Benchmarking It is a management tool that can help organizations improve the efficiency and effectiveness of their procedures and

processes that has been in evidence for several years now, both in the private and public sectors. Benchmarking is a tool that provides goals for realistic improvement and helps you understand the changes required for improving performance.

Benefits and use In 2008, a comprehensive survey on benchmarking was commissioned by The Global Benchmarking Network, a network of benchmarking centers representing 22 countries. Over 450 organizations responded from over 40 countries. The results showed that: 1. Mission and Vision Statements and Customer (Client) Surveys are the most used (by 77% of organizations of 20 improvement tools, followed by SWOT analysis (72%), and Informal Benchmarking (68%). Performance Benchmarking was used by 49% and Best Practice Benchmarking by 39%. 2. The tools that are likely to increase in popularity the most over the next three years are Performance Benchmarking, Informal Benchmarking, SWOT, and Best Practice Benchmarking. Over 60% of organizations that are not currently using these tools indicated they are likely to use them in the next three years. Functions and Objectives of benchmarking Benchmarking may be used to identify and rectify problems, implement strategic change initiatives, or for continuous improvement. In the private sector, the primary rationale for benchmarking is the desire to maintain or regain a competitive market position. While

most public sector departments and agencies do not actively compete for market share, there are equally valid reasons to consider benchmarking as a public sector management improvement technique. Benchmarking, which can be used in the public sector, is an example of a continuous improvement tool that can: Provide meaningful performance information. Improve strategic planning and provide an assessment of the organization's strengths and weaknesses. Establish challenging performance goals and stimulate better financial management. Foster implementation of best practices and lead to increased efficiency in the use of resources. Provide meaningful performance information Benchmarking can assist public sector managers improve the quality of their performance information. Such improvements can, in turn, help organizations better meet external and internal accountability requirements. Benchmarking information often adds an important comparative perspective to organizational outputs. Improve strategic planning and provide an assessment of the organization's strengths and weaknesses The organization can learn how to plan for the long term more effectively by seeing how other organizations have reached better levels of performance through their own strategic planning. Benchmarking allows management to determine where major problems lie, and what can be done to strengthen weak areas. Areas of excellence will also surface, enabling the organization to continue with what it is doing well. Establish challenging performance goals and stimulate better performance Benchmarking is all about comparison, and comparison can be a driving force to spur on organizational or individual performance. Realizing what an organization is doing wrong, or could do better, leads to easier planning for future target performance levels. Management will know where it stands in terms of performance and what has to be done to get where it wants to be. This should result in more realistic goals being set. Foster implementation of best practices and lead to significant savings Benchmarking and other comparative information can be used to address pressures by identifying ways to streamline processes, or opportunities to improve the allocation of resources. The implementation of best practices found in other organizations through benchmarking will help the organization become more efficient and effective.

Application of benchmarking involves four key steps: 1. 2. 3. 4. Understand in detail existing business processes Analyze the business processes of others Compare own business performance with that of others analyzed Implement the steps necessary to close the performance gap

Benchmarking should not be considered a one-off exercise. To be effective, it must become an ongoing, integral part of an ongoing improvement process with the goal of keeping abreast of ever-improving best practice.

Example Many Indonesian Manufacturing Industries have used the Benchmarking method. Some of the industries include food, wearing apparels and leather branches, furniture etc.