Benchmarking

Definition
In one of the first books to expound on the topic of Benchmarking, Robert Camp defined it as “the search for those best practices that will lead to the superior performance of a company.”

The purpose of Benchmarking, then is to accelerate the change [improvement] of processes to continue delivering superior products and services. The process of Benchmarking:

• Creates a healthy discomfort with the current state of excellence.
• Determines what to change.
• Defines results desired after the change.

Important definition distinctions:

• Benchmarking is the process of finding the “best” out there and then understanding and emulating “what they do” to be the best.
• Benchmarks: are industry standards defined in two ways:
• Quantitative Benchmarks: measures of performance that are used to define and find the “best” out there with whom to compare your organization against.
• Descriptive Benchmarks: the practices or, more specifically, defining the process(es) of “what they do” that makes them the best.

Successful Benchmarking depends upon:

• Realizing your customers' needs are continuously changing and that you must keep pace with these changes.
• Understanding first, how your own work is done before you can compare how the best are doing it.
• Negotiating and forming partnerships with others, whether internal or external to your organization, from whom you would like to learn how their superior processes operate.
• Measuring performance and enabling practices. You must establish baseline measures of your performance measures to compare against the best, to find the best, then seek to understand their practices.
• Understanding that just copying others' practices does not work. You must change and adapt what you learn to make it your own and apply it to your own processes.
• Committing to the decisions and changes you've made to bring your own processes to superior performance.

Whether internal or external to your organization, there are four basic types of Benchmarking:

• Internal Benchmarking: A comparison of internal operations, e.g., unit-to-unit or one office to another. A team within the personnel division of an organization might study the hiring process within another division of the same organization.
• Competitive Benchmarking: A comparison of your competitor. E.g., one hospital may study the triage process in a competitive hospital.
• Functional Benchmarking: To compare a function, such as warehouse operations, or information systems of another organization not necessarily similar in business. For example, IBM benchmarked Federal Express in their delivery process, or Ford Motor Co. benchmarked LL Beans warehousing process.
• Generic Benchmarking: Comparison of functions or processes that are the same regardless of the industry, e.g. City Corp. for document processing or the Federal Reserve for bill scanning.