Benchmarking (also "best practice benchmarking" or "process benchmarking") is a process used in management and particularly strategic management, in which organizations evaluate various aspects of their processes in relation to best practice, usually within their own sector. This then allows organizations to develop plans on how to adopt such best practice,usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to challenge their practices. Benchmarking in simplistic terms is the process where you compare your process with that of a better process and try to improve the standard of the process you follow to improvequality of the system, product, services etc. A process similar to benchmarking is also used in technical product testing and in land surveying. See the article benchmark for these applications.
Advantages of benchmarking Benchmarking is a powerful management tool because it overcomes "paradigm blindness." Paradigm Blindness can be summed up as the mode of thinking, "The way we do it is the bestbecause this is the way we've always done it." Benchmarking opens organizations to new methods, ideas and tools to improve their effectiveness. It helps crack through resistance to change by demonstrating other methods of solving problems than the one currently employed, and demonstrating that they work, because they are being used by others.
Collaborative benchmarking Benchmarking, originallyinvented as a formal process by Rank Xerox, is usually carried out by individual companies. Sometimes it may be carried out collaboratively by groups of companies (eg subsidiaries of a multinational in different countries). One example is that of the Dutch municipally-owned water supply companies, which have carried out a voluntary collaborative benchmarking process since 1997 through their industryassociation.
Procedure There is no single benchmarking process that has been universally adopted. The wide appeal and acceptance of benchmarking has led to various benchmarking methodologies emerging. The most prominent methodology is
the 12 stage methodology by Robert Camp (who wrote the first book on benchmarking in 1989)[
The 12 stage methodology consisted of 1. Select subject ahead2. Define the process 3. Identify potential partners 4. Identify data sources 5. Collect data and select partners 6. Determine the gap 7. Establish process differences 8. Target future performance 9. Communicate 10. Adjust goal 11. Implement 12. Review/recalibrate. The following is an example of a typical shorter version of the methodology: 1. Identify your problem areas - Because benchmarkingcan be applied to any business process or function, a range of research techniques may be required. They include: informal conversations with customers, employees, or suppliers; exploratory research techniques such as focus groups; or in-depth marketing research, quantitative research, surveys, questionnaires, re engineering analysis, process mapping, quality control variance reports, or financialratio analysis. Before embarking on comparison with other organizations it essential that you know your own organization's function, process; base lining performance provides a point against which improvement effort can be measured. 2. Identify other industries that have similar processes - For instance if one were interested in improving hand offs in addiction treatment s/he would try to identifyother fields that also have hand off challenges. These could include air traffic control, cell phone switching between towers, transfer of patients from surgery to recovery rooms. 3. Identify organizations that are leaders in these areas - Look for the very best in any industry and in any country. Consult customers, suppliers, financial analysts, trade associations, and magazines to determine...