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