The term ‘benchmark’ originally meant a assessors mark as a point of reference. It has come to mean anything taken as a point of reference or a point of comparison. In general sense therefore benchmarking mean’s setting standards which act’s as a point of reference.

In business benchmarking has come to mean variety of things. It has assumed a very special significance in today’s competitive world. It is now recognised as an effective approach towards improvement of productivity/quality & other dimensions of performances that determines competitiveness.

It is used as a guideline to collect business & user requirement.


Origin of Benchmarking

In general sense it has been with humans since business has started its operations early during civilisation days. From earlier times, traders have sought to compete by offering better, cheaper and varied type of products. In order to do this they used to compare with standard norms available then.

After the advent of Industrial revolution the business processes have become more compounded. To check the standard of business processes, a whole range of scientifically based methods like operations research, organisation & methods, statistical quality control etc have evolved.

Even though those methods have sought to measure the performance, they often lacked any external reference to showcase any major progress. These methods could not get a big leap in the performance of business processes. Since it is based on reference (mainly external), the company could recognize the competition which in turn forces the organisation to learn more from the best processes and make a quantum leap in their performance to gain competitive advantage.

Role of Benchmarking

The role of it is to provide management team with knowledge of what gets ‘best performance’ or ‘superior performance’ in a particular field.

Best performance relates to output, efficiency, quality and & other measurement relevant to performing the job. Benchmarking not only investigates what best practice means in terms of performance but also examine how best practices is achieved.

Benchmarking is therefore not only the practice of obtaining measurements but also involves understanding the conditions resources and competence necessary to deliver top performance.

No single department or company can corner the market on all good ideas in view of this it makes good sense to consider the experience of others. Those who always go with it alone are 2 lost to reinvent the wheel for they do not learn and benefit from others progress.

By systematically studying the best practices and by innovative adaptations an organisation can accelerate the progresses of improvement. Benchmarking and Total Quality Management is a long-term commitment to satisfying customer requirements in every aspect of business operations.

It is a philosophy, which has been adopted by many organisations who wish to enhance customer satisfaction and thereby boosting their market value. The main concept is know understand that individuals are in charge for improving the service they provide to their customers be it external customers (outside the organisations) or internal customers (inside the organisation).

Companies who adopt this approach make a commitment to continuous improvement. Often a team approach is adopted under management leadership to identify areas of improvement implement solutions. Increasingly it is being adopted by organisations that are striving for continuous improvement because it offers an external perspective in the quest for service quality. That’s why Benchmarking programmes often take place as part of total quality management.

It is a tool in Business Process Re-Engineering

It is a tool in Business Process Re-engineering. Process Benchmarking exposes organisations to state-of-the-art practices thereby acting as a catalyst for improvements in performance through best practices. Effective benchmarking cannot take place unless the organisations existing process are well understood. Benchmarking and process improvement are therefore fundamentally linked.

Re-engineering is “radical redesign of business processes” whereas benchmarking is “finding and implementing best practices”.

Through Benchmarking best practices can be unearthed and when these practices form basis for the new design of the process then it is called Re-engineering. Thus Benchmarking is essential to Re-engineering but still a necessary stand-alone tool.

Learning Aspect

Find and implement best practices for high performance processes that full satisfy customer needs.

Benchmarking in normal words is to develop unique standards which lead to high accomplishment in any business.

Benchmarks are measurements to gauge the deed of a action & procedure to achieve the same.

♦ Target Position / State ( “Best Practices”)

♦ Guiding Position / Standard Value

♦ Progressive appearance of a suitable boundary.

Benchmarking = Process of handling & dealing with benchmarks.

Areas to Benchmark

♦ Key business processes

♦ Areas of customer dissatisfaction

♦ Applications with swiftly moving knowledge

♦ Areas of employee dissatisfaction

♦ Processes where transparency exceeds assessment

Benefits of Benchmarking

♦ Widen practical drawn out goals and planned targets

♦ Establishes realistic, actionable objectives for implementation

♦ Provides a logic of necessisity to show progress

♦ Encourages striving for excellence, breakthrough thinking and innovation

♦ Emphasises warmth to varying consumer desires.

Result Benchmarking – Result Benchmarking is used for gathering quantitative data, either physical or financial, to compare the performance of different organisations in the same industry.

Why Result Benchmarking

♦ Performance evaluation with other participating organisations

♦ Superior aptitude to goal setting and performance

♦ Improved source for planned & effective decisions

♦ Broadened awareness on trade outline

Basics of Result Benchmarking

♦ Variety of functioning criteria in recipe to product cases

♦ Assemble statistics with survey

♦ Data handling and examination

♦ Management of wide ranging and unique information

♦ Matured goals benchmarks for particular areas backing for corrective process.


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