Benchmarking is defined as identifying and adapting best practices from other organizations to improve performance. There are several types of benchmarking based on the object benchmarked or organizations compared. The benchmarking process involves planning, analysis, integration, action, and achieving maturity. Benchmarking provides benefits like continuous improvement and sharing best practices, but also risks leading to stagnation if over-relied on without innovation.
Benchmarking is defined as identifying and adapting best practices from other organizations to improve performance. There are several types of benchmarking based on the object benchmarked or organizations compared. The benchmarking process involves planning, analysis, integration, action, and achieving maturity. Benchmarking provides benefits like continuous improvement and sharing best practices, but also risks leading to stagnation if over-relied on without innovation.
Benchmarking is defined as identifying and adapting best practices from other organizations to improve performance. There are several types of benchmarking based on the object benchmarked or organizations compared. The benchmarking process involves planning, analysis, integration, action, and achieving maturity. Benchmarking provides benefits like continuous improvement and sharing best practices, but also risks leading to stagnation if over-relied on without innovation.
Benchmarking is defined as identifying and adapting best practices from other organizations to improve performance. There are several types of benchmarking based on the object benchmarked or organizations compared. The benchmarking process involves planning, analysis, integration, action, and achieving maturity. Benchmarking provides benefits like continuous improvement and sharing best practices, but also risks leading to stagnation if over-relied on without innovation.
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Benchmarking
Learning Outcomes Objectives of Benchmarking Types of Benchmarking Benchmarking Process Benefits and Pitfalls of Benchmarking
#2 What is Benchmarking? American Productivity and Quality Centre (APQC) has defined the benchmarking as the process of identifying, understanding, and adapting outstanding practices and processes from organisations anywhere in the world to an organisation to improve its performance.
#3 Reasons to Benchmark (Objectives of Benchmarking)
1. Benchmarking aims at a goal setting process to facilitate comparison with the
best. 2. It aims at motivating and stimulating company employees towards the goal of continuous quality improvement. 3. It aims at external orientation of the company. 4. It aims at identifying a technological break-through. 5. It aims at searching for industry best practices.
#4 Reasons to Benchmark (Objectives of Benchmarking)
Objectives Without benchmarking With benchmarking
Becoming competitive Internally focused Understanding of Evolutionary change competitiveness Ideas from proven practices Industry best practices Few solutions Many options Frantic catch-up Superior performance activity Defining customer Based on history or gut Market reality requirements feeling Superior performance Perception Establishing effective Lacking external focus Credible, unarguable goals and objectives Reactive Proactive
Developing true measures Pursuing pet projects Solving real problems
of productivity Strength and Understanding outputs weaknesses not Based on industry best understood practices Route of least resistance #5 Types of Benchmarking
I. Classification Based on the Object to be Benchmarked
1. Product Benchmarking: This refers to comparison of different features and attributes of competing products and services. 2. Performance Benchmarking: This refers to comparison of performance indicators related to a business as a whole or to the group of critical activities or processes. 3. Process Benchmarking: This refers to comparison of processes. It identifies a more effective and efficient process to be implemented. 4. Strategic Benchmarking: This refers to examining competitive position in the market place. 5. Generic Benchmarking: This refers to comparison of general best practices which are common across industry sectors markets.
#6 Types of Benchmarking
2. Classification Based on the Organisations against Whom One is Benchmarking
1. Internal Benchmarking: It refers to comparison of performance between departments, plants, subsidiaries, etc., within the same organisation. 2. External Benchmarking: It refers to comparison of performance with external organisations producing same class of products and services. 3. Industry Benchmarking: It refers to comparisons with a group larger than the direct competitor (i.e., other organisational players such as suppliers, distributors, customers, etc.). 4. Competitive Benchmarking: It refers to comparison of performance against direct competitors in order to catch up or surpass competitor performance. 5. Best-in-class Benchmarking: It refers to comparison of performance with best practices prevalent in an organisation irrespective of products and services. 6. Relationship Benchmarking: It refers to comparison of performance with the benchmarking company which already has a relationship like #7 customer-supplier relations, joint venture arrangement, etc. Benchmarking Process
Phases Steps
1. Earmark what is to be benchmarked?
2. Identify the best competitor.
I. Planning 3. Determine the data collection method and start collecting data.
4. Determine the current performance gap.
II. Analysis 5. Project future performance levels.
6. Communicate benchmark findings and gain acceptance.
7. Establish functional goals
III. Integration
Communicate data Gain acceptance
for analysis for analysis
8. Develop action plans.
IV. Action 9. Implement specific actions and monitor progress.
10. Recalibrate benchmarks.
11. Attain the leadership position.
V. Maturity 12. Integrate practices into the process #8 Benefits of Benchmarking
(i) Creating a culture that values continuous improvement to achieve excellence.
(ii) Sharing the best practices between benchmarking partners. (iii) Prioritizing the areas that need improvement. (iv)Enhancing creativity by devaluing the not-invented-here syndrome. (v) Increasing sensitivity to changes in the external environment. (vi)Shifting the corporate mind-set from relative complacency to a strong sense of urgency for ongoing improvement. (vii) Focussing resources through performance target set with employee unit.
#9 Pitfalls of Benchmarking
Benchmarking is based on learning from others, rather than developing new
and improved approaches. Since the process being studied is there for all to see, therefore a firm will find that benchmarking cannot give them a sustained competitive advantage. Although helpful, benchmarking should never be the primary strategy for improvement. If all the industries employ the benchmarking approach, it will lead to stagnation of ideas, strategies, best industry practices, etc. So benchmarking should not be a substitute for innovation. It must be a mere improvement tool.
