|
 Benchmarking
is a systematic tool that allows a company to determine whether its performance
of organizational processes and activities represent the best practices. Benchmarking
models are useful to determining how well a business unit, division, organization
or corporation is performing compared with other similar organizations. A
benchmark is a point of reference for a measurement. The term 'benchmark'
presumably originates from the practice of making dimensional height measurements
of an object on a workbench using a gradual scale or similar tool, and using
the surface of the workbench as the origin for the measurements.
Business benchmarking is related to Kaizen
and competitive advantage
thinking.
use of Benchmarking. Benefits
- Improving communication
- Professionalizing the organization / processes, or for
- Budgetary reasons
- In outsourcing projects
Traditionally, performance measures are compared with previous measures
from the same organization at different times. Although this can be a good
indication of the speed of improvement within the organization, it
could be that although the organization is improving, the competition
is improving faster...
Five types of Benchmarking
- Internal benchmarking (benchmark within a corporation, for example
between business units)
- Competitive benchmarking (benchmark performance or processes
with competitors)
- Functional benchmarking (benchmark similar processes within an
industry)
- Generic benchmarking (comparing operations between unrelated
industries)
- Collaborative benchmarking (carried out collaboratively by groups
of companies (e.g. subsidiaries of a multinational in different countries
or an industry organization).
Typical steps in a benchmarking process
- Scope definition
- Choose benchmark partner(s)
- Determine measurement methods, units, indicators and data collection
method
- Data collection
- Analysis of the discrepancies
- Present the results and discuss implications / improvement areas and
goals
- Make improvement plans or new procedures
- Monitor progress and plan ongoing benchmark.
Cost of benchmarking
There are costs to benchmarking, although many companies find that it pays
for itself. The three main types of costs are:
- Visit costs - This includes hotel rooms, travel costs, meals,
a token gift, and lost labour time.
- Time costs - Members of the benchmarking team will be investing
time in researching problems, finding exceptional companies to study, visits,
and implementation. This will take them away from their regular tasks for
part of each day so additional staff might be required.
- Benchmarking database costs - Organizations that institutionalize
benchmarking into their daily procedures find it is useful to create and
maintain a database of best practices and the companies associated with
each best practice.
Limitations of benchmarking
- Benchmarking is a tough process that needs a lot of commitment to succeed.
- Time-consuming and expensive.
- More than once benchmarking projects end with the 'they are different
from us' syndrome or competitive sensitivity prevents the free flow of information
that is necessary.
- Comparing performances and processes with 'best in class' is important
and should ideally be done on a continuous basis (the competition is improving
its processes also...).
- Is the success of the target company really attributable to the practice
that is benchmarked? Are the companies comparable in strategy, size, model,
culture?
- What are the downsides of adopting a practice?
Book: Christopher
E. Bogan, Michael J. English - Benchmarking for Best Practices -
Book: Peter Bolstorff,
Robert Rosenbaum - Supply Chain Excellence -
Book: Joe Zhu -
Quantitative Models for Performance Evaluation and Benchmarking -
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What is Benchmarking? 3 Important Elements
"Benchmarking is a continuous, systematic process for evaluating the products, services and work processes of organizations that are recognized as representing best practices for the purpose of organiz..." |
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Successful Benchmarking
"The issue about best practices is subjective given that organizations operating within the same industry are highly likely to have varied environmental factors affecting their production processes. Fo..." |
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Benchmarking Notes of Caution
"1. Be sure apples are being benchmarked with apples only, and not with oranges. Believe me this is not an easy task.
2. Products are benchmarked based on their features having perceived utilities..." |
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Hospital Benchmarking
"If anyone have review of hospital medical record statistical performance especially in developing countries, please let me know." |
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Benchmarking for Monopolies?
"Reading through the article and the reactions I wonder what benefits a monopoly industry could achieve from benchmarking! Especially where a monopoly is not yet exposed to international competetion, u..." |
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Successful Benchmarking
"Benchmarking is aimed at improving the processes of an organization. It is obtained from observation of other firms that are identified as the best (or sufficiently good) in the processes of interest...." |
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Benchmarking is One Source of Progress
"Benchmarking seems to be one source of progress, it is a vision of the way to act to become the best one.
But it is always the use that the peoples do with the tools, desire of change? Desire of ..." |
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Best Practices or Next Practices?
"C.K. Prahalad says best practices take companies only so far. At best they allow firms to catch up with their competitors, but it will not make them market leaders. Prahalad, who is obviously n..." |
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IT Process Cycle Efficiency Benchmark
"Does any one have an idea for the benchmark 'Process Cycle Efficiency in IT Processes' (specifically the ITIL change management process). Thanks for your comment!" |
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Benchmarking Benefits
"From my experience and study, I found additional to the mentioned benefits the following list of benchmarking advantages:
1. Define the price per unit of the product / service.
2. Use..." |
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Benchmark in Value Chain Analysis
"Benchmarking is a framework based on recommendations from the findings. This is a tool that can help to evaluate the action plan from time to an other. By benchmarking, you can know whether an institu..." |
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Benchmarking of Production vs. Quality
"I'm in charge of both production and quality in my company. Given that those two functions are usually in collision, how can benchmarking help me to manage both functions efficiently without antagonis..." |
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Benchmarking in Sailing
"I'm trying to do benchmarking in sailing, it's the first time that my country is working in this project therefore I need some useful information in this matter. Is there anybody who can help me?" |
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Benchmarking is a Reference Point
"The way I see it, benchmarking is a reference point that is used as a comparison to everything that follows. If there is a new process in manufacturing and an audit it to be administered, then the fir..." |
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Benchmarking and Quality (ISO 9001)
"Hello, I am looking for information about the relation between benchmarking and quality. Is Benchmarking useful in a ISO9001 quality certification process? Thanks for your comments that will help me." |
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Major Benchmarking Mistakes
"Below follows a list that I assembled of the most crucial benchmarking errors:
1. Not having concrete goals and objectives
2. Not establishing the baseline (Going out to make benchmar..." |
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Advantages Generic Benchmarking
"Comparing processes between unrelated industries (Generic Benchmarking) offers the following two advantages for a firm:
1. Possibility to implement a leading practice from another industry into i..." |
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Benchmarking Quotes and Proverbs
"Here's the first quotation related to Benchmarking:
If you know the enemy and know yourself, you need not fear the results of a hundred battles.
Sun Tzu c. 544—496 BC, Militairy Strategist a..." |
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