27.2 Benchmarking

Benchmarking

A continuous process in which an organization compares aspects of the business, called the benchmark performance indicators, externally with high-performing businesses in the sector, or internally. The purpose is to assess the optimal systems, identify the steps and procedures and to improve system performance benchmark.

Stages in the benchmarking process

1. Identify the aspects of the business to be benchmarked.
2. Measure performance in these areas: , reliability records, delivery records and the number of customer complaints
3. Identify the firms in the industry that are considered to be the best
4. Use comparative data from the best firms to establish the main weaknesses in the business: management consultants or by benchmarking schemes operated by government or industry organisations.
5. Set standards for improvement.
6. Change processes to achieve the standards set.
7. Re-measurement.

Benchmarking in quality management

1. Cross-over of ideas: comparing performance with organizations in different sectors/industries can lead to a corss-over of ideas
2. Motivated workforce: including the workforce in the planning process by using their ideas and opinions can contribute greatly to their motivation levels
3. Competitive advantage: using external data to compare can be useful in gaining a look into what competition is doing and how they can be better
4. Relevant information: improvement is done on area most significant to customers, especially if customer feedback is taken in the identification stage of the benchmarking process
5. Internal benchmarking: useful to compare divisions to each other and analyze what department/division is doing the best
6. Increase international competition:

Benchmarking process limitations

1. Obtaining data: it might be difficult to obtain up-to-date data from other businessess
2. Cost issues: the cost of benchmarking might not be recovered from the benefits that come with change
3. Discouraging innovation: copying the optimal processes of high-performing businesses can create an environment that discourages innovation