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Benchmarking

Benchmarking is the process of measuring products, services, and processes against industry leaders to identify opportunities for improvement. There are four main types: internal, competitive, functional, and generic benchmarking across unrelated industries. The benchmarking framework involves six steps: selecting what to benchmark, identifying key performance metrics, choosing companies to compare against, collecting data, analyzing differences, and implementing best practices. Benchmarking helps companies improve performance, understand costs, gain strategic advantages, increase learning, and reduce project times. However, it can go wrong if companies simply copy others without understanding changes, use it just to set goals, or try to uncover proprietary information unethically.

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James Kudrow
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511 views

Benchmarking

Benchmarking is the process of measuring products, services, and processes against industry leaders to identify opportunities for improvement. There are four main types: internal, competitive, functional, and generic benchmarking across unrelated industries. The benchmarking framework involves six steps: selecting what to benchmark, identifying key performance metrics, choosing companies to compare against, collecting data, analyzing differences, and implementing best practices. Benchmarking helps companies improve performance, understand costs, gain strategic advantages, increase learning, and reduce project times. However, it can go wrong if companies simply copy others without understanding changes, use it just to set goals, or try to uncover proprietary information unethically.

Uploaded by

James Kudrow
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Benchmarking

What is Benchmarking? It is the process of measuring products, services, and processes against those organizations which are known to be leaders in one or more aspects of their operations. Types of Benchmarking 1. Internal. Benchmarking within a corporation 2. Competitive. Benchmarking performance and processes with competitors 3. Functional. Benchmarking similar processes within industry 4. Generic. Comparing operations between unrelated industries. Benchmarking Framework No 1 2 3 4 5 6 Step Select a product, service or process to benchmark Identify the key performance metrics Choose companies or internal areas to benchmark Collect data on performance and practices Analyze the data and identify opportunities for improvement Adapt and implement the best practices, setting reasonable goals and ensuring companywide acceptance

Companies use Benchmarking as a tool to: Improve performance. Benchmarking identifies methods of improving operational efficiency and product design Understand relative cost position. Benchmarking reveals a company's relative cost position and identifies opportunities for improvement Gain strategic advantage. Benchmarking helps companies focus on capabilities critical to building strategic advantage Increase the rate of organizational learning. Benchmarking brings new ideas into the company and facilitates experience sharing Reduce Project Execution Time. The benefit of the above points allow companies to attain shorter project execution time and further drive them associated costs

When Benchmarking can go wrong? Copycat benchmarking- Imitation benchmarking occurs when a company visits its partners and, rather than learning how the partners changed their businesses, concentrates on how to copy the partners' current activities Using benchmarking data as a performance goal - When companies benchmark their core competencies, they can easily fall into the trap of thinking a benchmark should be a performance indicator Unethical benchmarking-Sometimes a company will agree to benchmark with a competitor and then try to uncover proprietary information Conclusion Benchmarking is valuable because trying to reinvent the wheel is an expensive way to try to make improvements. Once a company has the proper view of the benchmarking process and disciplined guidelines are established and followed, desired improvements should follow. However, if the company does not benchmark for the right reasons, benchmarking efforts will become a curse.

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