To maintain the quality and sustain in the competitive global market has become major issue for every business holder. Every producers and marketers should focus on better product and service offering in the market place. Producers and marketers may wonder about their offering in the market than that of the competitors or the best offerings (competitive products or services). For them benchmarking has been an effective tool for measure and maintain their performance and offerings. Benchmarking is the continuous process of comparing a company’s strategy, products or service offerings, and processes with those of market leaders and best-in-class organizations to know how to succeed and know the errors and faults. It provides the answer why that organization has better results than theirs and why it is the best in class organization. Benchmarking simply is measuring the performance against that of best in class companies or the search of industry best practices that lead to superior performance and results. Best practices usually are the innovations in terms of the use of technology, management practices, or human resources that are recognized by the customers and industry experts. In business it been important to compare own business with competitors and what are the reasons behind the competitors are more successful, why not us.
Benchmark is a point of reference against which things and process are measured. Point of reference or standards can be in any forms. They can be measured in products or process, management styles, technology or any that are even comparable and influences in organizational performance. It can be measured by question about the products or services like how many, how much, how much cost, how reliable. Benchmark doesn’t stand alone, there must be a comparison one should be better in result or output. By studying other organizations and comparing the answers to those above (how) questions, one can be able to measure the performance against the others. As a result, one will be able to set new process, new goals and new styles and adapt the best practices in his/her organization. This, in return helps to satisfy customers with the best quality, cost, products and services. Benchmarking enables an organization or business to reach where it is able to be and where it wants to be. So, Benchmarking is the best tool and technique for measuring organizational products, services and processes against those of its competitors in search for best practices that will lead to the best performance and customer satisfaction.
Benchmarking helps all the companies to pave the path for success. Benchmarking requires considerable effort and costs but it has been found to bring best result. There are lots of benefits that a growing and developing company gain from benchmarking, but it has got less importance for best in class companies. Benchmarking promotes a thorough understanding of the company’s own processes that is the company’s current profile by determining the strength and weakness. It enables comparisons of performance measures in different dimensions, with the best practices for the particular measure and involves comparison with several companies which are best selected for measure. Benchmarking process involves in analyzing and adapting the practices of superior competitors rather than invention, by which it saves the time and cost of research and development. Benchmarking also facilitates human resource management; it provides a basis for training, recruitment and selection of human resources in the organization. Employees will be able to know the gap between what they are doing and what best in class organizations are doing. Employees training will be facilitated as by what sort of training and development of employees will bring the better result. Employees will also be able to able to develop themselves and learn self-actualization. Benchmarking allows organizations to set realistic, rigorous new performance targets as it is learned from best and the best are followed there will be low chances of failure and waste of time, effort and money. Another benefit of benchmarking is that it allows organizations or companies to define specific gaps in performance and to select the processes to improve. It enables the company to redesign its products and services to achieve results that meet or exceed customer expectations.
At a glance, benchmarking can be defined as, “a continuous process that involves in internal and external measurement of products, services and processes that leads to better practice and improved performance with the support to establish realistic improvement goals.
Benchmarking process
There are different ways and methods of benchmarking that may vary from company to company but the fundamental or basic approach is the same. The specific way of benchmarking of one’s company may not work for the other or may not bring better result for the other. As the company processes, operations and management styles differs with the others. Benchmarking itself is not a solution it only shows the path to solution. A successful benchmarking reflects the culture of organization, works within the existing infrastructure and is harmonious within the leadership philosophy. There are different processes or steps of benchmarking made by different companies and they are successful.
Motorola inc. uses the following five step benchmarking process below.
1. Decide what to benchmark,
2. Select companies to benchmark,
3. Obtain data and collect information,
4. Analyze data and form action plan and
5. Recalibrate and start the process again
AT & T uses nine step process given as below.
1. Project conception,
2. Planning,
3. Preliminary data collection,
4. Best in class selection,
5. Best in class collection,
6. Assessment,
7. Implementation planning,
8. Implementation action and
9. Recommendations
Xerox divided its initial benchmarking procedure into ten steps. The benchmarking can’t be said best if it has more steps or some few steps. As benchmarking is step-by-step process, the steps and procedures should be followed as per the need. Common steps of benchmarking are described as below:-
1. Identify what to benchmark: Benchmarking is an effective to drive an organizational performance to optimum level. Firstly benchmarking should be well targeted, well planned, structured and organized. What to benchmark? Should be identified, because it will be very costly investment in resources with minimal return on investment. In this step benchmarking objectives, targets, people to be involved, process and scope should be determined. Setting of boundaries and flow chart the process may also be necessary.
