Group Benchmarking

The fourth method in the model is a process of benchmarking. It has been divided into four different types of benchmarking process. The idea is to give alternatives for the companies in the group to utilize the knowledge of the other companies as diversified as possible. All the different types of benchmarking can be carried out individually without any need to participate in all of them. However, when a company performs all of them on a continuous basis, maximum amount of knowledge is created and, as well, great number of competencies can be improved. Different benchmarking types in the model are illustrated in Figure 6.6.

119 Fig. 6.6 The Group Benchmarking model

Figure 6.6 illustrates the Group Benchmarking model which includes four independent benchmarking types: bilateral, co-operative, collaborative group partnership and collaborative one-to-one partnership benchmarking. Figure 6.6 describes the direction of contact in the beginning of the benchmarking process and the direction of information flow during the process. The ellipses of different color shade represent the participating companies. The maximum number of companies in the group is four, but it is optional. The names of different benchmarking types in the model follow the terminology of previous definitions as far as they are applicable.

6.5.1 Bilateral Benchmarking

The process is started with the traditional bilateral benchmarking, which means that the communication happens between two companies. One of the companies is interested in developing a certain activity in its organization. It benchmarks one company from the group, which, according to the graph drawn from the positioning matrix form, has the best performance in this particular activity. The idea is that only the initiating company learns the best practice from another company. The same process can happen several times within the group of companies.

Contact flow Information flow

Co-operative benchmarking Bilateral benchmarking

Collaborative group partnership benchmarking

Collaborative one-to-one partnership benchmarking

120 6.5.2 Cooperative Benchmarking

Secondly, one company, which wants to improve its certain activities, chooses several companies of the group as targets for benchmarking. The choice is made again according to the positioning matrix Form (the graphs). This is reasonable when there are several activities to be improved and different alternative procedures to make improvements in. When one company benchmarks, for instance, three companies instead of one company, it learns, in principle, at least three times more to solve problems and to adopt and apply to its own activities. This type is called co-operative benchmarking. The information flows from the best practice companies to the initiating company.

6.5.3 Collaborative Group Partnership Benchmarking

The process continues with the third, collaborative group partnership benchmarking. In this type all the participating companies sit down together with the purpose to discuss about a subject interesting for all the companies. The subject can be chosen according to the positioning matrix Form (the graphs) or it may be otherwise proven to be especially interesting or actual. The Form helps to start the discussion because it shows which company is strong in the chosen activity and which have problems on that area. This type is very useful because all the participating companies can learn something from other companies. The information flows between all participating companies.

6.5.4 Collaborative One-to-one Partnership Benchmarking

The fourth, collaborative one-to-one partnership benchmarking, is a very effective type. In this benchmarking type two companies discuss about a chosen activity, which is interesting for both of them. Then both companies learn from each other. One company may have a better performance on the activity concerned than the other one but as well, according to the form, the companies may have an equal performance on the activity. Companies usually have different procedures to operate although they may assess to perform equally when they complete the form. Even this kind of situation is worth learning something about each other. These discussions can be carried out unlimited times. Each company can find from the Form the best practice target for each of its activities.

121 6.6 Summary of the Chapter “A New Group Benchmarking Model”

The chapter presents separate methods that belong to the wholeness of the Group Benchmarking model. As an assisting method there is an ABC-classification for identifying the suppliers that cause the most of the purchasing costs and the suppliers that deliver a big volume of products causing only a small portion of the costs. This is important information for the company in order to create a right kind of purchasing strategy to each supplier group. Another assisting method is supplier’s portfolio classification, which accomplishes ABC-classification by giving the idea of the importance of different suppliers for the company. The evaluation of supply risk as a function of supplier’s impact on financial results reveals the criticality of each supplier to the company. As a result, the suppliers of the company are divided into four groups of the portfolio.

The third method of the model is Strategic Supply Chain Positioning Matrix, which utilizes a Form as a boundary object in order to enable people to communicate with a similar vocabulary bringing together multiple perspectives, interests, and interpretations. The idea of matrix is to evaluate the percentage of suppliers on each of the four networking stage representing the development level in supply networking process. The evaluation is made according to 20 activities describing characters of network kind of performance in company’s supply chain. The evaluation is made on the present moment and target is set for the future.

The fourth method is benchmarking, which is now performed as a new kind of combination of existing benchmarking types. The idea of combining traditional bilateral benchmarking to co- operative benchmarking, collaborative group partnership benchmarking and collaborative one- to-one partnership benchmarking is to achieve a more effective method for small and medium sized companies, who can benefit the group method by decreasing costs of research (e.g. Ralston et al., 2001) and making easier to find the best practices. When the strategic supply chain positioning matrix is included in the Group Benchmarking process as a completed form, the focusing on the most problematic subjects i.e. the biggest gaps on the networking field is achieved as well as the most proper best practice targets are found. It can be concluded that the difficulties in general benchmarking process might be solved. The whole process is illustrated in Figure 6.7.

122 A na lysis S etting targets B en chm arking V isits D ev e lopm ent F illing p ositioning m atrix form : present

C om p anies discussing ab out the b est p erform ances Learning b y doing 1 . 2. 3 . 4 .

F illing the p ositioning m atrix form : future

A nalysing the p resent situatio n in the org anisatio n

D eterm ining targ ets for the future and ac tiv ities to b e dev elop ed.

Inform ation from one com p any is e dited and com b ined to existing know ledg e p latform of anoth er com p any

B etter w ays of doing activ ities and n ew know ledg e is app lied into com p any’s ow n activ ities

Fig. 6.7 Group Benchmarking as a continuous process

The Group Benchmarking model can be considered as functional benchmarking. It can as well be applied in other forms of benchmarking by designing the boundary object according to the need.

The new construction presented in this study gives an example of the way benchmarking can be successful also in the context of supply chain as a contrary to Cox’s ideas presented in Section 5.5. The idea is to benchmark different activities among supply chain or network. The wholeness of those activities and the way they are performed, determine the success of the whole chain and network. In that case, the whole supply chain need not to be known and determined, but parts of it can be benchmarked and the best practices to perform activities within the chain can be learnt.

The main idea in benchmarking is to improve the company’s own performance by learning from other best practices. In order to stay competitive, companies need to find new knowledge, technologies, techniques, products etc. as a continuous basis. This may be realized through the Group Benchmarking process by adopting the best practices innovatively, but additionally it needs purposeful development activities in the whole company.

Chapter 7 will present how the basis for the learning model i.e. knowledge management is strengthened by means of Group benchmarking. The theory of knowledge creation will be reflected as well as the enabling factors to the Group Benchmarking model. The indication of reflecting the knowledge management to the new construction is to show how the construction works and is applicable in supply chain context.

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7 THE ROLE OF GROUP BENCHMARKING MODEL IN THE EXISTING