprising that most of the 2016 respondents con-
duct benchmarking for this purpose less than once a year.

Organizations were also asked to indicate which functions they benchmark to meet these purposes. In 2014, organiza-
tions’ benchmarking efforts were predominantly focused on their customer service functions, followed closely by sup-
ply chain and IT. This made sense in 2014 when many organizations were embarking on their customer-centricity jour-
neys. However, in 2016, the primary function organizations are benchmarking is operations, closely followed by cus-
tomer service and quality. The shift of focus to operations makes sense given the role of operations in maximizing effi-
ciency and minimizing costs.

MEASURES OF SUCCESSES
What an organization measures reflects what it considers important, and benchmarking is no different. So respondents
were asked to indicate their measures to track benchmarking goals (Figure 3). For each of the primary benchmarking
goals, efficiency was the leading measure, with cost savings and cycle time also measured by most respondents.

Top Three Measures for 2016 Process Improvement Benchmarking Goals

Goal Measure One Measure Two Measure Three

Pinpoint improvement op- Efficiency (73%) Cost savings (58%) Cycle time (55%)
portunities

Prioritize improvement op- Efficiency (78%) Cost savings (65%) Cycle time (58%)
portunities

Identify new practices for Efficiency (68%) Cost savings (56%) Cycle time (52%)
adoption or adaptation

Figure 3
Regardless of the purpose of the benchmarking efforts, organizations measure the success of their efforts’ traditional
process improvements measures—those that support the focus on the organization’s bottom line through cycle time
improvements in addition to cost reductions and improved efficiency.

IMPROVING PROCESS IMPROVEMENT EFFECTIVENESS

The main purpose of this study is to analyze the role benchmarking plays in key business activities like process improve-
ment. A key question is respondents’ opinion about the effectiveness of their organization’s process improvement
efforts (Figure 4).

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 Process Improvement Efforts Satisfaction

Figure 4
Because most respondents feel there is room to improve their process improvement efforts, the question then be-
comes: How can benchmarking help?

To assess the aspects of benchmarking that improve the effectiveness of process improvement, APQC conducted addi-
tional correlation analysis on respondents’ satisfaction with benchmarking efforts, the frequency of benchmarking, and
benchmarking measures.

Benchmarking on Process Improvement Effectiveness

Figure 5

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Figure 5 indicates that the effectiveness of the benchmarking activities measured by satisfaction directly correlates to
improved effectiveness of process improvement efforts. In other words, those who found their process improvement
activities highly effective felt the same about their benchmarking efforts.

Role of Benchmarking Frequency

Given that the majority of respondent organizations conduct benchmarking less than once a year, APQC wanted to test
if increasing the frequency of benchmarking activities would improve benchmarking satisfaction—ultimately improving
process improvement efforts’ effectiveness (Figure 6).

Frequency on Benchmarking Satisfaction

Figure 6

Increasing the frequency of benchmarking for process improvement does not directly correlate to increased effective-
ness. But organizations that benchmark three or more times a year are somewhat more likely to indicate their bench-
marking activities perform far above expectations; this is likely due to the ongoing performance monitoring of the pro-
cesses.

Measures Impact on Satisfaction

Measures provide a focus for organizational efforts and create a quantitative indicator of value for benchmarking
efforts. To that point, APQC wanted to understand if the measures respondents use to monitor benchmarking success
improve benchmarking effectiveness. Although there is no correlation between the presence of measures and effec-
tiveness, some of the specific measures used correlate to increased benchmarking satisfaction.

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Increased stakeholder and customer satisfaction had a statistically significant (p = .002) effect on benchmarking satis-
faction. Satisfaction measures ensure that decision makers are getting the information they need to make decisions on
which opportunities need investment and what are the best fitting solutions.

Cost savings had a statistically significant (p = .042) effect on benchmarking satisfaction. Bottom-line measures such as
cost savings are often the primary impetus for improvement efforts. This correlation also confirms the effectiveness of
one of the primary goal of process improvement benchmarking projects: identifying improvement opportunities.

CONCLUSION
Benchmarking helps organizations drive process improvements efforts by identifying focus areas for improvement
efforts and providing context for decision makers in prioritizing opportunities. However, organizations not utilizing
benchmarking to its full potential should consider:

 using both performance and practice benchmarking to identify performance baselines, set tracking goals, and
identify new practices or opportunities and

 ensuring benchmarking measures match the purpose of the benchmarking activities and reflect stakeholders’
priorities.

ABOUT APQC
APQC helps organizations work smarter, faster, and with greater confidence. It is the world’s foremost authority in
benchmarking, best practices, process and performance improvement, and knowledge management. APQC’s unique
structure as a member-based nonprofit makes it a differentiator in the marketplace. APQC partners with more than
500 member organizations worldwide in all industries. With more than 40 years of experience, APQC remains the
world’s leader in transforming organizations. Visit us at www.apqc.org, and learn how you can make best practices your
practices.

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