BIJ

6,3 Benchmarking ± best practices:

an integrated approach
Khurrum S. Bhutta and Faizul Huq
254 University of Texas at Arlington, Arlington Texas, USA
Keywords Benchmarking, Teams, Partnering, Performance, Case studies
Abstract The essence of benchmarking is the process of identifying the highest standards of
excellence for products, services, or processes, and then making the improvements necessary to
reach those standards ± commonly called ``best practices''. Various companies have adopted
benchmarking and customized the methodology to suit their needs. A five-step benchmarking
model is suggested in this paper as a model to be used when undertaking a benchmarking study.
Two case studies are enumerated and a comparison presented.

I. Introduction
The essence of benchmarking is the process of identifying the highest
standards of excellence for products, services, or processes, and then making
the improvements necessary to reach those standards ± commonly called ``best
practices''. The justification lies partly in the question, Why re-invent the
wheel? Benchmarking is not just competitive analysis or number crunching,
nor is it spying, espionage or stealing. It is a process to establish the ground for
creative breakthroughs. Many organizations publicize what they have
achieved, but it is unusual for them to be open on the more mundane facts of
how this transformation was made to work. More than 70 percent of the
Fortune 500 companies use benchmarking on a regular basis, including AT&T,
Ford, Eastman Kodak, IBM, Ford Motor Company and Weyerhaeuser
(Greengard, 1995).
Benchmarking is a way to move away from tradition. It carefully dissects
the organization into segments, and then removes and inserts pieces to account
for changing environments. Changes occur once the process has started, and
will continue to change and mold the organization for as long as individuals are
continuously striving to make it better. If these individuals lose the ability to
analyze and make changes, they begin to lose ground. Benchmarking was
traditionally used as a problem solving technique (problem based
benchmarking). During the past several years, through extensive efforts,
leading organizations have come to realize that there is a better way to focus
benchmarking activities for greater payback. The most effective vehicle to
ensure continuous improvement is to focus on the basic processes that run the
organization. It is this concentration that will deliver the outputs that will
achieve the organization's objectives, priorities, and mission. This (process
based benchmarking) is a new and revolutionary perspective in benchmarking.
Benchmarking: An International
When undertaking a literature review in the benchmarking area, one is
Journal, Vol. 6 No. 3, 1999,
pp. 254-268. # MCB University
intimidated by the numerous methods adopted to do what actually accounts to
Press, 1463-5771 the same thing. A gap seems to exist in the literature regarding a unified
understanding of the steps involved in a benchmarking study. This paper will Benchmarking ±
attempt to fill this gap with the help of case studies. This paper is structured in best practices
six sections. In the first section an introduction to benchmarking is presented to
followed by a review of the current literature; the third section touches on the
types of benchmarking and an integrated approach is laid out; section four
enumerates case studies with the fifth section concentrating on the contrasts
between Xerox and Kodak approaches to benchmarking. Section six lists the 255
conclusions of the paper. The paper is concluded with a discussion to facilitate
the understanding of the subtle differences in the benchmarking methods/
techniques of the companies studied and some misconceptions among
executives about benchmarking.

