Benchmarking is the search for those best practices that will lead to the excellent performance of a company. However, today's companies go through a process of researching new ideas for methods, practices, and processes so that they can adopt or adapt good features.
So if industries want to move forward, they must benchmark their performance against that of other companies to achieve excellence.
Benchmarking is what the Japanese have done to gain an advantage at the expense of the operation of the American middle manager.
BENCHMARKING HISTORY:
In 1979 Xerox began the competitive benchmarking process. Benchmarking started Xerox industrial operations to examine its unit production costs, compare selected products, and compare product characteristic capabilities; These early stages are known as quality comparisons and product characteristics.
The formalization of the benchmarking was carried out with an analysis of the photocopiers produced by Fuji-Xerox where it was shown that the competitors were selling machines for the same cost that it cost Xerox to make them. Thus, production in the US was changed to adopt these benchmark goals.
In 1981 benchmarking was adopted throughout the Xerox company. Benchmarking was conceived as the process of understanding customer needs and employee participation was seen as the process by which benchmarking would be implemented.
Xerox continued to develop the concept of competitive benchmarking throughout the 1980s, introducing the concept to bulls through customers, suppliers, etc. Subsequently, other companies such as GTE began to use the word in 1983. However, benchmarking began to consolidate in the late 1980s. In 1991 an article was published entitled "Competitive comparisons and benchmark".
In 1989 Robert Camp, a logistics expert engineer who belonged to Xerox wrote the book Benchmarking: The Search for Industry Best Practices that Lead to Superior Performance.
Subsequently, articles continued to appear in business and trade programs that tried to positional benchmarking among readers with repetitive examples.
Subsequently, other benchmarking processes appeared in addition to the Xerox ten-step process, such as AT&T's nine-step process, ALCOA's six-step process, IBM's five-step / fourteen-step process, DEC's four-step process, and more.
DEFINITION
When we speak of benchmarking we speak of the search for those best practices that will lead to the excellent performance of a company.
"Benchmarking is the ongoing process of measuring products, services, and practices against the toughest competitors or those companies recognized as industry leaders." (C. Camp, 1993)
"Benchmarking: A systematic and continuous process to evaluate the products, services and work processes of organizations that are recognized as representing best practices, with the purpose of making organizational improvements." (J. Spendolini, 1992)
Benchmark according to Webster`s:
A surveyor's mark… of a predetermined position… and used as a reference point… a standard by which something can be measured or judged.
Job definition:
Benchmarking is the pursuit of industry best practices leading to excellent performance
BASIC PHILOSOPHICAL STEPS OF BENCHMARKING:
- Know the operation: the competitors will analyze your operation in order to take advantage of the weak points they discover. So you need to have an excellent understanding of the strengths and weaknesses of your operation to be able to defend yourself. Know industry leaders or competitors: You need to know the strength and weakness of competition, only comparison and understanding Superior industry practices or functional leaders ensure superiority. Include the best: Determine in which areas your competitors are strong, why they did it, and how they did it. These strengths should be imitated, either by copying or improving them. Gain superiority:A position of superiority must be obtained through research and implementation of best practices in its operation, taking advantage of existing strengths.
GENERIC BENCHMARKING PROCESS
Benchmarking can be divided into two:
- Practices: are the methods used. Measurement: is the quantified effect of putting the practices into operation.
Benchmarking should be focused on the basis of first investigating the practices of the industry and from them obtaining the measurements that quantify the effect of the practices.
Only the practices on which the measurement is based reveal why there is a gap.
The benchmarking gap is made up of asking the questions:
- How Where Where
However, to close this gap requires:
- Improved knowledge Improved practices Improved processes
For the benchmarking process it is essential:
- Management commitment Communication to the organization Employee participation
The sums of all these elements lead to excellent performance.
