Benchmarking: Don't Just Run the Numbers, Understand the Process

Benchmarking, a useful tool to determine areas in which a business can improve, involves the measuring of a company's own products, services, or processes against those of recognized best practitioners. The idea was first developed by the Japanese and pioneered in the West by Rank Xerox in the 1980s.

Simon Chalk

The information provided by benchmarking was crucial in helping Rank Xerox formulate its response to the increasing domination of the world photocopier market by the Japanese. It showed company executives a gap and indicated what was required.

Early benchmarking studies compared company results with those of competitors. Usually, the numbers being compared are either associated with financial performance or operational efficiency. While these numbers can be relatively easy to obtain, what they can tell you in practice can be quite disappointing.

Metrics can show the size of the gap but they tend to leave two questions unanswered: what does this actually mean? And, if it is true how do they do it? In these circumstances unless you are really determined to follow the exercise through, it usually falters here with the conclusion "so what." Consulting firms are especially adept at communicating sets of numbers showing how far behind the pack a company is without giving any clues to how the gap may be closed.

Those who have persevered with benchmarking recognize that its real potential lies in comparing processes. By analyzing the processes that deliver the results, one can both understand how these results are achieved and gain a valuable insight into how one can achieve them. The point being not simply to copy what other companies do but to use what they do as a mirror in which to view one's own processes. As business processes tend to be fairly universal, it is possible to make comparisons with the best practitioners across a wide range of industries.

For the pharmaceutical industry, with its added dimension of regulatory oversight, benchmarking provides a guide and assurance that interpretation of regulatory requirements is consistent with other companies in the industry. Attempting to make comparisons before fully understanding one's own processes is rather like putting the cart before the horse. Consequently, before embarking on any process benchmarking exercise, it is essential to have documented and analyzed one's own internal processes.

ASSESSING LONG-TERM GOALS

To think of process benchmarking only as a tool for identifying opportunities to improve processes would be to recognize only the tactical benefits of the approach. The real power of benchmarking lies in its ability to provide strategic focus, as demonstrated by Rank Xerox. Applied in this way, benchmarking can be used to revitalize and refocus long-term business improvement programs.

Used intelligently, it can also be used to track shifts in industry direction. Anyone benchmarking the use of disposable technologies in bioprocessing over the past few years will be detecting a switch away from stainless steel in the industry at a point where they would still have the choice to be a leader in the field. Leaving it much longer may result in follower status as the only option. Benchmarking trends in API production are already picking up on the transformative possibilities that flow chemistry offers as a replacement technology to batch production.

PRACTICAL LIMITATIONS

While benchmarking clearly has many benefits, it does have some limitations and practical difficulties. The main limitation is that while benchmarking might tell one a great deal about how current practice is achieved, it does not necessarily indicate what is possible or what best practice might look like in the future. The pitfall here is to take a narrow view of who to benchmark with. Comparing a C class company to B class performers will limit ambitions when A class students might be available to learn from.

Those seeking to benchmark practices around cleanroom design and operation might compare and share with other pharmaceutical companies. However, benchmarking with semiconductor manufacturers or automotive paint shops might result in a whole new set of ideas and processes not found in drug production.

Foremost among the practical difficulties are the problems that can be experienced in gaining the cooperation needed to carry out a full process benchmarking study. The development of benchmarking clubs and syndicates has helped overcome this problem. In biopharmaceuticals, the BioPhorum Operations Group's (BPOG) role is to create a safe and structured environment in which benchmarking can take place amongst industry players. Joint initiatives to benchmark with other industries are another function of this consortium.

BENCHMARKING PROCESS

To be successful, benchmarking needs to be taken seriously and must become an integral part of a business improvement program, either as a means of sizing the gap at the outset or revitalizing the program at a later stage. The world doesn't stay still, so benchmarking exercises should be repeated and data should be refreshed as often as opportunities allow. It also needs to be done largely by the organization's own people, as it is through the widening of their experience that a substantial part of the benefit is realized.

The scope for carrying out process benchmarking against direct competitors is limited in certain areas of intellectual property or proprietary knowledge; however for pharmaceutical companies, there are many areas where industry performance in terms of product and patient safety, reputation, and strengthening of competition can be enhanced. Independent moderators can facilitate benchmarking so that the participants can stay within the rules and where necessary, data can be blinded.

When embarking on a benchmarking exercise, the first thought for most companies is to seek to benchmark those processes associated with the core manufacturing and supply-chain activities to cut cost or improve service. While this might be entirely appropriate, consideration should be given to examining other key processes, such as process development, human resource management, and quality compliance. For pharmaceutical companies, achieving excellence of these processes could produce similar performance improvement leverage.

In benchmarking, companies have a systematic and objective method of assessing their performance and understanding best practice. By doing this, benchmarking can help the company focus on key competitive and performance issues so that the drive to be best in class can be achieved and maintained.

Simon Chalk is director of the BioPhorum Operations Group, simon@biophorum.com