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Introduction:
Measuring a performance against a well recognized business eminence or
quality framework could deliver a range of advantages for firms. It is vital
for a firm to know its own standard and compare it with others in today's
aggressive corporate environment. Benchmarking is a way to evaluate a
firms performance with those of other firms. It helps in finding the best
practice and to take needful working to improve the firms own
performance so that it meets or exceeds its competitors performance. It
is basically a process for reengineering or quality improvement
techniques, and focuses mainly on the ongoing quality management
efforts of SBUs which has resulted in the inception of a conceptual
framework for assessing users needs identified in market opportunity
analysis, the users ombudsman, a new service concept, relationship
marketing and a citizen charter.
Benchmarking can be considered as a reference point for measuring and
when applied to work processes can yield superior results.
What is to be benchmarked?
The competitors are the reference points for benchmarking. But till what
extent these competitors are willing to share the informations about their
best practices is also a factor to be taken into consideration.
Benchmarking can also be internal to the organization. Best practices in
one division could form the basis for benchmarking other similar activities
in other divisions. For example, Rentokil benchmarks its branches against
each other, identifies best practices and spreads them from across
branches through training or by transferring its managers to ensure a
consistent quality of service to its 1.5 million customers worldwide. At
Shell, internal best practices are identified and shared through its units
worldwideii.
World-class performers in the industry might share information about their
best practices. Sometimes, benchmarking against the best companies
may not be credible as they may be swamped with similar requests from a
number of other companies and hence unable to help all of them.
Companies in the subsequent positions in the industry can also provide a
valuable benchmarking experience to generate growth in a firms
activities/processes. Since some approaches could be similar across
different industries, the best companies in other industries can also meet
the purpose of benchmarking. This may serve to break the current
industry paradigms in search of new, world-class levels of performance.
For example, a medical centre might benchmark against a hotel industry.
Evolution of Benchmarking
Author Definition
Camp 1989 The continuous process of measuring products,
services and practices against the toughest
competitors or those companies recognised as
industry leaders.
Geber 1990 A process of finding the world-class examples of a
product, service or operational system and then
adjusting own products, services or systems to meet
or beat those standards.
Codling 1992 An ongoing process of measuring and improving
products, services and practices against the best
Vaziri 1992 A continuous process comparing an organisations
performance against that of the best in the industry
considering critical consumer needs and determining
what should be improved
Watson 1993 The continuous input of new information to an
organisation
Evans 1993 Measuring own performance against best-in-class
organisations to determine how they achieve their
performance levels and use the knowledge to
improve own performance
Kleine 1994 An excellent tool to use in order to identify a
performance goal for improvement, identify partners
who have accomplished these goals, identify
applicable practices to incorporate into a redesign
effort
Cortada 1995 A method for finding how to improve processes
quickly by learning from others dealing with similar
issues
Cook 1995 A kind of performance improvement process by
identifying, understanding and adopting outstanding
practices from within the same organisation or from
other businesses
Types of Benchmarkingiii
Methodology
Five phases of benchmarking iv
Advantages of benchmarking
Minimizes the costs and saves time to adapt the best practices of other
companies rather than re-invent them in-house.
Helps in implementation of upcoming changes and sophisticated
technological improvements, arising out of change across industries.
Bridges the competitive gaps in ones own concern from other
competing firms.
Initiates the formulation of strategic goals and objectives based on the
external models for improving activities and processes in the
organization.
Stimulates an organization to overcome its inertia and think differently
in the context of the brand-new approaches/models implemented
elsewhere.
Facilitates organizational learning and,
Drags improvement in critical areas within the organization by adapting
best practices and processes.
Disadvantages of benchmarking
The most resistant criticism of Benchmarking comes from the idea of
copying others.
It
is
Examples of benchmarkingv
Some examples of companies that stand out for their best practices are:
a) Microsoft creativity and innovation, entrepreneurship, globalization; b)
3M new product development, entrepreneurial spirit Motorola six sigma
quality culture, c) Mc Kinsey high level strategic consultancy services, d)
Compaq and Dell computers marketing and distribution system, e)
Johnson and Johnson ethics.
Xerox
The history of Xerox goes back to 1938, when Chester Carlson, a patent
attorney and part-time inventor, made the first ever xerographic image in
the United States. Carlson struggled for more than five years to sell the
invention, as many companies did not believe there was a market for it.
Finally, in 1944, the Battelle Memorial Institute in Columbus, Ohio,
contracted with Carlson to refine his new process, which he had named
'electrophotography.' Three years later, The Haloid Company, maker of the
photographic paper, approached Battelle and obtained a license to
develop and market a copying machine based on Carlson's technology.
Motorolavi
Motorola Corp. saved $22 Billion from 1986 to 2009, reflecting hundreds of
individual successes in all Motorola business areas including:
Sales and Marketing
Product design
Manufacturing
Customer service
Transactional processes
Supply chain management
Conclusion
vi Six Sigma Process and its Impact on the Organizational Productivity, Masoud
Hekmatpanah, International Journal of Social, Behavioral, Educational,
Economic, Business and Industrial Engineering Vol:2, No:7, 2008