II. Literature review

Benchmarking is first and foremost a tool for improvement, achieved through
comparison with other organizations recognized as the best within the area.
The philosophy of benchmarking is that one should be able to recognize one's
shortcomings and acknowledge that someone is doing a better job, learn how it
is being done and then implement it in one's own business (APQC, 1996). This
attitude has to be inculcated in the organization and only then can the
organization take full benefit of the benchmarking study. Benchmarking forces
an external focus to becoming competitive and often points the way to break-
through thinking (Landry, 1993). Benchmarking gives the firm an external
focus and forces the organization to look at what its competitors are doing.
Properly conducted, the study forces the organization to focus on its
competitive edge, while bringing the other processes up to mark with those of
its competition. In other words, benchmarking raises the standard of
competition in an industry and weeds out the companies that do not or cannot
maintain a competitive edge.
Andersen and Pettersen (1996) identify five steps of benchmarking, giving
the relationships that are at work at the various steps and how the steps are
interrelated. They stress the recognition of who is the best in class and then the
need to emulate them. Feigenbaum (1951) talks about benchmarking as the
process of continuously measuring and comparing one's business processes
against comparable processes in leading organizations to obtain information
that will help the organization identify and implement improvements.
Identification of critical performance measures and their comparison with
similar performance measures of ``best in class'' organizations is at the heart of
benchmarking. Identification of the proper measures is a fundamental part of
the study. Dickey (1996) and Pulat (1994) stress matching the objectives of the
organization's business strategy and management practices to those of the
benchmarking study. Benchmarking cannot be carried out in isolation and has
to match and contribute to the overall business objectives of the organization to
be of benefit.
Internal benchmarking and transfer of best practices is one of the most
tangible manifestations of knowledge management ± the process of identifying,
BIJ capturing and leveraging knowledge to help the company compete (Elmuti,
6,3 1997). Sharing and transfer of knowledge is also tangible evidence of a learning
organization ± one that can analyze, reflect, learn and change based on
experience. Before one can transfer knowledge or best practices, it is necessary
to define and find them. Of course, the organizations have always had
mechanisms, from R&D experts and technical audits to internal conferences,
256 intended to identify and spread practices. In their article, O'Dell and Grayson
(1998) focus on the impact that benchmarking could have on the oil refinery
business and lament on the short-sightedness of the people in this field.
``Research has good ideas, but they don't get used. The refineries don't always
talk to each other enough. We re-invent the wheel everywhere, and there is no
way to pass on the success stories''. Executives tend to be close-mouthed about
what they are doing in their respective organizations and the industry ends up
investing many times over in the same things and the successes are not shared.
Arun Maua, VP at Arthur D. Little, mentions, ``You can't just impose a best
practice. It has to be adapted to your own company's style''. This refutes the
assumption that all processes work for all companies (Boxwell, 1994). One
cannot just pick up a ``best practice'' and surgically implant it in one's own
organization. One has to look at the way things are being done, the culture
prevailing, the human resource employed to do the job, etc., before one can
adapt a process. And that is what is the main crux of the benchmarking
methodology, i.e. to adapt the process from the leading companies to one's own
organization.
Though benchmarking is an effective tool, it does have limitations. The
main problem with benchmarking is the focus on data ± and not the processes
used to make that data, however, this is changing as ``process-based
benchmarking'' becomes more in vogue as opposed to ``problem-based
benchmarking''. The initial focus on data is being replaced by focus on the
process and how it works and what makes it work. Benchmarking should be
used as a guide, not for statistical precision (Boxwell, 1994).

III. Different types of benchmarking

Comparison can be made at the company, process, function, or product levels.
The types of benchmarking (Table I) can be defined as based on what is
compared and what the comparison is being made against.
Figure 1 depicts the combinations of the types of benchmarking that can be
used to yield better results.
As can be seen from the combinations, some types of benchmarking are
more relevant than others in particular contexts. An internal comparison made
of the strategy would be almost meaningless whereas the comparison of
strategy with oneself would give little or no means of improvement. However, a
comparison made of one's strategy with a competitor's would reveal an
enormous amount of information and provide many avenues for improvement.
Types Definitions Benchmarking ±
best practices
Performance benchmarking It is the comparison of performance measures for the purpose
of determining how good our company is as compared to
others
Process benchmarking Methods and processes are compared in an effort to improve
the processes in our own company
Strategic benchmarking The study is undertaken when an attempt is being made to
257
change the strategic direction of the company and the
comparison with one's competition in terms of strategy is made
Internal benchmarking When comparisons are made between departments/divisions of
the same company or organization
Competitive benchmarking Is performed against ``best'' competition to compare
performance and results
Functional benchmarking A benchmarking study to compare the technology/process in
one's own industry or technological area. The purpose of this
type of benchmarking to become the best in that technology/
process Table I.
Generic benchmarking Comparison of processes against best process operators Types of
regardless of industry benchmarking

Internal Competitor Functional Generic

benchmarking benchmarking benchmarking benchmarking

Performance ∇ Φ ∇ θ
Benchmarking

Process ∇ θ Φ Φ
Benchmarking

Strategic θ Φ θ θ
Benchmarking

Figure 1.
Relevance/Value High Φ Medium ∇ Low θ The benchmarking
matrix
Source: Adapted from Leibfried & Mcnair (1992)

