An Analysis of the Process of Benchmarking in Determining an Organization’s Performance

Benchmarking is a process of comparing an organization's or company's performance to. That of other organizations or companies using objective and subjective criteria. The process compares programs and strategic positions of competitors or exemplary. Organizations to those in the company reviewing its status for use. As reference points in the formation of organization decisions and objectives. Comparing how an organization or company performs a specific activity with the methods of a competitor. Or some other organization doing the same thing is a way to identify the best practice.

And to learn how to lower costs, reduce defects, increase quality. Or improve outcomes linked to organization or company excellence. Organizations and companies use benchmarking to determine. Where inputs, processes, outputs, systems, and functions are significantly different from those of competitors or others. The common question is, What is the best practice for a particular activity or process? Data obtained are then used by the organization or company to introduce change into its activities in an attempt to achieve the best practice standard if theirs is not best.

Comparison with competitors and exemplary. Organizations is helpful in determining whether the organization's or company's capabilities or processes are strengths or weaknesses. Significant favorable input, process, and output benchmark variances become the basis for strategies, objectives, and goals. Often, a general idea that improvement is possible is the reason for undertaking benchmarking. Benchmarking, then, means looking for and finding organizations or companies that are doing something in the best possible way and learning how they do it in order to emulate them. Organizations or companies often attempt to benchmark against the best in the world rather than the best in their particular industry.A problem with benchmarking is it may restrict the focus to what is already being done. By emulating current exemplary processes, benchmarking is a catch-up managerial tool or technique rather than a way for the organization or company to gain managerial dominance or marketing share.

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Benchmarking can foster new ideas or processes when management uses noncompetitive organizations or companies outside its own industry as the basis of benchmarking. What if new ideas are not generated? It is possible that no one in some other organization or company has had a great idea that is applicable to the input, process, or outcome that the organization is attempting to improve or change by benchmarking.Benchmarking is not a competitive analysis. Benchmarking is the basis for change. It is about learning. The organization performing the benchmark analysis uses the information found in the process to establish priorities and target process improvements that can change business or manufacturing practices. Benchmarking commonly takes one of four forms.Generic benchmarking investigates activities that are or can be used in most businesses.

This type of benchmarking makes the broadest use of data collection. One difficulty is in understanding how processes translate across industries. Yet generic benchmarking can often result in an organization's drastically altering its ideas about its performance capability and in the reengineering of business processes.Functional benchmarking looks at similar practices and processes in organizations or companies in other industries. This type of benchmarking is an opportunity for breakthrough improvements by analyzing high-performance processes across a variety of industries and organizations.Competitive benchmarking compares the organization's processes to those of direct competitors.

In competitive benchmarking, a consultant or other third party rather than the organization itself collects and analyzes the data because of its proprietary nature.Internal benchmarking compares processes or practices within the organization or company over time in light of established goals. Advantages of internal benchmarking include the ease of data collection and the definition of areas for future external investigations. The primary disadvantage of internal benchmarking is a lower probability that it will yield significant process improvement breakthroughs.Each form of benchmarking has advantages and disadvantages, and some are simpler to conduct that others. Each benchmarking approach can be important for process analysis and improvement. Breakthrough improvements are generally attributed to the functional and generic types of benchmarking.

Eight steps are typically employed in the benchmarking process.Identify processes, activities, or factors to benchmark and their primary characteristics. Determine what form is to be used: generic, functional, competitive, or internal. Determine who or what the benchmark target is: company, organization, industry, or process. Determine specific benchmark values by collecting and analyzing information from surveys, interviews, industry information, direct contacts, business or trade publications, technical journals, and other sources of information. Determine the best practice for each benchmarked item. Evaluate the process to which benchmarks apply and establish objectives and improvement goals. Implement plans and monitor results. Recalibrate internal base benchmarks. A recurring problem that must be addressed during the eight steps is the determination of criteria to ensure that inaccuracies or inconsistencies do not occur that will make any comparison meaningless. The eight steps of the benchmarking process can be summarized as an improvement analysis. That is, the organization investigates another organization to find out what it does and how it is done. During the investigation, what goes right and what goes wrong is determined.

