Process benchmarking as a market research tool for strategic planning

Abstract

Process benchmarking partnerships are emerging as a research tool to help small firms to build a competitive advantage against larger rivals. Managers are now beginning to appreciate the need to benchmark the strategically relevant processes in their value chain. Process benchmarking begins with exploratory qualitative research to determine the core processes to be benchmarked. Quantitative research then follows, using an audit methodology and involving the collection of the costs of core processes from benchmark partners on a standardised computer spreadsheet. Each partner receives the results of statistical analysis comparing the firm’s own cost structure to the average of the benchmark partners in each core process. Strategic planning decisions can then be made about how to generate greater customer value by eliminating excess capacity, outsourcing and modifying existing processes. This paper describes a process benchmarking partnership conducted across four Australian building societies to illustrate the strategic benefits of this research methodology for firms in the new millennium.