2. Determine what to measure: Once the process, targets, objectives and what to measure are identified. Now, it’s time to look at similar process in other organizations. Comparison of the organization process with others should be meaningful so clear and accurate measure should be opted before looking at the processes in other organizations. For this, measurable items should be found like, overall time to complete the process, completion time, number repeats, costs and scarp. Process measures are also needed to be established by looking outside the process of own organization and considering the measures of your external customers requirement and measures of internal customers and suppliers requirements. To confirm what to measure is determined or what measure to use, refer back to your original objectives.
3. Identify who to benchmark: This is the step of finding organizations to benchmark. Once what to benchmark and what to measure is clear, it’s time to conduct general research from different sources. These sources may be trade magazine, industry publications, computer databases, and telephone or mail surveys, benchmarking consultants or market research. Out of few organizations that have sparked your interest, narrow the list of most fitted choices for your process. Industry’s best organizations processes and competitive or organization with best performance are often selected for benchmark.
4. Collection of data: After the list is narrowed and organization to benchmark is identified, the next step is to gather information on performance level related to benchmarking targets and objectives and analyze how they manage their processes to achieve these levels. Data are collected from internal sources which are the past research data available within the organization. Data are also collected from public information that is information found in public access resources and other companies who discovers new ideas and make careful observations. Benchmarking information can also be obtained by questionnaires and site visit.
5. Analyze data and determining gap: The real purpose of benchmarking lies here. Both quantitative and qualitative data collected are to be analyzed appropriately and gaps are determined. Quantitative data collected can be analyzed and plotted on graphs to identify the performance gaps between your organization and others. Average process time, average down time per unit and average percent of reworks are analyzed and gap are found out. On the other hand, qualitative analysis and gaps includes organizational policies and practices (philosophy used and management), procedural policies and practices (technology, method and task function) and structural policies and practices (budgeting and inventory practices).
6. Set goals and implementation: After analyzing the data and determining gap with both quantitative and qualitative views, goals are to be set for the process. A goal is the desired level of performance or result which provides the direction and focus to the organizational activities. Goals are to be measurable, realistic, finite and achievable in increments. As the goals are set implementation begins. Implementation means the action plan which includes determining the tasks, timelines and responsibilities by dividing the goals into separate and measurable tasks and putting them in order and includes who is responsible for each task and setting dates for the start and completion of every task. Contingency plans are also developed which is prepared to handle unexpected problems or events.
7. Monitor and control the process: once the action plans are made and implementation is done there will be changes and adjustment by everyone in the organization becomes essential. It is necessary to monitor and control over the activities as there are high chances of misunderstanding and misconceptions. To keep benchmarking alive it will be important to track changes and make benchmark a habit. Evaluation of changes and progress reports are necessary with the control and monitor of employees, suppliers and organizational resources to track the changes. Monitor and control is always necessary for organizations because it will be always worst if any attempt of an organization is out of track. Benchmarking should be made habit as it will always results better productivity in an organization.
These steps are only the base (path) for the proper benchmarking process and one generate his/her own style for benchmarking and succeed.
Reasons for benchmarking
Products, service and process improvement can take place effectively when there is relation to established standards. Benchmarking is also a tool for total quality management (TQM) in an organization where total quality management (TQM) is a well structured approach for meeting and exceeding customers needs expectations by creating an organization-wide participation and commitment in planning and implementation of continuous improvement in product or services, processes and operations. There are adequate reasons for benchmarking as it sets targets, suggests priorities and shows improvements in operations that will lead to gain by eliminating cost of time, energy and money for research and development. There are organizational internal and external components that are directly and indirectly the reason of benchmarking. These components can be said as drivers of benchmarking.
The external drivers include the followings:-
*customers: - They continuously demand better quality, low price etc.
*competitors: - They constantly try to get ahead and conquer the market.
*law: - Changes in law always require improvement of product and increase buyer protection.
The internal drivers include the followings:-
*company’s target: - If the targets of the company can’t be met than it will drives for benchmarking.
*technology:- technology development and innovations is the other reason for benchmarking. A fundamental change in processes is often required to benefit fully from introducing new technologies.
*self-assessment:- Self-assessment results which provides opportunities to learn from adapting best practices in the industry.
The reasons of benchmarking can be found in organization from different angles and different ways. Some possible reasons may be becoming competitive, having or following industry best practices, defining customer’s requirements, establishing effective goals and develop true measures of productivity.
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