Question 7

Explain the concept

performance.

of

benchmarking

in

improving

the

companys

Definition of benchmarking
Benchmarking is the process of comparing one's business processes and
performance metrics to industry bests or best practices from other companies.
Hence, benchmarking are measurement of the quality of an organization's policies,
products, programs, strategies, etc., and their comparison with standard
measurements, or similar measurements of its peers. The objectives of
benchmarking are
1. To determine what and where improvements are called for,
2. To analyze how other organizations achieve their high performance levels,
3. To use this information to improve performance.
In summary, the process of benchmarking, or identifying the best practices that
exist in your particular business or industry, is a method that is rapidly gaining a
reputation for helping businesses improve productivity and profit. Its also set
standards for operation through measurable, scientific, or business methods, is a
concept that has developed and solidified into a clear series of steps that benefit
industry or businesses as a whole.
How the concept
performance?

of

benchmarking

in

improving

the

companys

1. Observing Competitors
Benchmarking is used to identify what other businesses do to increase profit and
productivity, and then adapting those methods to make your business become more
competitive. Imagine if you had a car lot that sells 50 cars per month and down the
street a competitor sells 300 cars per month. By studying and identifying what your
competitor is doing, you could increase sales.
2. Identifying Areas of Excellence
Another productive use of benchmarking is to identify areas of excellence with your
employees and in your existing business. Picture a furniture factory where one
employee assembles more chairs than his co-workers. By examining his methods
and setting them as the benchmark for productivity, other employees can be
trained to work in less time. This will increase productivity as a direct result of using
these techniques.
3. Ongoing Work

Businesses also use benchmarking as an ongoing process that always changes and
adapts. By studying and comparing your benchmarks to the competition, the
industry, and within the individual processes of your company, you allow them to
evolve to meet changing demands and requirements. By keeping your company and
your personal business benchmarks fluid, you ensure that your business follows the
best practices defined by you. The end result should be a marked increase in
productivity and profits.