Benchmarking
Benchmarking is a systematic comparison of organizational processes and performance to create new standards or to improve processes. A benchmark is a point of reference for a measurement. There are 5 types of benchmarking...
1) Internal - benchmarking within a corporation, division, business units etc
2) Competitive - benchmark performance / processes with competitors
3) Functional - benchmark similar processes within an industry
4) Generic - comparing operations between unrelated industries
5) Collaborative - benchmarking carried out collaboratively by groups of companies
Various costs that could be attributable to benchmarking exercise would include visit costs (travel costs. lost labour time, boarding & lodging costs etc..), time costs (investment of time by team-members to research a problem, brainstorm, performing management experiments etc...) and database costs (costs of creating and maintaining a database of best practices and companies associated with each of the best practices).
I must say that benchmarking is a tough process that would involve tons of commitment & persistence for it to succeed. Also, it must be performed continously inorder to reap the true benefits over time (did I say "In relentless pursuit of excellence"?)
posted by Sriram at 10:46 AM
2 Comments:
Benchmarking is good, but eventually a company should make benchmarking an irrelevant tool.
Why?
Continuous Improvement.
Benchmarked companies are also trying to improve themselves all the time. Therefore -philosophically speaking- benchmarking is chasing a moving target. And we will never be like the benchmarked company because they'll be better by then.
(confusing?)
Gabriel S.
1:18 AM
Gabriel,
As u have rightly mentioned, companies should (must??) strive to continously improve their performance & practices and inorder to do that, benchmarking would be a critical tool for corporations to 'set the bar' (not that the bar is gonna remain frozen in perpetuity!) initially and then move forward to keep increasing the level of the bar inorder to improve from the existing level(s) of performance.
Ultimately, it is some kind of a 'chasing a moving target' exercise BUT never like 'looking for a black cat in a dark room that doesn't exist' and therefore it makes one hellova difference.
10:06 AM
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