Marwan ELSAYED

Monday, 21 December, 2009

BENCHMARKING

Background

Benchmarking means take measurement against a reference point.

Probably from the most successful pioneers in benchmarking is XEROX Corporation

which formally began conducting the benchmarking in the late 70th, in its copier
duplicator manufacturing division, other companies also conducted the
benchmarking as a tool of success like AT&T, Motorola, Johnson & Johnson and
they all win the award of quality improvement award.

Definition

Benchmarking is simply the process of measuring the performance of one's

company against the best in the same or another industry.
In addition Benchmarking is basically learning from others. It is using the knowledge
and the experience of others to improve the organization. It is analyzing
theperformance and noting the strengths and weaknesses of the organization and
assessing what must be done to improve.
Bare in mind that Benchmarking is not just making changes and improvements for
the sake of making changes, benchmarking is about adding value. No organization
should make changes to their products, processes, or their organization if the
changes do not bring benefits

Why organization uses the Benchmarking?

Organization uses the Benchmarking for many reasons we can list

 Stimulate planning: - assists the organization to clarify and shape the future
planning during gathering the information's.
 Accelerate process of improvement: - leaders want to implement changing in
the work flow because the benchmarking demonstrates that these changes are
successfully done by others.
 Finding new technologies and techniques: - help mangers to uncover new
technologies and techniques implemented by other organization that might
enhance the performance.
 Maximize award winning potential: - many award programs recognize
benchmarking and allocate points to the organization that implement it.

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 Marwan ELSAYED
Monday, 21 December, 2009

Types of benchmarking

Two main types of benchmarking are the most important and while defining them
we can also identify the advantage and the disadvantage of each one .

Internal Benchmarking:-
A comparison between two similar ongoing processes inside the same organization
in order to enhance the performance of the defected one and maintain the good
performance of the other.

Advantage of internal benchmarking:-

 Makes a great starting of benchmarking studies if any future case needs to
be benchmarked, easy because already done and also will improve the way .
 Gains a deeper understands of our own process and operation.
 Easy to transfer lesson earned.
 Sharing information and enhance the communication between members.
 In addition and overall it's fast and cheap.

Disadvantage of internal benchmarking:-

 Can create atmosphere of bad competition between departments.
 Limits option of imagination or new ideas.

External benchmarking:-
Can also be called "competitive benchmarking", This form of benchmarking is
measuring the performance, products, and services of an organization against its
direct or indirect competitors in its own industry, in addition could be chance to
combine forces against other third one.

Advantage of external benchmarking:-

 Better knowing your competitor.
 Useful for planning and setting goals.
 Possible partnership.

Disadvantage of external benchmarking:-

 Can result to a difficult legal issues
 Limited by trade secrets & Threatening

Another type of benchmarking can be listed is "Functional Benchmarking"

Comparison between the similar practice with the similar function from outside the
industry, example, assembling customers order, maintaining inventory control of
spare parts computer, etc….

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Monday, 21 December, 2009

Moreover, "Cooperative Benchmarking", organizations invite best in class

organizations to meet with their benchmarking team to share knowledge. This is
usually done without much controversy because these organizations are not direct
competitors.

Critisime of Benchmarking

One of the criticisms of benchmarking is that it can be considered as Spying on the

Competition . This is not truth. Benchmarking is not spying on the competition but
keeping up with what they and the rest of the industry are doing. In Japan,
benchmarking is a part of their manager's job descriptions . This is one of the ways
that the Japanese are able to keep up with and surpass others in industries such as
automobiles, motorcycles, electronics, etc.

Another criticism of benchmarking is that it is Copycatting ideas but copycatting and

Benchmarking are not one and the same.
Copycatting leads to stopping imagination and freezes the new ideas. Benchmarking
is not supposed to take the place of managers inside the organization. Although
copycatting is an easy trap for managers to fall into, it is very important for managers
to realize that benchmarking will never be an excuse for managers to stop being
creative and innovative.

Ethical practice concerning Benchmarking

Since the concept of benchmarking can sometimes leads to unethical behavior the
International Benchmarking Clearinghouse have established a general code of
conduct .some main principle of The code is as follows:-
 Do not ask competitors for sensitive information. Do not make them feel that
if the data is not shared the benchmarking process will end.
 Treat any information obtained from a benchmarking partner as privileged or
“top secret” information. Don't give away any information or potential trade
secrets without permission
 Consult with a legal advisor if any information gathering procedure is in
doubt.

Finally, When an organization looks at benchmarking they must look at all aspects of
the business, its products, and its processes. It is critical for organizations to focus on
anything that will impact its performance and quality.