Benefits of Benchmarking

This is article is part of a series of monthly articles produced by Harbour Results for PMA’s MetalForming Business Edge e-newsletter. Click here to view the full collection of articles.

It’s Time to Take Off the Benchmarking Blindfold

A phrase we use almost every day is, “good data helps leaders make better decisions.” Unfortunately, all too often, we see companies ignoring what the data is telling them, or even worse, not using the data at all. One tool business leaders often overlook as a way to strengthen their performance is benchmarking – understanding how your business is performing versus the best in class and/or your business’s competitive peer set. In short, benchmarking helps identify the key areas where your business can improve. It gives you a bigger picture of what’s going on outside of your business, with competitors and the overall industry, so you can identify and address issues to improve your business’s efficiency and competitiveness.

Benchmarking is an essential part of assessing your business, and with opportunities and challenges that are on the horizon for today’s manufacturers, it is critically important to identify your strengths and weaknesses.

And, if you are a metal stamper and a PMA member, leveraging benchmarking data has become even easier with the association’s new Metalforming Insight powered by Harbour Results and Plante Moran. The new benchmarking tool enhances and updates PMA’s industry surveys and reports and delivers an unmatched resource of business-critical data and insights for PMA members.

To get the most out of your data it is important to have a plan in mind when you review the performance metrics. A few key questions to ask yourself, include:

• What are my high-priority areas? It’s not realistic to try to improve every area of your business, so identify a few critical KPIs to focus on.

• Am I committed to taking action based on the results? If you aren’t going to act based on the information you learn from benchmarking, you are wasting time and resources.

Data tells the story

Your benchmarking data tells your company’s story: How is production impacted by pay raises? What are the gains from adding automated equipment and how long until you see them? How do you compare to competitors or your company status 5 or 10 years ago? Dusting off and analyzing your historical data can help you identify areas of common or related concerns. For example, periods of low production coinciding with times of high turnover, when resources are transferred to training new hires, show a need for increased employee retention efforts.  

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Key metrics to benchmark, include:

• Financial structure and performance (profitability, return on investment)

• Sales practices and performance (revenue, hit rates)

• Efficiency and productivity (throughput)

• Human resources (recruiting and retention rates)

• Management performance (adherence to 5- and 10-year plans, overall business strategy)

• Materials (lifespan of equipment, impact of automation)

• Engineering (efficiency of business processes)

• Workplace safety performance

• Wage rates and benefit costs

• Internal and external quality (rates of damaged goods, customer satisfaction)

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 Be sure to keep an eye out for anomalies in your data as these could point to an error in data collection or an underlying issue to address. This is especially true if the data point is significantly outside the normal or historical range. Dig in to find the root cause to avoid a reoccurrence.

PMA recently launched its first study of 2021 focused on financial performance and investment. We encourage everyone (PMA member or not) to participate. The more data compiled the better analysis that can be conducted. This study will enable business leaders to identify strengths and weaknesses, and by cross analyzing various data, they can see how certain operational factors interact to impact results. For example – a link between average daily production and the tenure of its workforce, or between the profit per day and the number of workers on the floor.

In the end, listen to the data. Whether benchmarking, which is incredibly valuable, or your own current and historical data. The numbers don’t like, they are telling your story and revealing insight you weren’t aware of that when addressed, could help that bottom line.

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This article was written in collaboration with Cara Walton, Engagement Manager, Harbour Results, Inc. She is responsible for managing the company’s Harbour IQ business intelligence tool, which provides data and intelligence to North American manufacturing companies.