Definition of Benchmarking
  • Benchmarking is a continuous process of comparing an organization's products, services and processes against those of its toughest competitors or those of organizations renowned as world class or industry leaders.
  • In many companies, benchmarking is a key component of the total quality management. Profitability and growth flow from a clear understanding of how the business is performing, not just against its previous accomplishment, but against the toughest competitors or world-class organizations.
Types of Benchmarking
  • Internal Benchmarking: Comparing similar activities between different departments, divisions, regions and business units within an organization.
  • Industrial Benchmarking: Comparing products, services, processes and results against direct competitors in the same industry.
  • Generic Benchmarking: Comparing the best practice business processes of organizations from different industries.
Types of Benchmarking Reference for Comparison Example Information Accessibility Innovationess
Internal Benchmarking Comparing similar activities between different departments, functions, regions within the same organizations. Merchandise in Watsons Vs in Park'N shop Easy Little
Industrial Benchmarking Compare with direct competitors in the same industries Cafe de Coral Vs Maxim's Difficult Medium
Generic Benchmarking Compare the best practices of orgaizations from different industries Sales & Marketing of P&G, Customer Service of Hang Seng Bank Medium High
Results Comparison & Processes Comparison
  • Results comparison can give you information regarding your own market position and performance discrepancy (if any), but you don't know how to shorten the discrepancy or out-compete your competitors.
  • Processes comparison can give you information on how to shorten the discrepancy or out-compete your competitors.
  • Therefore, Benchmarking is not only a "Number Comparison Game"
Procedures of Benchmarking
Key Success Factors for Benchmarking
  • Top management's commitment, involvement & support
  • Well preparation
  • Open-minded, accept new & innovative matters
  • Clear understanding on organizations' critical success factors & processes
  • Provide benchmarking training to relevant employees
  • Areas for benchmarking should not be too board for each single time
  • Clear self understanding before doing comparison
  • Find the best practice business process if possible
  • Follow the predetermined standard
  • Share information with partners voluntarily
  • Focus on processes improvement
Application & Value of Benchmarking
  • Benchmarking can apply to most measurable & observable areas, include:
    -Products & services
    -Support functions
    -Organization performances
  • Benchmarking is a key component of Total Quality Management. It facilitates continuous improvement of organizations to achieve a better performance.
  • Benchmarking can facilitate the change of corporate culture, motivate managers and employees to continuously compare the best practices of other organizations in order to improve self performance.
Conclusion of Benchmarking
  • Benchmarking is a concept, attitude, tool or management system
  • Benchmarking is a practical management tool. By using a best organization as a reference, it can improve an organization's processes and performance in an effective and efficient way.
  • The ultimate goals of benchmarking is learning, improvement, enhance business competitiveness and performance improvement.
  • Benchmarking emphasize proper transfer and adoption (according to own situation), but not "totally transfer".