Benchmarking

business practices
in the Philippines
What is Benchmarking?

 A measurement of the quality of an organization's policies, products,

programs, strategies, etc.

A comparison with standard measurements, or similar

measurements of its peers.

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Business Practice

▪ A method, procedure, process, or rule

employed or followed by a company in the
pursuit of its objectives.

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Types of Benchmarking

1. Internal benchmarking
2. Competitive benchmarking
3. Functional benchmarking
4. Generic benchmarking

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Internal Benchmarking

▪ It is a comparison of a business process to a similar process inside the organization

to acquire the best internal business practices.
Example:
In Jollibee Food Corporation (JFC) can choose among its chain retail stores (Jollibee, Chowking, Mang
Inasal, Red Ribbon, etc.) and compare the business practices such as food, menu, manner of service,
etc.

Competitive effect Anti-Competitive effect

 cost efficient fosters mediocrity
 Relatively easy limits options for growth
Low cost low performance improvement
 good practice/training with benchmarking process can create atmosphere of competitiveness
information sharing not much of a stretch
easy to transfer lessons learned No growth
common language may not yield best-in-class comparisons
gain a deeper understanding of your own process
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Competitive Benchmarking

▪ A direct competitor-to-competitor comparison of a product, service, process, or method.

▪ This form of benchmarking provides an opportunity to know yourself and your competition better.

Example:
Comparison of two different branding companies

Competitive effect Anti-Competitive effect

comparing like processes
know your competition better
possible partnership
useful for planning and setting goals
similar regulatory issues
difficult legal issues
low performance improvement
threatening
limited by trade secrets
may provide misleading information
may not get best-in-class comparisons
competitors could capitalize on your
weaknesses
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Functional Benchmarking

▪ A comparison to similar or identical practices within the same or similar functions

outside the immediate industry

Example: The picking process for assembling customer orders, maintaining inventory
controls of spare computer parts, logistics to move operational forces, manner of
delivery

Competitive effect Anti-Competitive effect

provides industry trend information diverse corporate cultures
common functions can be difficult to find
quantitative comparison takes more time than internal or percent
better improvement rate must be able to visualize how to adapt the best practices

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Generic Benchmarking

▪ Generic benchmarking broadly conceptualizes unrelated business processes or

functions that can be practiced in the same or similar ways regardless of the
industry.
Example: The hospital’s check-in process is contrasted against a car rental agency's check-in process.
Adapting grocery store bar coding to control and sorting airport luggage.

Competitive effect Anti-Competitive effect

Non-threatening difficult concept
can be difficult to identify best-in- class
innovative takes a long time to plan
high potential for discovery known world-class companies are inundated with
examines multiple industries requests
quantum changes can bring high risk, escalate
fear

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Analogy

Internal Competitive Functional Generic

External   

Internal   

Cost  
efficiency
Same   
products,
service and
methods

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End.