5.3.1 What is benchmarking

There are a lot of definitions of benchmarking.
Let’s take a look at some of them:

  • The process of continuously comparing and measuring against other organisations anywhere in the world to gain information on philosophies, policies, practices, and measures which will help our organisation take action to improve its performance1  

or

  • A standardised method for collecting and reporting critical operational data in a way that enables relevant comparisons among the performances of different organisations or programmes, usually with a view to establishing good practice, diagnosing problems in performance, and identifying areas of strength.2

So in general this is the process of:

  • collecting data
  • comparing performance
  • diagnosing problems
  • setting-up measures for improvement etc.

Basic phases of the benchmarking process

5.3.1.1 Types of benchmarking

There are typically four types of benchmarking.
They do not exclude each other, so you as a Manager can choose any one or a combination to meet your objectives. We recommend that strategic benchmarking is conducted first to create a context and rationale that will enhance all other benchmarking efforts as shown with the arrow on the graphics below – Figure 1.:

Figure 1: Types of benchmarking (Please click for more information)

Please stop and think about the situation in your company:

  • Specify your main competitor
  • Define their strengths and weaknesses
  • Define their methods of concurrent production
  • Specify the measures to counteract.

5.3.1.2  Other types of benchmarking, related to its concrete performance

Competitive benchmarking - measuring the performance, products, and services of an organisation against its direct or indirect competitors
Using competitive benchmarking the goal is to focus on your direct competitors and not the industry as a whole.

 

Co-operative benchmarking and collaborative benchmarking
These are the most widely used types of benchmarking because they are relatively easy to practice.
With co-operative benchmarking, your company may invite best–in-class organisations to meet with your benchmarking team to share knowledge. This is usually done without much controversy because these organisations are not direct competitors.3

With collaborative benchmarking, information can be shared between groups of firms.

Internal benchmarking is used to identify the best in-house practices in the organisation and to disseminate these practices throughout the organisation.  Internal benchmarking allows the manager in your organisation to know more about the company as a whole.

1 APQC definition
2 Harvey, L., 2004, Analytic Quality Glossary
3 Lankford W., Benchmarking: Understanding the basics