is the process of
an organization's operations and internal processes against those of other
organizations within or
outside its industry. The other organizations against which the
comparisons are made, known as
partners', are usually
those that are perceived to be the
performers in their class.
The purpose of benchmarking is to identify and adopt best known practices that can lead to superior performance.
It was a buzzword in the 80's and 90's, but continues to be strongly
practiced in various industries today.
a systematic process - it must have a
and use a
set of attributes that are measurable to compare
multiple organizations objectively.
Benchmarking must be performed on a
area or activity only, such as operational best practices, information
technology, staffing, compensation packages, distribution systems,
budgeting, and the like. Limiting the scope of the benchmarking
activity allows the formulation of a more
agenda that provides more useful information from better-targeted
are classified into four (4) categories: 1)
which pertains to departments, factories, etc. of the same company; 2)
which pertains to direct competitors; 3)
which pertains to best-in-class organizations who are in the same field or
activities; and 4)
which pertains to leading organizations from various fields and
usually the best
point for a benchmarking program. However, many companies or organizations
are not big enough for internal benchmarking, and have to resort to
external benchmark partners to get the information they need. Identifying
suitable external benchmarking partners depends on the purpose of the benchmarking
activity as well as the nature of the benchmarking organization.
example, it would be good to be able to benchmark against a leading
competitor, but this benchmarking arrangement is usually quite difficult to set up
because most leading competitors will not divulge their 'trade secrets' to
enable a competitor to catch up, resulting in bench mark results that are
empty of useful information. In such
cases, functional or generic benchmarking partners involving
companies are viable options, since these are often willing enough to
share information with an organization.
on what process or
to benchmark, considering which would give the most leverage or
improvement potential; 2)
processes or operations involved in the area being benchmarked and collect
data on their key performance metrics; a good understanding of how an
internal system works would facilitate understanding of those of the
benchmark partners; 3)
who are best in class in the area to be benchmarked and arrange
mutually-beneficial benchmarking activities with them; 4)
activities arranged with the partners; and 5)
practices that will produce the greatest benefits to the organization.
many ways by which the benchmarking proper may be conducted with the
benchmarking partner, but one of the most popular ones is by exchanging
information through a
possibly on a
the partner. This may consist of the following steps: 1)
a questionnaire that covers all the information that need to be obtained;
the questionnaire internally to test it and so that the same information
may be provided reciprocally if the partner asks for it; 3)
for every question so that its necessity may be rationalized to the
partner if necessary; 4)
the questionnaire to clarify its objectives, areas of interest, and areas
of confidentiality and sensitivity with the partner; and 5)
arrange a visit
with the partner.
If the visit to
the benchmarking partner materializes, the following
would be useful: 1) prepare for the visit thoroughly; 2) define the
purpose and objectives well; 3) commit the questionnaire to memory and
leave the hard copy behind; 4) be open and honest during the visit; 5)
avoid being seen by the partner taking down notes, but take down notes
nonetheless; 6) reciprocate information requests; 7) thank the partner
again and again.
just a tool to learn from others, and not a tool to win in business.
It will not give information on what products and services customers want,
or how to generate more revenues and profits. There are other management
techniques to accomplish these objectives. These must complement the
regular use of benchmarking to ensure continuous improvement in everything
that a company does. Lastly, benchmarking per se is
not useful unless knowledge gained from it are
put in action
to benefit the company.
Supply Chain Management; TQM
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