III.I The benchmarking wheel

As implied in the various definitions offered, benchmarking is a continuous
process (Figure 2). It follows the PDCA (plan, do, check, act) cycle (Pulat, 1994).
The ``plan'' phase focuses on the various upfront decisions, such as the selection
of functions/processes to benchmark and the type of benchmarking study to
embark on. In the ``do'' phase, one delves into a self-study to characterize the
selected processes using metrics and documenting business practices.
Furthermore, data (metrics and business practices) are collected on the
company that is the benchmarking partner. ``Check'' refers to the comparison of
findings via a gap analysis to observe whether negative or positive gaps exist
BIJ
6,3
Determine What to
Take action Benchmark

258
Collect and analyze
Benchmarking information Form a Benchmarking team

Identify Benchmarking
Partners

Figure 2.
The benchmarking
wheel
Source: Adapted from Camp (1989)

between the benchmarking company and the benchmarking partner. ``Act''

refers to the launching of projects either to close negative gaps or maintain
positive gaps. This is the stage that distinguishes benchmarking from
organized tourism. Benchmarking can be carried out in many steps; some
companies have used up to 33 steps while others have used only four. A
fundamental process evaluation reveals five major components of the
benchmarking process that are linked together like the spokes on a wheel,
hence the name, benchmarking wheel.
With the above benchmarking wheel in mind the basic content of the
benchmarking process is described as under.
Step 1: plan the study. Corporate or divisional leadership teams typically
decide what will be benchmarked, though some companies use benchmarking
study teams. In either case, the decision of what to benchmark must be driven
by organizations' ``critical success factors'' ± that is, an organization should
benchmark processes that are aligned with the company's strategic direction.
Step 2: form the benchmarking team. Next comes the formation of
benchmarking teams. Proper training is provided to the team members in the
field of benchmarking. The team develops a plan that includes designation of
team member's roles and responsibilities, project milestones and a realistic
completion date; a typical study takes four to six months to complete.
The team then defines the process or processes to be benchmarked. A
thorough understanding of the process being benchmarked is found to be the
strongest success factor. Defining the process involves (Pattison, 1994)
identifying customers, defining the process' start and end points, designing a
flow chart, determining critical success factors and deciding on the critical
performance measures.
 Step 3: identifying partners. The team then identifies potential Benchmarking ±
benchmarking partners ± companies that are considered by the business best practices
community at large to be ``world class'' in that process. Though these
companies can be competitors, it is more common that they will be non-
competitors within the same industry. Many companies choose Baldrige
Award winners as benchmarks. Candidate companies are invited to participate
in the study, and an agreement is reached about the information that will be 259
shared and how it will be used. Not all companies contacted will want to
participate, so it is imperative that mutual benefits are highlighted. Generally,
sharing the benchmarking report with partners serves as a strong incentive for
participation.
Step 4: collect and analyze information. This step is perhaps the heart of the
benchmarking process. Not only are data collected, but also analyzed and
turned into information to be compared with one's own. The purpose of
collecting data in a benchmarking study is much more than understanding
which companies are excelling at certain processes and by how much. This
does not answer the question of how best practice performance is achieved, so
the data collection should be geared toward understanding the ``enablers'' of
best-practice performance (Camp, 1989). A multi-pronged data collection
approach is preferred, yielding richer data and enhanced validity.
When analyzing results, the realization of the rationale for collecting more
than statistics from benchmarking partners emerges. By understanding
variations in different companies' processes along with enablers of superior
performance, one is able to identify strategies for improvement.
Step 5: adapt and improve. The final benchmarking step involves adapting
the other companies' best practices and implementing specific improvements.
Adapting best practices is not to be confused with copying best practices. Best
practices learned from others must be adapted to an organization's culture,
technology and human resources. Action planning or goal settings are
appropriate for this phase. Some improvements will be immediate or short-
term, requiring few or no additional resources. Others will be long-term and
will require considerable resources.
A method of evaluating improvements over time is critical to effective
adaptation of best practices. The measures developed in the planning phase
can now be used to track performance improvements on an ongoing basis.
Measurable improvement usually takes at least three months after the
completion of the study. The time taken on the benchmarking process depends
what is being benchmarked and how smoothly the process progresses. There is
usually a degree of overlap in the processes of the benchmarking exercise and
feed-back loops are ever present to enable evaluation. Figure 3 depicts the
relationships between the steps.

