Benchmarking has had its turn as the darling of the business press and the hot topic solution to all the woes a business faces. Thank goodness the days of it being oversold have passed.
Benchmarking provides a set of insights and perspectives to management teams that take the time to provide accurate information of sufficient detail. They also allow you to get through learning curves of the key metrics’ meanings and their calculations, and help you own emotional reactions to challenging and exposing information. Lastly, benchmarking also helps you actively seek disconfirming information, and shows you the implications of things so you can formulate action plans to implement. Benchmarking is a window of insight to those qualified to use it, a mirror of denial to those seeking affirmation, and an opaque barrier to those ill-equipped.
How AgriSolutions Uses Benchmarking to Make your Ag-Business Better
AgriSolutions, Inc. has been providing benchmarking opportunities, supporting industry standards initiatives, and leveraging technology to collect and manage data for well over 40 years. We understand the challenges that each stage of the process contains. Whether collecting, presenting, or applying benchmark information, there are unique costs and benefits that everyone involved in the effort should fully appreciate if a value is to be realized. This article describes the costs and benefits of each of these three areas from the perspective of the Historical Performance Analysis (HPA) data collected from our customers.
Computer technology holds great promise for speed and efficiency in collecting data. This is important for benchmarking’s value proposition. Remember, the value is best understood as real and perceived benefits divided by real and perceived costs. This means that there are two ways to improve the value of the effort: reduce cost and increase benefits. Both of these strategies are (and should be) pursued. The cost of assembling data for a benchmark is directly related to the availability of that input data. For financial benchmarking this means that the business has up-to-date financial records that are accurate, that comply with the standard, and are of sufficient detail. For many producers, getting to the point where such records exist is part of the process.
AgriSolutions helps by offering a staged-in approach, by coordinating meetings that serve as training and networking sessions, and by providing support personnel to assist in the process. A producer can start in a meaningful and valuable benchmarking relationship at the first stage if they can provide just 10 key numbers per year. These numbers are entered on a secure web page and are stored in a secure database so that the full capability of modern reporting solutions are available.
Benchmark Reporting & Analysis
AgriSolutions has worked hard to improve the benchmark reporting process and its corresponding analysis as well. Using SMED (single minute exchange of dies) principles, borrowed from manufacturing, AgriSolutions has reduced the time between entering data and receiving a deck of benchmark reports to less than one minute. Being so dynamic also means that corrections are instantly processed – updating all reports. Ideally, everyone has plenty of time and perfect accuracy, but pragmatism is the better approach. Thus, a participant can move quickly to get started with benchmark analysis, learning the concepts and seeing results. For the HPA Financial Benchmark that we have been discussing, this means that the management team can consider what-if scenarios and probe the magnitude of observed shortfalls (for example, to raise Current Ratio to the target value are we looking at a $100,000 problem or a $750,000 problem?). From that AgriSolutions can help you forecast and benchmark future sentiments. Benchmarking adds a new dimension when it is focused on the future instead of the past. Financial benchmarking at the overall level is important as it lets the management team know exactly where they stand competitively.
AgriSolutions can Help You Forecast and Benchmark Future Sentiments
Benchmarking adds a new dimension when it is focused on the future instead of the past. Financial benchmarking at the overall level is important as it lets the management team know exactly where they stand competitively.