BENCHMARKING

The process of benchmarking consists of distinguishing the aspects of policy, procedure and practice for which information from other organizations is needed and identifying the important performance areas or factors within the organization for which comparative data is needed. It also includes identifying different organizations or sources of information concerning these factors and approaching organizations to achieve agreement on getting information on a reciprocal basis. Aggregating the data from different organizations about the efficacy of any policy, procedure or practice and how well it performs. It is much important to determine the extent the approach is transferable from that organization to the organization exercising benchmarking and evaluates the degree to which a practice is unique to an organization and is not therefore, transferable in its present form and analyzing published data or information from professional/employer’s organizations. 

 Benchmarking is concerned with identifying best practices within and outside the industry to which an organization belongs to, compare them with existing practices within the organization, and taking action to make improvements in those practices in view of the information on the best practices, comparing and measuring the performance of the organization in particular respects with the performance in those areas of the other organizations.

The purpose of benchmarking is to find the best performers in an area so that one could match one’s own performance with them and even surpass them. It facilitates to the organization a platform to improve the performance of the organization by appropriate best practices into the existing procedures and practices and by identifying areas where performance is inadequate compared with other organizations so that corrective action is taken.

When examining policies, practices and procedures it is essential to ascertain the extent to which they will be taken in their present or a changed form. The information can be used to check the degree to which proposed innovations within the organization are advancing along the correct path and to amend proposals to take account of the lessons learned elsewhere. One thing that works well in one organization may not work well in another due to variations in organization culture, structure, management style, technology and customer base. There is often as much to draw lessons from the failures and bad practices or comparator organizations as there is from their successes. Albeit the most effective elements are taken from a variety of sources, the real skill lies in knowing how to combine the ingredients properly.

When one is fascinated by looking for the areas of comparison benchmarking is of three types:

1. Process,
2. Performance, and
3. Strategic benchmarking.

Process benchmarking make comparison of the methods and practices for performing processes.

Performance benchmarking put one’s own performance against that of some other organization in order to ascertain the positive aspects of its own.

Strategic benchmarking compares critical decisions and actions other organizations undertake to achieve their long run objectives.

When distinguished against whom to compare there are four types of benchmarking.

1.     Internal benchmarking makes a comparison between units or department of the same organization.

2.     Competitive benchmarking compares one’s own performance against the best competitors.

3.     Functional benchmarking compares processes or functions against non-competitive organization within the same sector or technological area.

4.     Generic benchmarking makes a comparison of one’s own processes against the best practices anywhere in any sort of organization.

When comparing published data, it is essential to ensure that like is being compared with like.

The following steps may be necessary for benchmarking.

1.     The firms understand their own process in detail.

2.     Study other companies that produce similar products and choose the best ones.

3.     Make a visit of the best companies.

4.    Distinguish the factors responsible for better performance in terms of lower cost and better quality.

5.     Take corrective action.

Certain basic areas have been identified for designing benchmarking architecture.

1.  1. Customer service performance
   2    Product /service performance
   3    Core business process performance
   4    Support processes and services performance
   5    Employee performance
   6    Supplier performance
   7    Technology performance
   8     New product/service development and innovation performance
   9     Cost performance
          Financial performance
   

   

In designing benchmarking architecture the following steps are taken:

1.    Design a system that enables management to achieve the organization’s objectives.

2.  Create a common language for measuring performance consistent with the corporate culture.

    Design plans to gather, process, and analyze the performance measures.

  In addition to careful design of benchmarking system architecture, other critical success factors include:

1.     Top management support.

2.     Benchmarking training for the project team

3. Suitable management information system

4.     Appropriate information technology.

5.     Internal corporate culture

6.     Adequate resources

The precise process need for benchmarking varies from company to company according to internal needs and culture. 

Thus, a firm could attempt benchmarking at several levels using all the different types of benchmarking. The main purpose should be to find out the best practices so that one could conform to it. But before one does this, benchmarking is enough to show where a firm excels or lags behind. This assists in evaluating the strengths and weaknesses of an organization and determining its capability.