BENCHMARKING TYPES:
- Internal benchmarking: similar activities in different sites, departments, operating units, countries, etc. One of the easiest benchmarking investigations is to compare these internal operations. Competitive benchmarking: This benchmarking investigation should show what are the comparative advantages and disadvantages among direct competitors. However, we must be careful to understand where the operations of competitors are not truly comparable. The size of the operations can have an effect on comparability since, due to this factor, the operations are probably managed differently. Functional benchmarking: it is not necessary to focus only on direct product competitors.There is a great potential to identify industry leading companies' functional competitors for use in benchmarking even if they are in disparate industries. In the case of logistics this would represent identifying those companies that are notoriously have superior logistics functions wherever they exist. Operations have to be comparable from a logistical point of view. Some of the advantages of this type of benchmarking are that it is easier to get interest in research as well as in shared data, there are fewer confidentiality problems. Generic benchmarking: some business functions or processes are the same regardless of the Industry dissimilarities. One of those processes is order fulfillment.It can be described as the functions of order receipt, customer service, warehouse order handling, billing and collection.
The benefit of this form of benchmarking, the purest, is that you can discover practices and methods that are not implemented in the researcher's own industry, you can discover an easily transferable technology, with proven results, or transferable practices with only small settings.
Generic benchmarking has the potential to reveal the best of best practices. However, it is the most difficult benchmarking concept to obtain acceptance and use.
BENCHMARKING PHASES:
Phase 1: Planning
The objective of the phase is to plan benchmarking investigations and its essential steps are:
- What should be benchmarked? Against whom or against what will we make the comparison? How will the data be collected?
Phase 2: Analysis
This phase includes a careful understanding of the current practices of the process as well as those of the partners in benchmarking. And the questions are answered:
- What is desired is an understanding of internal performance by which to assess strengths and weaknesses? Is the benchmarking partner better? Why are they better? How much are they better? What best practices are being used now? Are they expected to be used? How can their practices be incorporated or adapted for their use?
The answers to these questions will be the dimensions of any performance gap, whether negative, positive or parity.
The gap is a projection of performance and will change as industry practices change.
Phase 3: Integration
Integration is the process of using benchmarking findings to set operational objectives for change. These findings must be communicated to all organizational levels to obtain endorsement, commitment and ownership.
The key to the process will be the conversion of the benchmarking findings to a statement of operational principles that the organization can accept and by which actions for change will be judged.
Phase 4: Action
Both the findings and the operational principles obtained from them must be converted into actions put into practice, they must be measured periodically and the achievement must be evaluated. A reporting mechanism should be created and all employees should be informed of progress towards benchmarking findings in turn. Feedback is required.
Phase 5: Maturity
Once industry best practices are incorporated into all business processes, we will ensure superiority and maturity. One way to confirm superiority is if the other companies copy their internal operations as a benchmark.
STEPS OF THE BENCHMARKING PROCESS:
Planning:
- Identify that you are going to benchmark
Some benchmarking candidates can be classified as follows:
Customer needs:
- ProductsServices
Products manufactured:
Copiers Spare Parts
Services provided:
- Delivery services Financing
Critical success factors:
- Customer Satisfaction Level Delivery Services Unit Costs Asset Utilization
Products purchased:
- Components Material Handling Equipment
Processes used:
- Receiving the order Solving customer questions / problems Warehouse assortment Billing Collection
- Identify comparable companies
Benchmarking research should focus on companies with a certain level of comparability. Some considerations to take are the following:
Consider “Competitor” in the broadest terms:
- What company, function, or operation has the best practices in the industry.
Comparable operations where best practices, methods or processes are used.
Ensure comparability:
- Companies with high customer satisfaction must be measured against companies with high customer satisfaction. The characteristics of the products must be generic for the process, that is, the packaged goods must be measured against packaged goods.
Stay within the same industry:
- Broadly define the industry
Where are the discoveries found or likely to occur in business practices?
