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.
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
Forum discussions about Benchmarking. Below you can ask a question about this topic, share your experiences, report a new development, or explain something.
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Advantages Generic Benchmarking
Comparing processes between unrelated industries (Generic Benchmarking) offers the following two advantages for a firm:
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Benchmarking Quotes and Proverbs
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Bullivant divides the history of benchmarking into five periods, namely:
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Benchmarking is a Reference Point
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The best, top-rated topics about Benchmarking. Here you will find the most valuable ideas and practical suggestions.
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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.
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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 not the ...
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...
Conditions for Successful Benchmarking
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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.
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