Benchmarking concept

Presentation

This work aims to clarify the concept and applications of Benchmarking in the company. Understand and apply the existing working methods as well as the most important aspects of this tool.

Introduction

What is Benchmarking for? Does Benchmarking consist of COPY? How does it apply to Benchmarking?

goals

Know the concepts and possible definitions of Benchmarking. Learn the different types of Benchmarking. Apply different techniques and methodologies of Benchmarking.

Sections

1. Introduction

2. Possible definitions

3. Benchmarking categories

4. Techniques and Methodologies

5. Risk factors

6. Summary

7. Bibliography

1. INTRODUCTION

Benchmarking is a concept that started to be used about 20 years ago. In many cases more theoretical than practical. But it was not until the early 1990s that the main companies worldwide began to take an interest in this topic.

The increasing competition to which many companies are subjected has forced them to seek novel resources and techniques with which to compete. One of these techniques is Benchmarking.

At the beginning, in the 1980s, the idea of Benchmarking was to compare North American companies with Japanese ones. Currently Benchmarking consists of comparing your company with the best in the world.

Surely you have heard of Benchmarking but not Benchmarking. Ultimately it is the same concept, but we use Benchmarking to emphasize the commercial or marketing function.

2. POSSIBLE DEFINITIONS

There are numerous definitions regarding this concept. However, generically, most authors agree, with some nuances in the fundamental principles. Thus, some possible definitions could be:

"Benchmarking is the continuous process of measuring products, services and practices against competitors recognized as leaders in their sector"

(David T. Kearns, CEO of Xerox Corporation)

Specifically, Xerox Corporation was the first to apply Benchmarking in 1979 as a competitive technique and process against its competitors, formalizing and directing its analyzes to Fuji.

Other possible definitions:

"We understand Benchmarking to the process of comparing and measuring the operations of an organization or its internal / external processes against those of a recognized market leader, both internal and external to the reference market"

"The continuous process of measuring and comparing an organization with leading organizations anywhere in the world to obtain information that helps them execute actions to improve their performance is called Benchmarking or comparative performance studies"

So we have in practice an organization that applies Benchmarking, in reality what it does is search for organizations that are or are not competitors and analyze improvement processes. It is about learning based on the experience of others. It is not exactly a comparative analysis of a product of the competition against ours. Benchmarking goes much further by comparing the manufacturing, launch, strategy, organization, quality processes etc…

It should also be understood as a continuous process of comparison and not merely as a point echo.

In reality, on many occasions, we need a measurement standard to be able to judge and evaluate the correctness of our procedures. In short, we need a standard or reference point.

"Benchmarking is the search for the best practices in the industry that lead to excellent performance" (Robert C. Camp)

Seeing all of the above, we might think that it only focuses on COPYING what others do well. Obviously this is not always the case or at least it should not be. A company that applies it correctly should identify what other companies do well and try to improve their procedures. But in practice, not all theories are successful.

Currently, companies do not have time to implement gradual improvement systems in the areas or departments in which the company is most disadvantaged or backward. The World Bank can help us tell us exactly where we are in relation to the best. However, the best do not always have to be our competitors.

Benchmarking is not just about comparing ourselves with our competitors but also with the best, whether or not they are competition.

"Benchmarking is usually done between organizations that agree to do so"

"Benchmarking focuses on processes and practices and not only on products"

3. CATEGORIES

There are different categories when it comes to talking about BM, so we can differentiate:

3.1 Internal benchmarking

3.2 External Benchmarking

3.2.1 Competitive

3.2.2 Generic

3.3 Functional benchmarking

3.1 Internal Benchmarking.

By internal BM we understand the comparison operations that we can carry out within the same company, subsidiaries or delegations. This, in general, is applicable to large companies, where what is sought is to see which processes within the same company are more efficient and effective. We can thus establish comparison patterns with departments or sections taking them as standard to initiate continuous improvement processes.

One of the risks of the internal approach is that they are not aware of the comparison that their methods are less efficient than the best. A predominantly internal approach prevents having a global vision of the outside.

3.1 External Benchmarking.

It is subdivided into two categories. The competitive BM and the generic BM.

3.2.1 Competitive Benchmarking.

This is usually the best known by companies. In general, it consists of carrying out comparability tests as well as investigations that allow us to know all the advantages and disadvantages of our most direct competitors. The SWOT matrix can be a good tool.

This matrix is used to know the:

• Weaknesses

• Threats

• Forces

• Opportunities

Both from our competition and from our own company.

3.2.2 Generic Benchmarking

There are functions and processes that can be identical in companies from different sectors and activities. Thus, accounting, billing, inventory control, logistics, etc. departments of other companies may show similarities with our company, so it may also seem logical to compare the best practices of these companies and to adapt to new systems or improvement processes..

We will be able to observe, therefore, how new technologies or working methods have worked in other organizations without the need to apply the Trial-Errror method. In other words, perfecting a system on our own based on, in many cases, making mistakes. In addition to being a slow method, it is usually expensive.

3.3 Functional Benchmarking

In this case we do not stop just comparing ourselves with the direct competitors of our products. In many cases, information shared between companies from different sectors can be used. The fundamental reason for Benchmarking is said to be that there is no point in investigating a particular process or system if it turns out that the process already exists.

4. TECHNIQUES AND METHODOLOGIES

Here are some techniques or methods to apply the Benchmarking process.

Some steps to consider may be the following:

• Define what we want to analyze

• Determine which clients we will use for the Benchmarking information

• Identification of critical factors (success / failure)

• Determination of the Benchmarking process

• Create the necessary work teams

• What equipment will we use

• Functional working groups

• Cross functional teams

• Who will be the people involved

• Internal specialists

• External specialists

• Collaborators

• Determine the roles and tasks of the teams, as well as their responsibilities

• Employee training if necessary

• Activity program

• Choose the companies we are going to study

• Benchmarking networks

• Determine which companies have the best practices in the industry

• Form agreements with Benchmarking partners

• Develop information collection systems

• Identify sources of information and documentation

• Collect and organize information

• Analysis of the information

• Summary of data

• Establish differences between both organizations

• Identify all improvement ideas

• Application

• Development of the strategic plan to match and exceed the best

• Implementation and review of the system

One of the key points of all this methodology is the formation of agreements with Benchmarketing partners. It consists of identifying which person or persons from the chosen company can be used to establish the first collaboration contacts. Of course, the best BM system is the one that has partners or companies that collaborate in the exchange of information and data jointly and by mutual agreement. We must set limits on what information we can and cannot disclose.