IV. Case studies

Benchmarking is emerging in leading companies as an information tool to
support continuous improvement and to gain competitive advantage.
BIJ
6,3 PLAN what
to do
OBSERVE
Collect Data
A
N
A
D
A O
L P
SEARCH make Y T
teams & find S
partners I
260 S

Figure 3.
Relationships of the TIME
benchmarking steps
Source: Adopted from Feigenbum (1951)

Following are two case studies of leading international firms who have adopted
the benchmarking approach to their activities.

IV.I Xerox
Xerox's success is the first in the history of benchmarking. It has become a real
model since, being in a critical situation in 1972, Xerox has achieved what is
called today a top-benchmarking partner status. In 1979, Xerox started
benchmarking and by 1989, had won the Malcolm Baldrige National Quality
Award (Boxwell, 1994). The Xerox benchmarking methodology was a ten-step
process (Camp, 1989).
Step I: identify what is to be benchmarked. Xerox's benchmarking process
first started in the photocopier manufacturing unit as part of an effort to assess
its manufacturing costs. Benchmarking was in effect invented in the late 1970s,
when a shocked Xerox decided to analyze the performance of its Japanese
associate to discover how Eastern rivals could sell excellent photocopiers for
less than it cost the parent to make them.
Step II: identify comparative companies. Xerox first studied one of its
Japanese affiliates, Fuji-Xerox, and later on Canon, Minolta and Toyota to
determine whether the relative costs of their Japanese counterparts were as low
as their relative prices (Finnigan, 1996).
Step III: determine data collection method and collect data. The studies confirmed
that US prices were higher than the Japanese ones. Japanese costs became the target
for Xerox. However, the benchmarking process was only starting. Managers from
the main plant visited Xerox's Japanese affiliates and saw what they were doing at
the factory floor. Xerox then started collecting the information.
Step IV: determine current performance gap. The information collected at
the previous step is then used to determine the gap that might exist between
Xerox's performance and the best in class.
Step V: project future performance levels. From the gap analysis, projected
future performance levels are determine and how these levels are going to be
achieved and maintained is determined.
Step VI: communicate benchmark findings and gain acceptance. All Xerox
employees receive at least the basic 28-hour leadership through quality training
and many were trained in advanced quality techniques. Over the last four years, Benchmarking ±
Xerox has invested four million man-hours and $125 million in its training best practices
program. Once a new benchmark has been established and incorporated for in
future strategy, it is communicated to the rest of the organization so that others
may also use it in their standard operating procedures.
Step VII: establish functional goals. Xerox identified that purchased
materials accounting for 70 percent of its product unit manufacturing costs,
261
small strides could translate into significant quantifiable benefits. The
company cut its supplier base from more than 5,000 in the early 1980s to 420
today. Defective components have been reduced from about 10,000 parts per
million in 1980 to 225 today. Six of seven parts inspectors have been reassigned
to other jobs, and 95 percent of supplied parts need not be inspected at all.
Component lead-time is down from 39 weeks in 1980 to eight weeks last year.
And the cost of purchased parts has been slashed by 45 percent. These goals
were not necessarily all set at once but with the continuous process put in place
for lowering costs they came more easily and without disruption.
Step VIII: develop action plans. Concrete action plans need to be developed
and Xerox developed these plans, resulting in the reduction in lead times and
the quality improvement of the copiers.
Step IX: implement specific actions and monitor results. Benchmarking has to
be a coordinated plan. Specific action plans have to be drawn up and the results
monitored to ensure that the required results are being achieved.
Step X: recalibrate benchmarks. After having benchmarked Japanese
industries, Xerox didn't stop there, it started looking at L.L Bean, the American
Hospital Supply and Caterpillar. The results speak for themselves as Xerox is
the only company in the world to have won all three major awards: Japan's
Deming Prize, America's Malcolm Baldrige National Quality Award and the
European Quality Award. Obviously, adopting the benchmarking process was
essential (Finnigan, 1996).

