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What is Benchmarking?
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What is
Informal Benchmarking?
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Informal Benchmarking is the type of
benchmarking that most of us do unconsciously at
work and in our home life. We constantly compare
and learn from the behaviour and practices of
others – whether it is how to use a software
program, how to cook a better meal, or play our
favourite sport. In the context of work, most
learning from informal benchmarking comes from
the following: |
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Talking to work colleagues and learning from
their experience (coffee breaks and team
meetings are a great place to network and learn
from others). |
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Consulting with experts (for example,
speaking with the award office, business
consultants who have experience of implementing
a particular approach or process or activity in
many business environments. |
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Networking with other people from other
organisations at conferences, seminars, and
Internet forums such as memberships in the
Emirates Quality Association. |
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On-line databases/web sites, such as the
BPIR, and
publications that share benchmarking information
provide quick and easy ways to learn of best
practices and benchmarks. |
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What is Formal Benchmarking?
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There are two types of Formal Benchmarking -
Performance and Best Practice Benchmarking.
(a) Performance benchmarking; this involves
comparing the
performance levels
of organisations for a specific process. This
information can then be used for identifying
opportunities for improvement and/or setting
performance targets. Performance levels of other
organisations are normally called benchmarks and
the ideal benchmark is one that originates from
an organisation recognised as being a leader in
the related area. Performance benchmarking may
involve the comparison of financial measures
(such as expenditure, cost of labour, cost of
buildings/equipment, cost of energy, adherence
to budget, cash flow, revenue collected) or
non-financial measures (such as absenteeism,
staff turnover, the percentage of administrative
staff to front-line staff, budget processing
time, complaints, environmental impact or call
centre performance).
(b) Best practice benchmarking; this is where organisations search for and study organisations
that are high performers in particular areas of
interest. The processes themselves of these
organisations are studied rather than just the
associated performance levels, normally through
some mutually beneficial agreement that follows
a
benchmarking code of
conduct. Knowledge gained
through the study is taken back to the
organisation and where feasible and appropriate,
these high performing or
best practices
are adapted and incorporated into the
organisation’s own processes. Therefore best
practice benchmarking involves the whole process
of identifying, capturing, analysing, and
implementing best practices . There are a number
of best practice benchmarking methodologies. One
of which is the
TRADE Best Practice
Benchmarking methodology. This is
delivered in the UAE via a 2-day workshop run by
the Emirates Quality Association
www.eqa.ae.
You may also contact the award office for
details. |
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Track Record of
Benchmarking?
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Because benchmarking is so
closely linked to business excellence, many of
the benefits attributed to one can also be
attributed to the other. For organisations to
reach performance levels judged as "world-class"
the various
business excellence
models indicate clearly, through
their scoring systems, the importance of
benchmarks and the process of benchmarking.
Czarnecki through considering the Baldrige
scoring table concluded that over half the
points available were related to benchmarking
activities.
There are many case studies focusing on the
success gained through benchmarking alone in
organisations. The best known of these are
perhaps the experiences at Xerox and Chrysler.
In the late 70’s and early 80’s where, faced
with ruin due to more efficient Japanese
competitors, benchmarking turned the giant Xerox
organisation around and put it back at the top
of the market. At Chrysler Corporation the
benchmarking of Japanese new product development
techniques prior to the development of the Viper
sports car is credited with saving three billion
dollars from development costs and one year of
development time.
Payback, from a financial perspective, is likely
to vary dependent on the specific aims of the
project. If projects are carefully selected,
planned and managed, there is no reason why
major benefits (financial and non-financial)
should not be obtained. A study of 57
organisations that used best practice
benchmarking indicated an average financial
return of $100,000 to $125,000 per project with
over 20% reaping benefits of more than $250,000
per project |
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Who Uses Benchmarking?
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The
most highly successful organisations use best
practice benchmarking as a tool to continually
learn and improve. The resources needed to carry
out repeated best practice benchmarking projects
properly and in a way that maximises the
learning to be gained from the experiences can
be considerable, hence it is used more
frequently within large organisations. A key
reason for the development of the BPIR was to
offer help to all organisations (large or small)
who may not have the necessary resources to
undertake best practice benchmarking. We aim to
assist you in every step of a benchmarking
process. On the other hand, comparative or
competitor benchmarking is not affected to the
same degree by resources, and is used by
organisations of all sizes, the most basic form
of this practice is simply knowing your main
competitors product price, something that is a
prerequisite to staying in business.
Indications are that the use of benchmarking
worldwide continues to grow since Robert Camp
wrote the first book on benchmarking in 1989.
Support for this comes from the following: |
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The
2008 study by
the Global Benchmarking Network showed the
improvement tools that are likely to increase in
popularity the most over the next three years
are Performance Benchmarking, Informal
Benchmarking, Strengths, Weaknesses,
Opportunities, and Threats, and Best Practice
Benchmarking. Current use of Informal
benchmarking is 68% of organisations,
Performance benchmarking, 49%, and Best practice
benchmarking, 39%. |
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The growth from year to year
in membership of the
Global Benchmarking
Network which now has representatives
from over 20 countries |
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The growth in the number of
countries that have a business excellence award
to more than 70 (the growth in business
excellence is likely to be correlated to the
growth in benchmarking as a central part of
business excellence
is benchmarking with as much as 50% of the
points associated with these models attributed
to benchmarking) and |
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The continuing popularity of
benchmarking within the academic community as
the number of papers written on the subject
continues to grow. |
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FAQ's
Important Links
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Benchmarking |
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