This information is then used for the improvement of activities or processes. When the activities and processes of the organization making the investigation are equal to or better than the measurements found during the investigation, no change is warranted because the investigating organization has the better practice.Another view of benchmarking is as an organization gap analysis. The organization determines what it lacks in terms of what it knows and how it does things. The shortfalls that initiate the gap analysis can be activities and processes or they can be tactics and strategies. The organization must then determine what other organization is good at doing those things that can be improved or changed for the better. A very systematic investigation is made of the organization with the best practices to discover what is done, how it is done, how it is implemented, and how it fits into the organization's operations. The findings of the systematic investigation then become the basis of revision or modification for the organization doing the investigation.Benchmarking efforts typically collect information on responsibilities, program design, operating facilities, technical know-how, brand images, levels or integration, managerial talent, and cost or financial performance.

Financial or cost data are often the category of greatest concern because these are factors in the input, pro cessing, and output activities of the organization or company.Benchmarking is frequently referred to as a "wake-up call." Organizations and companies benchmark for many reasons: They want to determine where they spend their time and how much value they add, or they are curious about how they stack up against others. Through the knowledge gained by benchmarking, organizations and companies redefine their roles, add more value, reduce costs, and improve performances. The electronics industry has a unique style of benchmarking. Here benchmarking involves running a set of standard tests on a system to compare its performance with that of others. That is, it is a tool for measuring the power and performance of hardware and software systems and applications as well as the capacity of a system. There are four categories of benchmarking in the electronics industry:An application-based benchmark runs real applications or parts of applications either in full or modified versions. A synthetic benchmark emulates applications activity.

A playback test uses logs of one type of system call (e.g., disk calls) and plays the calls back in isolation. An inspection test exercises a system or component to emulate an application activity. The synthetic and playback benchmarks are used to get a rough idea of how a system or component performs. If application-based benchmarks are available that match the application, they are used to refine the evaluation. The inspection benchmarks are used to determine whether a system or component is functioning properly. These benchmarks use a well-defined testing methodology based on real-world use of a computer system. They measure performance in a deterministic and reproducible manner that allows the system administrator to judge the performance and capacity of the system.

Benchmarks provide a means of determining tuning parameters, reliability, bottlenecks, and system capacity that can provide marketing and buying information. Although benchmarking in the electronics industry is a testing mechanism or process, it, too, is a technique for learning, change, and process improvement. Benchmarking is an effective way to ensure continuous improvement or progress toward strategic goals and organizational priorities. A real benefit of benchmarking comes from the understanding of processes and practices that permit a transfer of best practices or performances into the organization. At its best, benchmarking stresses not only processes, quality, and output but also the importance of identifying and understanding the drivers of the activities.

BIBLIOGRAPHY

1. Blinn, James D. (1998). "Benchmarking Can Help Control Costs of Risk." National Underwriter, October: 24-25.
2. Camp, Robert C. (1989). Benchmarking: The Search for Industry Best Practices That Lead to Superior Performance. Milwaukee, WI: ASQC Quality Press.
3. Camp, Robert C. (1995). Business Process Benchmarking: Finding and Implementing Best Practices. Milwaukee, WI: ASQC Quality Press.
4. Camp, Robert C., ed. (1998). Global Cases in Benchmarking: Best Practices from Organizations Around the World. Milwaukee, WI: ASQC Quality Press.
5. George, Steven. (1992). The Baldrige Quality System: The Do-It-Yourself Way to Transform Your Business. New York: Wiley.
6. Hammer, Michael, and Champy, James. (1993). Reengineering the Corporation: A Manifesto for Business Revolution. New York: Harper Collins.
7. Hurwicz, Michael. (1998). "Behind the Benchmarks," Byte, April: 75-81.

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