IV.II Kodak
The legal department may be more prestigious and the advertising department
may be sexier, but the maintenance department is one of the unsung heroes of a
manufacturing company. Neglect maintenance of the myriad pieces of
equipment in a factory and someday soon the company will be devoting more
time to the emergency repair of machinery than to the production of goods
(Geber, 1994). Kodak uses a six-step benchmarking process. The following is a
description of benchmarking at Kodak's Rochester plant.
Step I: what to benchmark. There is no guessing about the impact of a poorly
performing maintenance department on a company's fortunes. If a machine
breaks down in the middle of a run, it is easy enough to measure how many
widgets its operator would have produced during the idle time.
BIJ That ability to measure most aspects of maintenance performance, along
6,3 with a desire to lessen the maintenance department's drag on earnings, led the
maintenance function at Rochester, NY-based Eastman Kodak Company to
begin a benchmarking project in 1991.
As a large company with worldwide locations, Kodak had the luxury of
measuring all its maintenance divisions against each other internally as it tried
262 to find the exemplars for each of a long list of measurements. It then compared
the various results to those of other companies with superior maintenance
departments. As a result, Eastman Kodak was able to increase its planned
maintenance work, reduce its inventory of parts for maintenance, and reduce
the amount of time it spent on emergency repairs. Each one of those outcomes
had an effect on the company's earnings.
Step II: establish teams. In 1990, the company's quality improvement director
formalized ad hoc approaches to benchmarking by establishing the three-
person office under Mr Enustun. Besides acting as a port of entry for incoming
benchmarking requests from other companies, Mr Enustun's office maintained
a detailed internal database that described and quantified best practices within
Kodak worldwide. In addition, he and his staff served as consultants for
benchmarking projects undertaken throughout the company. In that role, they
helped Harvey Berson get his project started in January 1992.
Berson, manager of Kodak's manufacturing engineering and maintenance
organization, oversaw maintenance of the equipment the company used for
film production in nine manufacturing plants scattered across the globe.
Berson wanted to find the pockets of excellence around the world and bring the
rest of the maintenance departments up to those standards, thereby reducing
overall maintenance costs for the company.
Step III: identify partners and identify critical measures. Berson knew that
some maintenance facilities within Kodak were doing much better on certain
measures than Kodak-Park, the company's huge hometown facility in
Rochester. He was determined to improve Kodak-Park's performance, while
seeking top performers elsewhere within the company. Luckily for the
benchmarking project, the maintenance function was easily tracked and
measured. One of the first tasks for Berson and the other four members of the
initial benchmarking team was to identify which of those many measures were
crucial to the business.
At about the same time as Kodak-Park was launching the internal
benchmarking project, it was beginning to look outside its walls as well. It
found willing benchmarking partners within two professional maintenance
organizations. One, the Plant Engineering Maintenance Managers Conference
(PEMMC), consisted of a group of maintenance managers at eight large
companies who formed a once-a-year networking group.
Step IV: collect data. Collecting the information in the first rounds from all
Kodak's maintenance operations worldwide was not an idle data-gathering
exercise, Berson says. The company used a questionnaire to make sure that
data were being assembled in a uniform manner, a necessity if the numbers
were to have any validity. If a number seemed particularly high or low, a Benchmarking ±
facility manager would be asked to check again. ``Consistency has to be one of best practices
the under-pinning's of a measurement system'', Berson says.
Once the data had been gathered from within Kodak, they was given to a
second team, this one made up of the 36 Kodak managers responsible for
maintenance functions. It was crucial to get them involved in analyzing the
information since they were the ones who had to create individualized 263
improvement plans based on the numbers. ``The whole point behind
benchmarking is understanding where to make the improvement'', Berson
says. ``The number is only the trigger'' (Geber, 1994).
Step V: gap analysis. Once Berson and the team had collected all the numbers,
both internally and externally, they grouped the data into a number of charts
that showed how Kodak-Park stacked up against its benchmarking partners. In
some cases, the verdict was good, in other cases not so good. For instance, the
data confirmed what Berson suspected, and what had prompted the study in the
first place: Kodak-Park did too much reactive, or emergency, maintenance work.
Its reactive work amounted to about 34 percent of the total time spent. That
figure made Kodak-Park roughly equal to the rest of the company, better than
the PEMMC average, but significantly behind the SMRP companies, which
together spent an average of about 19 percent of their time doing reactive work.
On the other hand, Kodak-Park had some of the lowest maintenance costs, as
measured by the category of maintenance cost as a percentage of the cost of the
product.
Step VI: feedback and review. One way to use the information to improve, Berson
says, was to involve the maintenance managers' customers: the manufacturing
heads. Consequently, the benchmarking group devised another survey, this one a
32-question instrument based on the 12 measures Kodak wanted to hack. Each
maintenance manager and the manufacturing manager he served was asked to rate
the performance of the maintenance department. Afterward, the two managers
would sit down to figure out how to improve the maintenance department's
performance. After measuring how it stacked up, and beginning to implement some
of the things it learned from high-performing partners, the Kodak-Park
maintenance unit increased the amount of preventive work by 6 percent in one year.
It made great strides in increasing inventory turnover, saving more than $3
million in the process. Kodak-Park reports that it is on track for more
improvement on turnover that would save an additional $5.5 million by the end
of 1994.

