Benchmarking

[ Basics Concepts ]    [Additional Information]

Responsible : Sergio Luis ; Prof. Henrique Rozenfeld
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Basic Concepts

Introduction

For a company, benchmarking seeks the best practices that lead to the maximisation of the enterprise performance. A formal definition given by David T. Kearns of Xerox Corporation says, "Benchmarking is the continuous process of measurement of products, services, and practices, related to the strongest competitors or the recognised companies that is leader in its field."

The generic process of benchmarking can be divided in two parts, practices and metrics. The practices are defined as the methods that are used; the metric ones are the quantified effect of the installation of the practical. The benchmarking must be carried out starting with an investigation of the practices of the studied industry. The metrics that quantifies the effect of the practices can then be obtained or summarised. Therefore, the benchmarking is an understanding of some practices and, then, its quantification to show its numerical effect.

Based on the Xerox example (pioneer in the Benchmarking application) the necessity to carry out this activity in a larger sphere has become evident. Rather than only aiming for a benchmarking of manufacturing activities, for example, comparing internal operations of the company or worrying about disassembling machines or physical products of competitors, companies need to look on a greater scope. It is also necessary to carry out the business-oriented processes benchmarking such as; the maintenance, the distribution, the product development, etc. It is different than having something physical to disassemble. This greater scope requires that practices and methods are detailed, and then, compared with the external environment. In addition, it is clear that the benchmarking can take the understanding of the competitor position, but the intention is not to create the idea of superior practices in those competitors. These superior practices will only be obtained by discovering the best practices, wherever they are (in other kinds of organisations and not only in the competitors).

The benchmarking accomplishment goes through five generic phases:

- Benchmarking inquiries planning, searching to answer three questions: What must be used as a main point reference? With who or what will we compare? How will the data be collected? It is emphasised again that it is important to recognise that benchmarking is not only a process to get quantified metric goals, but also, and more importantly, a process to investigate and to document the industry best practices, allowing for these goals to be reached.

- Analysis, involving a careful understanding of current practices of company processes and other industries, considering that the benchmarking process is a comparative analysis. What is desired is an understanding of the internal performance, allowing the verification of strengths and weaknesses: Are the analysed benchmarking partners better? Why? How many? Which of the best practices are in use already or will be used very soon? How can their practices be incorporated or customised for implementation?

- Integration: it is the phase that seeking to incorporate new practices in the operation. The benchmarking discoveries need to be communicated to all levels of an organisation to get a sense of association, commitment, and belonging. It is necessary to demonstrate, in a clear and convincing form, that the benchmarking discoveries are correct and that they are based on concrete data and are obtained from diverse sources.

- Action: the benchmarking discoveries and the operational principles, based on benchmarking discoveries, must be converted into specific implementation actions. Moreover, it is necessary, periodically, for some measurements and evaluations. The progress on route to the control points (goals) must be reported to all employees;

- Maturity: it will be reached when the best industry practices are incorporated in all processes of the company and when the benchmarking becomes something permanent, essential, and automatic for the management process. 

The creativity to carry out these five generic phases will make the results different for each company in the benchmarking accomplishment. Benchmarking can obtain benefits for a company in different ways:

- It makes it possible to incorporate the best practices of any industry (competitors or not) into the company processes.

- It can also encourage the people, who the creativity is demanded of, to carry out and to implement the discoveries of benchmarking.

- It can also happen that people are more receptive about new ideas and to their creative adoption, when these people had not necessarily originated in that particular company.

- It can also identify in other industries (of other business-oriented branches), technological advances that would not be usually applied in the normal sector.

The people involved in the benchmarking process notice that the contacts and interactions resulting from benchmarking have an incalculable value for the future professional growth.

Reading guide for additional information

The article of Elmuti et. al. (1997), makes a good general review about the benchmarking application process and its implications for the continuous improvement and competitive advantage. It also analyses the benefits, limitations, costs, implementation, and ethical and legal aspects of benchmarking application.

No livro de Fuld (1993), has a display of practical methods and tools to monitor the competitors, based on available sources of information from inside the proper company, or outside. Moreover, it suggests forms to organise and store information about the competitors and how to transmit to decisions makers in the companies.

Another workmanship well known about benchmarking is the  book of Spendolini (1993), this presents a generic model of benchmarking, appropriate for any organisation. It considers a set of actions that an individual, group, or an organisation can follow to establish its proper benchmarking process. It is divided into three parts: the first one approaching the fundamentals of benchmarking, the second presenting the five practical phases to carry out the benchmarking, and the third displaying recommendations of benchmarking specialists about the best practices.

Finally, in the sites The Benchmarking Exchange e do International Benchmarking Clearinghouse there can be found up to date texts and a range of articles with practical cases about the subject.
 
 

Adding information - last verification 11/11/1999  (back to top )

ELMUTI, D.; KATHAWALA, Y.; LLOYED, S. (1997)  The Benchmarking Process: Assessing Its Value and Limitations. Industrial Management, p. 40 – 50, July-August. (t:583)

FULD, L. (1993)  Administrando a Concorrência.  Rio de Janeiro: Record.(Available in Comunity Library  UFSCar)

SPENDOLINI, M.J. (1993)  Benchmarking.  São Paulo: Makron Books.  (Available in Library Engineer EESC - USP)

Related Sites

The Benchmarking Exchange and Best Practices Homepage (1999) http://www.benchnet.com/index.htm

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