Benchmarking - FAQ
Q.: What functions / industries your organization provide benchmarking services for?
- Finances (costs/expenses, financial performance/efficiency (ratios), assets, liabilities, investments, taxes)
- Sales/Marketing/CRM (account management, promotion efficiency, brand management, business development, marketing efficiency)
- Price benchmarking
- Manufacturing (technologies, production flow, maintenance, R&D, innovations, quality assurance, warranty)
- Supply chain/Procurement (logistics, inventories, delivery, warehousing, procurement, SRM, outsourcing)
- Management (strategy, project management, resource planning)
- HR (recruitment, retirement, training, workforce, salaries)
- IT benchmarking
- Product-related benchmarking (marketing, technical features)
- We do benchmarking in all industries from our coverage list
Q.: Can you share with us some examples of metrics that can be developed for various functions benchmarked?
A.: We use hundreds of metrics in our benchmarking projects (currently our base contains 1219 metrics)
- Finances (revenue per employee, ROI, ROE, gross margin, time for expense reimbursement cycle, capital efficiency, EBITDA/debt, current liabilities as % of total liabilities, operating expenses, etc.)
- Sales/Marketing/CRM (market share, advertising expenses in % to total expenses, brand awareness, % of new revenues, % of repeat customer revenue, average order size, effective reach, average sales per customer, reaction time on claims, time to resolution of claims, open claims at month end, number of claims submitted, number of internal rejects, etc.)
- Manufacturing (MTBF, yield, scrap value, equipment availability, not-first-time-through, defects per million, etc.)
- Supply chain/Procurement (purchase order cycle time, % of procurement requests satisfied by preferred suppliers, inventory turn, total transport cost as % of delivered sales, % of logistics outsourcing, on-time pickups, inventory location accuracy, etc.)
- HR (cost of office space per employee, training penetration rate, average number of sick days per employee, etc.)
Q.: What is the process and timeline for getting a benchmarking report?
A.: It's a multi-phase process:
- Phase 1: Identification and adjustment of benchmarking indicators - depends on the customer (if he clearly understands which metrics he wants, etc.), from 2-3 days up to 2 weeks
- Phase 2: Identification and selection of companies to compare with - again, it much depends on the customer (if he has a list of preferences among the competitors, etc.), from 2-3 days up to 2 weeks
- Phase 3: Identification of data sources for benchmarking indicators - it's our internal work, usually we do not allocate separate days for this and do identification during Phases 1 & 2
- Phase 4: Benchmarking data collection (with surveys/interviews, databases and other desk sources) - the longest phase, much depends on number of metrics, number of companies in the benchmarking list, etc.From 1 week up to 10-12 weeks
- Phase 5: Benchmarking calculations - usually we do this during Phase 4, not allocating separate days
- Phase 6: Analysis of benchmarking results - from 2-3 days up to 1 week
- Phase 7: Reporting - depends on the required format (if it the Excel file with figures and Word comments, or PPT presentation, etc.); from 2-3 days up to 1 week
Thus the total length of the benchmarking projects may vary:
- Small projects - 2-4 weeks
- Mid projects - 3-8 weeks
- Large projects - 6-14 weeks
Q.: How many team members are in your benchmarking team?
A.: Our benchmarking team consists of 2 parts:
- Benchmarking experts - people who select metrics, provide metric calculation methodology, do calculations; we have few persons for this (with degrees in economics, management and mathematics)
- Market analysts - for each project we involve our staff in particular country and industry; they collect data and make analysis (based on their market knowledge)
Thus the size of the team depends on: project size, country and industry. For instance, if we do benchmarking project that refers performance of coalmining companies in the largest exporting countries we make a workgroup that includes:
- Benchmarking experts
- Our mining market experts in Russia, Indonesia, etc.
Q.: What is the pricing?
A.: Two-component cost structure:
- Cost of data sources: as we actively use governmental/industry databases and other desk sources, the first type of the costs if presented with expenses we pay for such source access/use; no any "general" indicators - as it's very individual by country, market, etc.
- Our fee: it's the fee for our experts working on the project
Basically we prefer to quote the fixed budget per a project (knowing the project's parameters, of course) - that will cover both types of costs (fees + source expenses), rather than "per day" fee or similar.