Benefits of Benchmarking
Benchmarking is a process, developed in America, that allows a company to measure its operating profile against other companies that are considered ‘best-in-class”. There are many benefits of benchmarking due to its continuous, systematic process for evaluating the products, services, and work processes of organizations that are recognized as representing best practices for the purpose of organizational improvement. ( Michael Spendolini).
Benchmarking is distinguished by a number of activities: internal, competitive, and process in addition to others. Internal benchmarking assumes there are differences in the work processes of an organization as a result of geographical differences, local organizational history, customs, differences among business units, and relationships among managers and employees. The benefits of benchmarking for competition, on the other hand, is for a company to identify specific information about a competitor’s products, processes and business results and then make comparisons with those of its own organization. And lastly, process or activity benchmarking involves the identification of state-of-the-art products, services, or processes of an organization that may or not be a company’s direct competitor. The benefits of benchmarking from this method helps to identify the best practices in any type of organization that has established a reputation for excellence in specific business activities such as manufacturing, marketing, engineering, warehousing, fleet management, or human resources.
When doing a benchmark study, success will hinge on the level of commitment from top managers, who must take their blindfolds off and realize that dramatic changes needs to be made in certain areas. Before the the benefits of benchmarking can be seen, companies need to get as specific as possible when identifying areas to be benchmark. For example, if a company is interested in studying customer service, it needs to determine what specific area or activity within customer service needs to be examined. Customer service encompasses a broad base of activities, such as order taking, answering inquiries, handling irate customers, issuing credits, or invoicing. Each of these activities are different, each with their own thought processes, techniques, and management controls.
The next steps are to determine the issues to be benchmark, and then determine what company to study. Once the best practices have been identified, the benchmarking collects the data, analyzes it and then plots its company’s performance against the best practices to help them identify improvement opportunities.
The team then determines the level of effort required to re-engineer the best practices to suit it’s company’s unique circumstances. The benefits of benchmarking versus the costs involved with eliminating the gaps between current processes and the best practices are evaluated, and then implementation priorities are established.
