Benchmarking

Benchmarking is a process of identifying the “best practice” in relation to both products and the processes by which of those products are created and delivered. The research for “best practice” can take place both inside a particular industry, and also in other industries. The primary aim of benchmarking is to understand and evaluate the status of a business or organization in relation to “best practice” and to identify areas and performance improvement.

Types of Benchmarking:

Strategic Benchmarking:

Businesses need to improve in overall performance by examining their long-term strategies and general approaches which enables high-performers to succeed. It involves high level of aspects such as core competencies, developing new products and services which improve the capabilities for dealing with changes in the external environment. The changes resulting from this type of benchmarking may be tedious to implement and takes more time to materialize.

Performance Benchmarking:

Businesses consider their role according to their performance characteristics of key products and services. Benchmarking partners are drawn from the same sector. This type of analysis is often undertaken through trade associations or third parties to protect confidentiality.

Process Benchmarking:

Process Benchmarking is focused on improving specific critical processes and operations. Benchmarking partners are learnt from best practice organizations which perform similar work and deliver services. It always involves producing process maps to facilitate comparison and analysis. This type of benchmarking often results in short term benefits.

Functional Benchmarking:

Businesses look to benchmark with partners drawn from different business areas of activity to find out the ways of improving similar functions. This sort of benchmarking can lead to innovation and dramatic improvements.

Internal Benchmarking:

Internal Benchmarking involves businesses operations within the same organization. The main benefit of internal benchmarking are to access the sensitive data and information is easier; standardized data is often readily available; and, usually less time and resources are needed. There may be fewer barriers to implementation as practices may be relatively easy to transfer across the same organization.

External Benchmarking:

External Benchmarking involves analyzing of outside organizations that are known to be best in class. It provides opportunities of learning from those who are at the "leading edge". This type of benchmarking takes significant time and resource to ensure the comparability of data and information.

International Benchmarking:

Best practitioners are identified and analyzed anywhere in the world, because there are too few benchmarking partners who produce valid results in the same country. Globalization in information technology advances the increasing opportunities for international projects. Moreover, it needs more time and resources to set up and implement and the results. 

Questions:

• Define Benchmarking.
• Explain the various types involved in Benchmarking.