Definition and Process

Benchmarking:

Benchmarking:

Definition and Process

Benchmarking is a systematic method by which organisations can measure themselves against the best industry practices Benchmarking is a search for best practices, innovative ideas and highly effective operating procedures through using the experience of others Benchmarking is a powerful tool to achieve business and competitive objectives when used correctly and aligned with organisation strategy

Operations Management

Benchmarking:

Deciding What to Benchmark

Organisations that benchmark, adapt the process to best fit their own needs and culture through deciding what to benchmark, understanding their current performance and through planning

In deciding what processes to benchmark, one may ask:

Which processes are causing the most trouble? Which processes contribute most to customer satisfaction and which are not performing up to expectations?
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Benchmarking:

Deciding What to Benchmark

What are the competitive pressures impacting the organisation the most? What processes or functions have the most potential for differentiating our organisation from competition?

Operations Management

Benchmarking:

Understanding Current Performance

In order to compare practices to outside benchmarks, organisations must thoroughly understand and document the current processes

Operations Management

Operations Management:
What is Benchmarking
Benchmarking is a systematic process for identifying and implementing best or better practices Benchmarking is a self-improvement tool for organisations It allows them to compare themselves with others, to identify their comparative strengths and weaknesses and learn how to improve It is a way of finding and adopting best practices

Operations Management

Operations Management:
What is Benchmarking
Although experts break benchmarking into several types, there exist two main types of benchmarking:
Performance benchmarking: This involves comparing the performance levels of organisations for a specific process This information can then be used for identifying opportunities for improvement and/or setting performance targets

Operations Management

Operations Management:
What is Benchmarking
Performance levels of other organisations are normally called benchmarks and the ideal benchmark is one that originates from an organisation recognised as being a leader in the related area Benchmarks are also often used in the form of indexes such as the American and European Customer Satisfaction Indexes

Operations Management

Operations Management:
What is Benchmarking
Best practice benchmarking: This is where organisations search for and study organisations that are high performers in particular areas of interest The processes themselves of these organisations are studied rather than just the associated performance levels, normally through some mutually beneficial agreement that follows the benchmarking code of conduct

Operations Management

Operations Management:
What is Benchmarking
Knowledge gained through the study is taken back to the organisation and where feasible and appropriate, these high performing or best practices are adapted and incorporated into the organisations own processes Therefore best practice benchmarking involves the whole process of identifying, capturing, analysing, and implementing best practices

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Operations Management:
Who Uses Benchmarking
In the West most large and highly successful organisations use best practice benchmarking as a tool to continually learn and improve The resources needed to carry out repeated best practice benchmarking projects properly and in a way that maximises the learning to be gained from the experiences can be considerable, hence it is used more frequently within large organisations

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Operations Management:
Who Uses Benchmarking
Indications are that the use of benchmarking worldwide continues to grow since Robert Camp wrote the first book on benchmarking in 1989 Support for this comes from: The Benchmarking Exchange which has been monitoring Google search hits on benchmarking over many years, The growth from year to year in membership of the Global Benchmarking Network which now has representatives from over 20 countries
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Operations Management:
Who Uses Benchmarking
The growth in the number of countries that have a business excellence award to more than 70 (the growth in business excellence is likely to be correlated to the growth in benchmarking as a central part of business excellence is benchmarking with as much as 50% of the points associated with these models attributed to benchmarking) and The continuing popularity of benchmarking within the academic community as the number of papers written on the subject continues to grow

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Operations Management:
Who Uses Benchmarking
Different research studies have placed UK company involvement in benchmarking at 78%, 85%, and 60%, and a European study suggested that 88% of companies were involved in benchmarking In the US a similar level of involvement was recorded by Bain & Companys international management tools survey (of which 60% of respondents were US), it indicated that 84% of organisations used benchmarking

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Operations Management:
Challenges in Benchmarking
There are several common challenges associated with the benchmarking approach. There are several main issues that both inhibit organisations actively involved in benchmarking and prevent others from attempting active involvement

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Operations Management:
Challenges in Benchmarking
These difficulties included: Finding suitable partners Difficulties in comparing data (50% of organisations found this) Resource constraints (time, finance and expertise) Staff resistance

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Operations Management:
Challenges in Benchmarking
The main reasons given by respondents for not being involved in benchmarking at all were: Ignorance Resource constraints Data comparability Too small to gain Not appropriate

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Operations Management:
Business Performance Improvement Resource (BPIR)

How can the BPIR help? Membership of the BPIR simplifies the whole process of benchmarking so that all organisations whatever their size and level of resource can benefit from this powerful technique of "learning from the experience of others The BPIR will assist you in finding suitable benchmarking partners, measuring performance, and directly shares good ideas and best practices from leading organisations through the hundreds of case studies provided
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Operations Management:
Track Record of benchmarking Use
Because benchmarking is so closely linked to business excellence, many of the benefits attributed to one can also be attributed to the other For organisations to reach performance levels judged as "world-class" the various business excellence models indicate clearly, through their scoring systems, the importance of benchmarks and the process of benchmarking

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Operations Management:
Track Record of benchmarking Use
Business excellence models include, among others: The Balanced Scorecard (BSC) and the EFQM's Business Excellence Model (BEM) which are tools that use measures of an organisation's performance to drive organisational improvement - generally by highlighting current shortfalls in performance to management teams

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References and Further Reading

http://www.acu.ac.uk/policyandresearch/benchmarking/whatisbe nchmarking.html

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References
Besterfield, D.H., Besterfield-Michna, C., Besterfield, G.H and BesterfieldSacre, M. (2006). Total Quality Management, 3rd ed. New Delhi: PrenticeHall of India Private Ltd. Zeithaml, V.A and Bitner, M.J.O. (2003). Services Marketing: Integrating Customer Focus Across the Firm: McGraw-Hill, Boston. Hashmi, K. (n.d.). Introduction and Implementation of Total Quality Management (TQM). Retrieved November 18, 2006, from http://www.isixsigma.com/library/content/c31008a.asp. http://www.destinationcrm.com/articles/default.asp?ArticleID=5129 http://www.workz.com/content/view_content.html?section_id=487&co ntent_id=4996 http://www.acu.ac.uk/policyandresearch/benchmarking/whatisbench marking.html

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