Benchmarking: A permanent Process for Excellence
Benchmarking is a process in which organizations evaluate various aspects of their
processes in relation to best practices, usually within their own sector. It is also a process of
identifying other organizations that are best at some facet of our operations and then modeling
our organization after them (Operations Management, 9/e, Jay Heizer & Barry Render). It
selects a demonstrated standard of performance that represents the very best performance for a
process or activity. Benchmarking is `the continuous process of measuring products, services and
practices against the toughest competitors or those companies recognized as ...view middle of the document...
There are different types of benchmarking but the primary types are: internal,
competitive, functional and generic (Benchmarking for Best Practices). Internal benchmarking is
a comparison of a business process to a similar process inside the organization. Competitive
Benchmarking is direct competitor to competitor comparison of a product, service, process or
method. Functional benchmarking is a comparison to similar or identical practices within the
same or similar functions outside the immediate industry. Generic benchmarking broadly
conceptualizes unrelated business processes or functions that can be practiced in the same or
similar ways regardless of the industry.
Benchmarks are the performance measures considered during benchmarking process.
These measures include How many? How quickly? How high? How low? Benchmarks are facts
(Benchmarking For Best Practices, By Barbara Harison). Performance measurement is a
method by which organizations evaluate results. Performance measuring gives numerical
information quantifying performance dimensions (Performance measurement systems for
benchmarking in the construction industry, Costa, Formoso,). This information is useful for
process control and establishing feasible and challenging goals. The result we get from
performance measurement, through the process of benchmarking, can be analyzed and compared
to other organizations performance to get more insights. Hence performance measuring is the
information used as a benchmark in the benchmarking process to show how organizations
perform relative to others.
One of the world’s renowned and leading organizations in benchmarking, APQC,
indicated that organizations use benchmarking to improve productivity and lower costs,
accelerate and manage change, achieve breakthroughs and innovation, set performance targets,
and create a sense of urgency. The benchmarking methodology being used in this organization
consists of four phases and has its flexibility in application and rigor.
• Planning to establish the project scope and developing the data collection approach and
requirements, and set the criteria for peer groups.
• Collecting data.
• Analyzing and validating information collected to identify performance levels, leading
practices, enablers, and proven templates and other tools.
• Adapt—report and develop action plan for change.
The PDCA cycle of (W. Edwards Deming) proposes that business processes should be
analyzed and measured to identify sources of variations that cause products to deviate from
customer requirements. Business processes should be placed in a continuous feedback loop so
that managers can identify and change the parts of the process that need improvements. PDCA
represents “Plan, Do, Check, Act”. “PLAN” refers to designing or revising business process
components to improve results. “DO” refers to implementing the plan and measuring its
performance. “CHECK” refers to...