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Mohammad Zaid

BENCHMARKING
What is Benchmarking?
Benchmarking is a popular method for developing requirements and setting goals. In more conventional terms, benchmarking can be defined as measuring your performance against that of best-in-class companies, determining how the best-in-class achieve those performance levels, and using the information as the basis for your own companys targets, strategies, and implementation. Benchmarking involves research into the best practices at the industry, firm, or process level. Benchmarking goes beyond a determination of the industry standard; it breaks the firms activities down to process operations and looks for the best-in-class for a particular operation. Benchmarking goes beyond the mere setting of goals. It focuses on practices that produce superior performance. Benchmarking involves setting up partnerships that allow both parties to learn from one another. Competitors can also engage in benchmarking, provide they avoid proprietary issues. Benchmarking must have a structured methodology to ensure successful completion of through and accurate investigations. However, it must be flexible to incorporate new and innovative ways of assembling difficult-to-obtain information. It is a discovery process and a learning experience. It forces the organization to take an external view, to look beyond itself.

The benchmarking process


Canm (1989) lists the following steps for the benchmarking process:

1. Planning
1.1 Identify what is to be benchmarked 1.2 Identify comparative companies 1.3 Determine data collection method and collect data

Mohammad Zaid

2. Analysis
2.1 Determine current performance gap 2.2 Project future performance levels

3. Integration
3.1 Communicate benchmark findings and gain acceptance 3.2 Establish functional goals

4. Action
4.1 Develop action plans 4.2 Implement specific actions and monitor progress 4.3 Recalibrate benchmarks

5. Maturity
5.1 Leadership position attained 5.2 Practices fully integrated into process

Getting started with benchmarking


The first step in benchmarking is determining what to benchmark. To focus the benchmarking initiative on critical issues, begin by identifying the process outputs most important to the customers of that process. The essence of benchmarking is the acquisition of information. The process begins with the identification of the process that is to be benchmarked. The process chosen should be one that will have a major impact on the success of the business. Once the process has been identified, conduct research using the internet and other electronic networking resources. Dont forget your organizations internal resources. If your company has an Intranet use it to conduct an internal search. Set up a meeting

Mohammad Zaid

with people in key departments, such as R&D. Tap the expertise of those in your company who routinely work with customers, competitors, suppliers, and other outside organizations. Often your companys board of directors will have an extensive network of contacts. The search is, of course, not random. You are looking for the best, not the average firm. There are many possible sources for identifying the elites. One approach is to build a compendium of business awards and citations of merit that organizations have received in business process improvement. Dont overlook your own suppliers as a source for information. If your company has a program for recognizing top suppliers, contact these suppliers and see if they are willing to share their secrets with you. Also contact your customers. Customers have a vested interest in helping you do a better job. If your quality, cost, and delivery performance improves, your customers will benefit. Customers may be willing to share some of their insights as to how their other suppliers compare with you. And advantage to identifying potential benchmarking partners through your customers is that you will have a referral that will make it easier for you to start the partnership. Another source for detailed information on companies is academic research. Companies often allow universities access to detailed information for research purposes. After a list of potential candidates is compiled, the next step is to choose the best three to five targets. A candidate that looked promising early in the process might be eliminated later based on the following criteria: Not the best performer Unwilling to share information and practices. Low availability and questionable reliability of information on the candidate.

As the benchmarking process evolves, the characteristics of the most desirable candidate will be continually refined. This occurs as a result of a clearer understanding of your

Mohammad Zaid

organizations key quality characteristics and critical success factors and an improved knowledge of the marketplace and other players. This knowledge and the resulting actions tremendously strengthen the organization.

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