Bench Marking

Benchmarking
Definition
Benchmarking is the process of identifying "best practice" in relation to both products

(including) and the processes by which those products are created and delivered. The
search for "best practice" can taker place both inside a particular industry, and also in
other industries (for example - are there lessons to be learned from other industries?).
The objective of benchmarking is to understand and evaluate the current position of a

business or organisation in relation to "best practice" and to identify areas and means of
performance improvement.
The Benchmarking Process
Benchmarking involves looking outward (outside a particular business, organisation,

industry, region or country) to examine how others achieve their performance levels and
to understand the processes they use. In this way benchmarking helps explain the
processes behind excellent performance. When the lessons learnt from a benchmarking
exercise are applied appropriately, they facilitate improved performance in critical
functions within an organisation or in key areas of the business environment.
Application of benchmarking involves four key steps:
(1) Understand in detail existing business processes
(2) Analyse the business processes of others
(3) Compare own business performance with that of others analysed
(4) 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.
Types of Benchmarking
There are a number of different types of benchmarking, as summarised below:
Type Description Most Appropriate for

the Following Purposes
Strategic Where businesses need to improve overall - Re-aligning business
Benchmarking performance by examining the long-term strategies that have
strategies and general approaches that have become inappropriate
enabled high-performers to succeed. It
involves considering high level aspects
such as core competencies, developing new
products and services and improving
capabilities for dealing with changes in the
external environment. Changes resulting
from this type of benchmarking may be
difficult to implement and take a long time
to materialise
Performance Businesses consider their position in _ Assessing relative level

or Competitive relation to performance characteristics of of performance in key
Benchmarking key products and services. Benchmarking areas or activities in
partners are drawn from the same sector. comparison with others
This type of analysis is often undertaken in the same sector and
through trade associations or third parties to finding ways of closing
protect confidentiality. gaps in performance
Process Focuses on improving specific critical - Achieving

Benchmarking processes and operations. Benchmarking improvements in key
partners are sought from best practice processes to obtain quick
organisations that perform similar work or benefits
deliver similar services. Process
benchmarking invariably involves
producing process maps to facilitate
comparison and analysis. This type of
benchmarking often results in short term
benefits.
Functional Businesses look to benchmark with partners - Improving activities or

Benchmarking drawn from different business sectors or services for which
areas of activity to find ways of improving counterparts do not exist.
similar functions or work processes. This
sort of benchmarking can lead to innovation
and dramatic improvements.
Internal involves benchmarking businesses or - Several business units
Benchmarking operations from within the same within the same
organisation (e.g. business units in different organisation exemplify
countries). The main advantages of internal good practice and
benchmarking are that access to sensitive management want to
data and information is easier; standardised spread this expertise
data is often readily available; and, usually quickly, throughout the
less time and resources are needed. There organisation
may be fewer barriers to implementation as
practices may be relatively easy to transfer
across the same organisation. However, real
innovation may be lacking and best in class
performance is more likely to be found
through external benchmarking.
External involves analysing outside organisations - Where examples of

Benchmarking that are known to be best in class. External good practices can be
benchmarking provides opportunities of found in other
learning from those who are at the "leading organisations and there is
edge". This type of benchmarking can take a lack of good practices
up significant time and resource to ensure within internal business
the comparability of data and information, units
the credibility of the findings and the
development of sound recommendations.
International Best practitioners are identified and - Where the aim is to

Benchmarking analysed elsewhere in the world, perhaps achieve world class
because there are too few benchmarking status or simply because
partners within the same country to produce there are
valid results. Globalisation and advances in insufficient"national"
information technology are increasing businesses against which
opportunities for international projects. to benchmark.
However, these can take more time and
resources to set up and implement and the
results may need careful analysis due to
national differences

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Benchmarking

Benchmarking is the process of identifying "best practice" in relation to both products

The objective of benchmarking is to understand and evaluate the current position of a

The Benchmarking Process

Benchmarking involves looking outward (outside a particular business, organisation,

Application of benchmarking involves four key steps:

(1) Understand in detail existing business processes

(2) Analyse the business processes of others

(3) Compare own business performance with that of others analysed

(4) Implement the steps necessary to close the performance gap

Benchmarking should not be considered a one-off exercise. To be effective, it must

There are a number of different types of benchmarking, as summarised below:

Type Description Most Appropriate for

Performance Businesses consider their position in _ Assessing relative level

Process Focuses on improving specific critical - Achieving

Functional Businesses look to benchmark with partners - Improving activities or

External involves analysing outside organisations - Where examples of

International Best practitioners are identified and - Where the aim is to

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