V. Comparison and discussion

A comparison of the techniques undertaken and the steps followed by both
Xerox and Kodak show that the process followed is fundamentally the same.
The basic principle of PDCA (plan, do, check, act) is followed by both
companies, though the steps within each stage of the principle differ. Some of
the salient features of both the companies are given in Table II and a
comparison is made between the methodology followed by them respectively.
 6,3
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264

Table II.

and Kodak
Comparison of Xerox
Xerox Kodak Comparison

Number of steps in the Xerox has ten steps in its Kodak has only six steps in The number of steps does not signify any deviation
study benchmarking process its benchmarking process from the process of benchmarking. It is simply an
adaptation by the companies to suit their individual
needs, depending on the complexity and size of the
project undertaken. A careful analysis of these steps
shows that they are fundamentally the same as those
proposed earlier in the paper. The number of steps is
adjusted to better enable them to control and monitor
the study
Internal vs. external focus Xerox has an external focus Kodak on the other hand The external vs. internal focus followed by Xerox and
and comparison strategy began by using an internal Kodak is another major difference between the
focus companies. Again the scope of the project may be to
blame for the difference but the problem being studied
also contributes to this. In the case of Xerox, the
manufacturing costs were being studied and Xerox
studied its affiliates and competitors to determine the
benchmark to follow. In the case of Kodak the
comparison was primarily made with Kodak's other
facilities, however, Kodak later started to look at
external sources
Formation of teams The steps followed by However, in the case of Formation of teams in itself is not such a major
Xerox in its benchmarking Kodak, a benchmarking difference but, when teams are formed and given the
process do not explicitly team is established as a authority and responsibility, the study undertaken
depend on the formation of part of the benchmarking becomes a priority. However, looking at the success of
teams to perform the study. process. This team decides Xerox in benchmarking this can be argued
However, teams are formed the problem to be studied
as the study progresses and carries the whole study
to its logical conclusion
(continued)
Process vs. problem based Xerox carried out a process In the case of Kodak, the Recently more emphasis has been place on ``process-
benchmarking orientated benchmarking case seems to indicate a based benchmarking''. So instead of taking one problem
study in the case under more problem-based focus. at a time, the whole process is studied and benchmarked
study. This would imply The management at Kodak against the best in class
that Xerox was in fact tring felt that they had a problem
to benchmark its ``process'' with the maintenance costs
of manufacturing costs and were trying to minimize
rather than a particular itemthe costs. Hence a problem
in the process was identified and a
benchmarking study
undertaken to alleviate it
Formal communication of The benchmarking study at At Kodak no formal means Communicating the findings and results of a
benchmarking findings Xerox incorporates a formal of communicating the benchmarking study makes it easier and brings the
process of communicating findings was apparent importance of benchmarking to the fore. Xerox, being a
its findings to all parts of pioneer, has inculcated the spirit of continuous
the organization, enabling improvement in its organization and that seems to be
the whole organization to apparent from communicating and highlighting the
take advantage of the achievements made by department. This also helps in
results of the new study proposing and identifying possible benchmarking
partners for other studies

Table II.
best practices

265
Benchmarking ±
BIJ As can be seen from Table II, Xerox and Kodak have successfully integrated
6,3 benchmarking into their operating strategies. The benefits derived by both
these organizations are innumerable. In terms of cost savings and customer
satisfaction alone the organizations have saved millions (Worthing Brighton
Press, 1997). At first glance the process looks different as adopted by these
companies, but in fact it is fundamentally the same. Benchmarking has played
266 a significant role in the industry leadership stature of both these organizations.

