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Internal, competitive, functional, generic and collaborative benchmarking. Explanation of Benchmarking.


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Benchmarking exampleBenchmarking 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

  1. Internal benchmarking (benchmark within a corporation, for example between business units)
  2. Competitive benchmarking (benchmark performance or processes with competitors)
  3. Functional benchmarking (benchmark similar processes within an industry)
  4. Generic benchmarking (comparing operations between unrelated industries)
  5. 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 -

Benchmarking Forum
  Benchmarking Graphics
Performing a benchmark basically means comparing your organization with other organizations and acting on the difference.
What graphics do you prefer to do the comparison?
In industry benchmarking or competitor analysis I prefer the medi...
  Benchmarking Approaches
Processing a benchmark often means investing a lot of time in getting relevant data and determining the best practices. What approaches do you use to get data? Most used systems are:
- Custom-made benchmarking system with online data delivery to...
  Upgrade to ISO9001:2015 from ISO9001:2008
I own a ISO 9001:2008 company and want to upgrade it from 9001:2008 to 9001:2015. I need to do an internal audit for it. I want to know how can I upgrade my ISO certification and what new modules have been added into it. And how can I manage these ne...
  Benchmarking Websites
In the past I had access to PwC's, a product no longer offered by PwC.
They provided benchmarking reports using an exchange of information basis. Clients who participate in one of the benchmarking survey tools received re...
  Benchmarking in Seconday Sales in FMCG
I am trying to understand how various FMCG companies benchmark their secondary sales. Can somebody guide me?...
  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 by the end beneficiary, which may not be the same...
  Hospital Benchmarking
If anyone have review of hospital medical record statistical performance especially in developing countries, please let me know....
  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, unless of course forced by legislation....
  Conditions for Successful Benchmarking
Benchmarking is OBTAINED from the observation of other firms that are identified as the best (or sufficiently good) in the processes of interest.

Benchmarking is AIMED at improving the processes of an organization. It aims to achieve maxim...
  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 progress for what? With whom and why?...
  Airlines Benchmarking
If anybody has review of airlines organization benchmarking, please let me know.....
  What is Benchlearning?
Do you have any information about "benchlearning"? Thank you for your attention....
  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!...
  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 results to improve your organization strategy.
  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 institution is stagnant or dynamic....
  The Role of Benchmarking in 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 antagonism?...
  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?...
  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 first one becomes the benchmark to where all others a...
  How should I put together a Peer Group?
How do I determine the right companies to compose a Peer Group... Does anybody have an approach or criteria?...

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Best Practices - Benchmarking Premium
  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 not the biggest fan of benchmarking, advises to loo...

Expert Tips - Benchmarking Premium

Top 20 Benchmarking Mistakes

Below follows a list that I assembled of the most crucial benchmarking errors:
1. Not having concrete goals and objectives
2. Not est...
Usage (application): Checklist of Things to Avoid

How to Avoid Subjectivity in Benchmarking

The issue about best practices is that they're subjective given that organizations operating within the same industry are highly likely to have varyin...
Usage (application): How to Correct for Environmental Factors

3 Crucial Elements for Benchmarking

Benchmarking is a continuous, systematic process for evaluating the products, services and work processes of organizations that are recognized as repr...
Usage (application): Things to Remember when Planning Benchmarking

Avoiding Cognitive Biases During Benchmarking

To discover correctly what makes a business successful one has to look at BOTH thriving AND floundering companies to spot the qualities that separate ...
Usage (application): Benchmarking Best Practice

How to Select the Benchmarking Team

One of the most important elements in the preparation phase of a benchmark is the selection of the benchmarking team.
Although benchmarking can ...
Usage (application): Benchmarking Implementation

The Benchmarking Applications and Categories

You can benchmark any function or characteristic that you can observe or measure. Typically, the main categories used in benchmarking are:
Usage (application): What can be Benchmarked?

Avoiding Cognitive Biases During Benchmarking

During World War 2 the statistician A. Wald was assessing the vulnerability of airplanes to enemy fire. All the available data showed that some parts ...
Usage (application): Classical Example

Resources - Benchmarking Premium

What is Benchmarking?

In this video (with Spanish subtitles) 5 questions about benchmarking are answered:
  2. It is an activity that tells...
    Usage (application): Benchmarking

Benchmarking Introduction

Introduction into the concept of Benchmarking by Luann Stokke, including the follwoing sections:
1. Benchmarking defined
2. Why do people be...
Usage (application): Explaining Benchmarking Approach and Process


Benchmarking Method


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Benchmarking Method


Benchmarking Performance


Benchmarking Method


Benchmarking Performance


Benchmarking Method


Benchmarking Performance

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