World-Class or Best-in-Class?

WP-WCorBICFor benchmarking to be meaningful, you need to be clear about both the performance level you are aiming for and what is feasible in your sector.

Most senior procurement executives want to know how their organisation compares to others in their possession and use of the available operational processes and systems that support ‘good practice’. While this sounds straightforward, understanding what is ‘good practice’ for a specific organisation can be problematic. This is because managers often struggle with definitions of ‘world-class’ and ‘best-in-class’ performance. Are they the same?

An attempt is made in an IIAPS Whitepaper to shed light on these issues.

The general thrust of the argument in this document is that the concept of ‘world-class’ can only be useful if it is seen as a moving ‘ideal’ that is unlikely to be fully achieved by any organisation, but against which public and private sector organisations (operating within particular circumstances) can compare themselves.

This definition makes it possible to understand what ‘best-in-class’ means — the current performance of an organisation relative to both ‘world-class’ and other comparable organisations. This comparison may be against organisations in the same industrial sector, or those of similar size in terms of revenues or number of employees.

The argument is supported by evidence from benchmarking studies into organisational competence in Europe, the Middle East and the US. The evidence shows that some organisations and sectors perform better than others, but also why it is that they should be expected to do so.

Not every organisation can, or needs to, adopt the same practices as others. What organisations and their managers have to understand is which practices are ‘best-in-class’ (i.e. ‘optimal’) for them in the context in which they find themselves. Put simply, organisations need to understand what is the most appropriate thing to do in the context of their sector, market and supply chain
circumstances.

The arguments presented in this blog are fully explained by an IIAPS Whitepaper World-Class or Best-in-Class?

IIAPS
IIAPS
The International Institute for Advanced Purchasing & Supply (IIAPS) is dedicated to the raising of international standards in purchasing and supply management so that real business value - improvements in the quality, cost and delivery performance of supply - is delivered to organisations.

5 thoughts on “World-Class or Best-in-Class?”

  1. Good to see an article that makes the distinction between world-class and best-in-class and why it does not make sense to attempt to be world-class in certain industries. The contractors I have worked for in the construction industry would not want to waste the time and effort trying to be world-class, as our short-term focus has been on getting the most from individuals projects that we have managed discretely. As much as we would like to form long-term relationships based on a flow of projects we find this very difficult as we do not have any certainty about future work, which forces us into certain ways of approaching our suppliers.

  2. I encounter very similar problems to Sam. I am also working in the construction industry (for a small firm) and spend the majority of my time focusing on strategies targeting cost reduction. I have identified areas where I can develop longer-term relationships, but these are very limited and are based on demand for specific ‘standardised’ products and services across our projects. The skills I need to manage these suppliers are quite different and I am relishing the opportunities to use them!

  3. I would like to see more detail on how you established your definition of world-class. It is surprising how some organisations considered to be world-class use tools that are very poor to develop their purchasing strategies. The resulting widespread use of ‘three bids and a buy with the usual suspects’ can hardly be considered world-class.

    1. Thanks for the comments. You will be interested to know that we will shortly be publishing a series of blogs highlighting the strengths and weaknesses of procurement tools and techniques that are widely used by practitioners and consultants.

  4. Very interesting post and thanks for sharing your thoughts. It is good to see material that does not assume that everyone needs to be world-class to be successful in their industry.

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