V.I Misconceptions and limitations

Some of the common misconceptions and limitations encountered in the
process are:
. Benchmarking alone does not tell one what customers actually want. If
the product or service is obsolete, no amount of improvements in
production processes will make it competitive. Benchmarking is only of
benefit if the improvement actions are implemented. An effort should
always be made to seek out how a company has improved its
performance, and this normally comes from the people, not the
management (who will tell you how much performance has improved
but not necessarily how).
. Not involving employees during the process. Ultimately, these
employees will need the information to improve the process. Some
organizations have difficulty treating benchmarking as an ongoing
process: it should not be viewed as a onetime project. In addition, some
companies think a tactic not invented by them may be inferior.
Furthermore, some companies do not benchmark because it exposes
their weaknesses.
. Benchmarking is too expensive. Benchmarking does come at a price, but
costs vary considerably. Usually there are travel expenses and indirect
costs ± including employee time devoted to team meetings and travel ±
but with careful planning, benchmarking costs can be kept to a
minimum. In a 1995 survey of benchmarking exchange members,
benchmarking was one of the top five most popular current business
processes. Resources and information are now more affordable and
accessible. In 1992, the average cost of conducting one benchmark study
was $50,000. By 1996, the average cost had dropped to $5,000. With the
cost of benchmarking falling rapidly, its use is increasing. The
knowledge gained is well worth the small investment.
. A way to control costs is to tackle benchmarking one step at a time. It is
not an extremely difficult or complex process: companies can reduce
financial stress by examining one process at a time. Actually, costs can
be controlled if the company benchmarks in degrees and defines very
narrow areas to explore.
 . To minimize costly meeting and travel time, a company must work Benchmarking ±
efficiently and communicate effectively. The company should do its best practices
homework and know specific problems before employees visit other
companies. The trip should be clearly defined: what to look for and what to
accomplish. Make this information known to the other company and, since
benchmarking is a two-way street, it is important to understand the other
company's needs and decide what you are willing to share with them. 267
. Benchmarking gives too much information to one's competitors.
Employees providing information should be smart about it and not give
away the heart and soul of the company. As a whole, distributing
information and processes helps our country become more competitive
in the global marketplace.

VI. Conclusion
Camp (1989) calls benchmarking an applied discipline. It cannot be learned by
taking a class or reading a book. It is a hands-on learning experience, and the
drawback to this type of a process is that mistakes are inevitable. However,
senseless mistakes are avoided by setting goals and following the rules to
achieve them. Companies that benchmark identify specific areas of weakness,
and find solutions to turn them into strengths.
Benchmarking is a process that can be and has been adapted to fit the
managerial inclinations of an organization. It can be carried out in 33 steps or just
five, however, the essence remains the same. It is also very important to
remember improvements are continuous and benchmarks go out of date quickly,
the competitor's performance will probably continue to improve in advance of
one's own. The study should always remain honest and thoroughly professional.
During the past several years, through extensive efforts, leading firms have
come to realize that there is a better way to focus benchmarking activities for
greater payback. Formulating a strategy in an attempt to continuously improve
processes has lead to myriad benchmarking steps. This paper attempted to
provide an integrated approach to benchmarking and illustrated the various
methods followed by enumerating the case studies of Xerox and Kodak.
References
American Productivity & Quality Center (APQC) (1996), Emerging Best Practices in Knowledge
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Further reading
American Productivity & Quality Center (1997), Using Information Technology to Support
Knowledge Management, American Productivity & Quality Center, Houston, TX.
Ellram, L.M. (1991), ``A managerial guideline for the development and implementation of
purchasing partnerships'', International Journal of Purchasing and Materials
Management, Vol. 27 No. 3, Summer.
Hendrick, T.E. and Ellram, L.M. (1993), Strategic Supplier Partnerships: An International Study,
Center for Advanced Purchasing Studies, Tempe, AZ.
Kearns, D. and Nadler, D. (1992), Prophets in the Dark: How Xerox Reinvented Itself and Beat
Back the Japanese, HarperCollins, New York, NY.
Lambertus, T. (1997), ``Basis of benchmarking'', Incentive.
Martin, J. (1996), ``Are you as good as you think you are?'', Fortune.
Omachonu, V.K. and Ross, J.R. (1994), Principles of Total Quality, St Lucie Press.
Power, J.V. (1995), ``Sprint corporation: blending in benchmarking with quality'', Continuous
Journey, American Productivity and Quality Center.
Szulanski, G. (1994), Intra-Firm Transfer of Best Practices Project, American Productivity &
Quality Center, Houston, TX.