BENCHMARKING

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Customer Expectation Dilemma

 Benchmarking
Benchmarking is the process of continually searching
for the best methods, practices and processes, and
either adopting or adapting their good features and
implementing them to become the “best of the best.”

Use benchmarking both for comparison of

performance as well as to understand the
potential for improvement

The search for "best practice" can take
place both inside a particular industry,
and also in other industries (for example
- are there lessons to be learned from
other industries?).

The objective of benchmarking is to
understand and evaluate the current
position of a business or organisation in
relation to "best practice" and to identify
areas and means of performance
improvement.

How is benchmarking used?
1. Compare performance of an existing
process against other companies’ best-in-
class practices
2. Determine how those companies achieve
their performance levels
3. Improve internal performance levels
Application of benchmarking involves four
key steps:
(1)Understand in detail existing business processes

(2) Analyse the business processes of others

(3) Compare own business performance with that of others

analysed

(4) Implement the steps necessary to close the performance

gap

Benchmarking should not be considered a one-off exercise.

To be effective, it must become an ongoing, integral part
of an ongoing improvement process with the goal of
keeping abreast of ever-improving best practice.
 Types of Benchmarking
Type Description Most Appropriate
for the Following
Purposes

Strategic Where businesses need to improve overall - Re-aligning

Benchmarking performance by examining the long-term business strategies
strategies and general approaches that that have become
have enabled high-performers to inappropriate
succeed.
It involves considering high level aspects
such as core competencies, developing new
products and services and improving
capabilities for dealing with changes in the
external environment.

Changes resulting from this type of

benchmarking may be difficult to implement
and take a long time to materialise
Type Description Most Appropriate
for the Following
Purposes

Performance Businesses consider their position _ Assessing relative

or Competitive in relation to performance level of performance
characteristics of key products in key areas or
Benchmarking and services. Benchmarking activities in
partners are drawn from the comparison with
same sector. others in the same
sector

This type of analysis is often And finding ways of

undertaken through trade closing gaps in
associations or third parties to performance
protect confidentiality.
Type Description Most Appropriate
for the Following
Purposes

Process Focuses on improving specific critical - Achieving

processes and operations. improvements in
Benchmarking
key processes to
Benchmarking partners are sought from
obtain quick
best practice organizations that perform
similar work or deliver similar services.
benefits

Process benchmarking invariably

involves producing process maps
to facilitate comparison and
analysis.
This type of benchmarking often
results in short term benefits.
Type Description Most Appropriate for the
Following Purposes

Functional Businesses look to benchmark - Improving activities or

Benchmarking with partners drawn from services for which
different business sectors or counterparts do not
areas of activity to find ways exist.
of improving similar functions or
work processes..

This sort of benchmarking can

lead to innovation and dramatic
improvements
Type Description Most Appropriate
for the Following
Purposes
Internal Involves benchmarking businesses or operations - Several
Bench from within the same organisation (e.g. business business units
marking units in different countries). within the same
organisation
The main advantages of internal benchmarking are exemplify good
that access to sensitive data and information is practice and
easier; standardised data is often readily available; management want
and, usually less time and resources are needed. to spread this
expertise quickly,
throughout the
organisation
There may be fewer barriers to implementation as
practices may be relatively easy to transfer across
the same organisation.

However, real innovation may be lacking and best

in class performance is more likely to be found
through external benchmarking.
Type Description Most Appropriate
for the Following
Purposes
External Involves analysing outside - Where examples of
organisations that are known to good practices can be
Benchmar- be best in class. found in other
king External benchmarking provides organisations and there
opportunities of learning from is a lack of good
those who are at the "leading practices within internal
edge". business units
.
This type of benchmarking can
take up significant time and
resource to ensure the
comparability of data and
information, the credibility of the
findings and the development of
sound recommendations
Type Description Most Appropriate
for the Following
Purposes
Internation Best practitioners are identified and - Where the aim is to
analysed elsewhere in the world, perhaps achieve world class
al because there are too few benchmarking status or simply because
Benchmark partners within the same country to produce there are
ing valid results. insufficient"national"
businesses against
which to benchmark.

Globalisation and advances in information

technology are increasing opportunities for
international projects.

However, these can take more time and

resources to set up and implement and the
results may need careful analysis due to
national differences