Benchmarking

BY

MOSES K. KISUBI
 Benchmarking
•It is a process for improving performance by constantly identifying,

understanding and adapting best practices and process followed inside and

outside the company.

•Benchmarking is the systematic search for best practices, innovative ideas

and highly effective operating procedures.

•Benchmarking is an ongoing outreach activity; to identify best operating

practices that, when implemented, produce superior performance

•Benchmark refers to a measure of best practice performance.

 Types of benchmarking
• Strategic bench marking
• It is used where businesses need to improve overall performance by
examining the long term strategies and general approaches that
have enabled high performers to succeed.
• This type of benchmarking is suitable when the company has to
realign business strategies that have become inappropriate.
 Competitive /Performance benchmarking

•  It is used when organizations consider their positions in relation to

performance characteristics of key products and services.
•  Benchmarking partners are usually drawn from the same sector.
•  This type of benchmarking is suitable for assessing relative levels
of performance in key areas or activities in comparison with others
in the same sector to find ways of closing gaps in performance.
 Process benchmarking
• It is used by the organization when the focus is on
improving specific critical processes and operations
•  Benchmarking partners are sought from best practice
organization and are drawn from the same sector.
•  This type of benchmarking is suitable for achieving
improvements in key processes to obtain quick and short
term benefits.
 Generic/Functional benchmarking

• It is used when organizations look to benchmark with partners

drawn from different business sectors or areas of activity.
• It can lead the organization to innovation & dramatic
improvements.
•  This type of benchmarking is suitable for improving activities or
services for which counterparts do not exist.
 Internal bench marking
• It involves seeking partners from within the same
• organization & from business units located in different regions.
•  The main advantages are access to sensitive data & information,
availability of standardized.
•  This type of benchmarking is suitable when several business units
within the same organization exhibit good practice and
management and want to spread this expertise quickly throughout
the organization.
 External benchmarking
• It involves analyzing outside organizations that are known to be
the best in a particular area.
•  It provides opportunities of learning from those who are at the
“learning edge”.
•  This type of benchmarking is suitable where examples of good
practices can be found in other organization and there is a lack of
good practices within internal business units.
 International bench marking
• This is used when the best practitioners are located in other
countries. This is due to globalization and advances in
information technology.
• There is a need for careful analysis & interpretation due to
national differences.
•  This type of benchmarking is suitable where the aim is to
achieve world class status or simply because there are
insufficient “national” businesses against which to benchmark.
 Bench marking process
• Planning
I. Identify benchmarking subject.
2. Indentify benchmarking partners
3. a) Determine data methodology and b) collect data
• Analysis
4. Determine current competitive gap.
5. Project future performance.
• Integration  
6. Communicate findings & gain acceptance.
7. Establish functional goals.
• Action
8. Develop action plans 
9. Implement plans & monitor progress
10. Recalibrate benchmark
• Maturity attained, Leadership position attained and
practice fully integrated into Process
 Prerequisites for Benchmarking
 
• Benchmarking will not improve performance if the proper
infrastructure for a total quality program is not in place. The
requirements are:-
• Involve the employees who will ultimately use the information and
improve the process.
• Relate process improvement to strategy and competitive
positioning.
• Define your own process before gathering data or you will be
overwhelmed and will not have the data to compare your process
with.
 Prerequisites Con’t
• Perceive benchmarking as an ongoing process. It is not a one time
project with a finite start and complete date.
• Expand the scope of the company studied.
• Perceive benchmarking as a means to process improvement rather
than end.
• Set goals for closing the gap between what is existing process and
what can be benchmarked.
•  Empower employees to achieve improvements
 Guidelines for successful benchmarking
• Successful benchmarking requires the following :-

• Thorough understanding of one’s own processes.

• Emphasis on industry best practices.
• Selection of appropriate benchmarking partners and techniques.
• The benchmarking partner’s willingness to share information

• Maintaining confidentiality of critical information

•  Involvement of management and employees in the analysis of best
practices,
 Guidelines Con’t

• It should be a continuous process as the competition is always

changing.
• Emphasis on practices and processes not on end results.
•  Commitment towards the adoption and implementation of best
practices.
•  Selection and empowerment of benchmarking teams.

•  Willingness to change as per the findings of the benchmarking

study.
•  The adaptability of the practices should be tested and the
implementation results should be verified.
 Pitfalls In Benchmarking Limitation To Benchmarking
• Lack of management commitment and • Benchmarking is a tough process
involvement
• Not applied to critical areas first that needs a lot of commitment
• Inadequate resources to succeed.
• No involvement of the line
organization. •  It is a time consuming and
• Scope not well defined. expensive.
• To many performance measures.
•  More often than not
•  Critical success factors & performance
drivers not understood or identified. benchmarking processes end
• Potential partners ignored
with the “they are different from
• Poorly designed questionnaires.
• Inappropriate data collection method. us” syndrome or competitive
• Too much & inconsistent data. sensitivity that prevents the free
• Analysis paralysis; excess precision.
flow of necessary information
• Management resistance to change.
• No repeat benchmarking.
 References
• Dolan, E. D., & Moré, J. J. (2002). Benchmarking optimization software with
performance profiles. Mathematical programming, 91(2), 201-213.
• Spendolini, M. J., & Spendolini, M. J. (1992). The benchmarking book (Vol. 4).
New York, NY: Amacom.
• Carr, A. S., & Smeltzer, L. R. (1999). The relationship among purchasing
benchmarking, strategic purchasing, firm performance, and firm size. Journal of
Supply Chain Management, 35(3), 51-60.