- Discover innovative practices wherever they exist Even in similar industries
- Determine the method for data collection and collect the data. Some examples of information sources can be:
Internal source:
- Library DatabaseInternal ReviewsInternal Publications
External source:
- Professional AssociationsIndustry PublicationsSpecial Industry ReportsGiro Functional PublicationsGeneral Administration
Functional newspapers
- SeminarsIndustry Data FirmsIndustry ExpertsComputer Software VendorsUniversity SourcesCompany Observers
Original research:
- Customer Feedback Telephone Surveys Question Service Networking Consultant Signatures
Analysis:
- Determine the current performance "gap" There are various types of performance such as:
- Negative gap: this means that external practices are superior; that is, that external operations are the benchmark. The main focus of comparative analysis will be to explain why there are differences and specific contributing factors that require change. In this case, the benchmark to be performed is based on findings. Parity: if the operations are in parity, it means that no significant differences have been found in the practices, both operations have similar performance measures, there may be subtle differences. Benchmarking practices are examined and documented at a point in time while industry practices and competitive methods change and the parity position is short lived.At the same time, the parity position must be evaluated to determine the factors that contribute to it. Analyzes of work processes, standards, environmental conditions and work processes, standards, environmental conditions and economic or cultural processes must be evaluated to determine their contribution to the existence of practices. Positive gap: this wants say that internal practices are superior compared to external ones. The goal is to reach a higher level of performance. In this case, a benchmark based on internal findings is performed.environmental conditions and economic or cultural processes to know their contribution to the existence of practices. Positive gap: this means that internal practices are superior compared to external ones. The goal is to reach a higher level of performance. In this case, a benchmark based on internal findings is performed.environmental conditions and economic or cultural processes to know their contribution to the existence of practices. Positive gap: this means that internal practices are superior compared to external ones. The goal is to reach a higher level of performance. In this case, a benchmark based on internal findings is performed.
- Project future performance levels: since the current performance gap has been defined
Based on benchmark practices, it is necessary to project future performance levels. This is the difference between expected future performance and the best in the industry. It is important to project the future gap because industry practices change and it will be important to understand future trends in the gap. The “Z” chart is used to graphically show the size of the gap, to present the full scope of the gap, today and in the future. However, it also allows understanding of the meaning of the gap.
Integration:
- Communicate benchmarking findings and gain acceptance
The benchmarking team needs to communicate its progress to affected management and field staff. The goal is to obtain acceptance from the directly affected administration. There are three fundamental steps to communicate the findings to the various people and organizations affected:
- Determine the audience and its needs Select the communication method and adapt it to the audience Benchmark findings should be organized for your best presentation and understanding.
- Set functional goals
Goals are a statement of planned performance. In the benchmarking context the goals are derived from the benchmarks. By their nature benchmarks are statements of the best practices in the industry. Therefore, the functional goals as described here are based on a conscious and concerted point of view and the search for the external world.
Action:
- Develop action plans
When planning the action of the benchmarking findings, the two facets of implementation that are part of the standard action planning process that is followed in most businesses should be taken into account. The first relates to the activity or task to be accomplished and the second relates to people and behavioral aspects of implementing change.
- Implement specific actions and monitor progress Recalibrate benchmarks
Maturity
- Achieved a leadership position Practices fully integrated into the processes:
BENCHMARKING BENEFITS:
- Adequately meet the needs of the end consumer. Development of short and long-term plans Establish goals based on a concerted view of external conditions. Trend of predictions in relevant business areas. Determine true productivity measures. Comparisons with competitors or Top-performing organizations Achieving a competitive position Setting performance targets for modern practices Being aware of and seeking industry best practices.
CONCLUSION :
Today, in an increasingly competitive world, companies need to adopt new techniques to stand out among all the competitors.
In the case of benchmarking, it is of great help to achieve this since through it the best practices of the competitors for our company are copied or adapted and improved and thus in this way achieving the best of all existing ones.
Benchmarking requires great commitment from all members of the organization, just as it requires continuous feedback.
THANKS:
I thank my alma mater the Orizaba Technological Institute, Professor Fernando Aguirre y Hernández who teaches the subject of Fundamentals of Administrative Engineering for showing us that we are capable of writing articles on various topics, for promoting the habit of reading and above all for helping us realize what we are capable of achieving.
BIBLIOGRAPHY
- Camp, R. (1993). BENCHMARKING: THE SEARCH FOR BEST PRACTICES IN THE INDUSTRY THAT LEAD TO EXCELLENT PERFORMANCE. MEXICO, DF: PANORAMA. J. Spendolini, M. (1992). BENCHMARKING. Bogota, Colombia: GRUPO EDITORIAL NORMA.
