1.

2 Competitive Benchmarking

Benchmarking is used to compare the organization’s processes or products to other

organizations, either internal or external to their own industry. This comparison can be on specific
product features, or can be on broad customer service categories, such as product delivery,
product warranty, etc.

The concept of benchmarking is important to achieving IPD. Benchmarking can be used in

support of IPD to improve the design process. During the initial design phase, a technique such as
QFD can be used to identify those issues that should be considered the most important to the
customer. By focusing on these issues, the design team can use benchmarking to identify other
organizations that are considered the best at each area. For example, if expediting product
delivery is considered a strong customer demand, organizations considered as “world class” in
that area should be used as the benchmark. By studying and adopting the “best practices” of
industry, product and process can be designed to deliver total customer satisfaction.

Competitive Benchmarking

The search for industry best practices

that will lead to superior
performance.
Robert C. Camp
 Benchmarking Process Steps
• Identify what is to be benchmarked.
• Identify competitive companies.
• Determine data collection method and collect data.
• Determine current performance levels.
• Project future performance levels.
• Communicate benchmark findings and gain acceptance.
• Establish functional goals.
• Develop action plans.
• Implement specific actions and monitor progress.
• Recalibrate benchmarks.

Benchmarking consists of five basic phases: the planning phase, analysis phase, integration, action,
and maturity. The planning phase is concerned with laying the foundation for the benchmarking
effort. This phase begins with the identification of the aspects of the organization that are to be
benchmarked. After identifying what to benchmark, we must identify those leading companies and
organizations that we will be comparing ourselves against. Finally, planning concludes with the
determination of how data will be collected. The analysis phase is directed at understanding the
organization’s current process practices and those of the organizations being used as a
benchmark. What we want is to understand and assess the strengths and weaknesses of our
internal performance. The questions that must be answered at this junction are: Is the benchmark
organization better? Why are they better? By how much? What best practices are they using
now or anticipated? How can we incorporate or adapt these practices into our organization? By
identifying these performance differences we can determine the improvement necessary to
perform at the same level as the “best”. The integration phase translates the benchmarking
investigation into a set of performance goals/targets. This phase begins with management’s
acceptance of the benchmark findings. In addition, the findings must be communicated to all levels
of the organization; the communication process lays the foundation for establishing performance
targets. The key to benchmarking is the conversion of the benchmark findings into a set of
operational principles which the organization can endorse and that can be used to evaluate their
performance. The action phase is where change is initiated. This is where the findings of the
benchmarking study are incorporated into processes. This is also where plans for updating the
benchmarking study and re-evaluation is done. Finally, the maturity phase is reached when the
industry best practices are incorporated into the organization’s processes and the organization as
established itself has an industry leader.

Shown below are a few of the companies that are often used as benchmarks and their areas of
excellence.
 Companies Often Used as
Benchmarks
• Florida Power and Light (Quality Management)
• L.L. Bean (Logistics)
• Hewlett Packard (Research & Development)
• Fuji Xerox (Total Quality Management)
• Saturn (Engineering)
• Microsoft (Marketing)
• Xerox (Customer Satisfaction)
• Honda (Suppliers Partnerships)

[Source: Benchmarking: The Search for Best Practices that Lead to Superior Performance by Robert C. Camp]