What is Benchmarking?: Definitions and Process

Benchmarking is a process that seeks quantum improvement or breakthrough ideas that can be adapted to the business environment of an organization and lead to superior products and services. Benchmarking not only determines where a company stands in relation to another company’s similar products, processes, or services but also identifies how that company’s alternative processes can perform more effectively or efficiently than the processes it currently uses. Benchmarking is not competitive analysis. Competitive analysis is typically associated with an incremental change that will improve a company’s product, process, or service to a level similar to that of the competition. Benchmarking is not industrial espionage but involves forming partnerships directly with other companies for the mutual exchange of information.

What is Benchmarking?: Definitions and Process

Benchmarking is a partnership with another company to compare products, processes, or services. Benchmarking is not industrial tourism. Industrial tourism occurs when a company visits another company to gain information through observation and dialogue without first understanding its own process. Discussions that transpire between benchmarking partners become two-way exchanges and should benefit both companies. Any questions that a company asks of its partner, it should be prepared to answer for its own organization. Information gathered on an industrial tour can produce a less-thanoptimum improvement to the visiting company.

Benchmarking is a technique aligned with the company’s mission, goals, and objectives. A misalignment of benchmarking with the corporate strategy and customer values can lead to the optimization of processes that add little to the company or to customer satisfaction. Benchmarking is a process based on customer value as well as on the strategy of the company.

Benchmarking is a process of self-discovery and learning that requires time, money, and resources to complete. It may take several months and a great deal of money to implement. It is serious business and requires benchmarkers to demonstrate astute observation and creativity skills to translate ideas into the business environment.

Benchmarking is a continuous process by which a company can discern where the process in question stands relative to similar processes in another company or even in its own company. Realistic goals are set and followed. Benchmarking is more than a quality program that could soon be replaced. However, companies that compete for the Malcolm Baldrige National Quality Award should be actively involved in benchmarking.

Benchmarking has received celebrated success within the last five years, and many organizations are placing emphasis on benchmarking to improve quality, efficiency, effectiveness, and productivity. In a study conducted by the International Benchmarking Clearinghouse (IBC), 95 percent of the respondents said they were not sure what benchmarking was in 1992. By 1995, though, 76 percent of the respondents said they have more than some awareness of benchmarking concepts.

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