Benchmarking is the continuous process of measuring one
product or process against another similar product or process to identify best
practices. It is a starting point for initiating change within a company or
organization. The most common reasons an organization will benchmark are to
determine where they stand amongst the competition and whether value can be
added by incorporating the practices of others. Benchmarking can be used by
organizations for comparison of internal operations, competitor-to-competitor
products, industry standing, and generic business functions or processes. The
goal of benchmarking is to identify the best practices of industry and to adapt
and/or incorporate those practices that are beneficial to the organization.
In benchmarking, it is always best to start with a known
problem that can be defined or one that has the potential to provide the maximum
benefit to the organization. When applied to producibility, benchmarking can
result in the identification of processes that will reduce cost, improve
quality, and result in more desirable products for the customer.
Benchmarking within an organization can be used for the
setting of goals and spurring creativity and innovation. It can also be employed
to identify solutions for product or process problems. Benchmarking is an
effective means of identifying improvements within an organization by raising
the standard of quality and efficiency in a product or process. The standard of
quality is elevated when comparison via benchmarking identifies opportunities
and methods that can improve upon the item, process, or procedure being
When a company decides that it will strive to have the
best product or process, benchmarking is used to determine its current status in
the industry and to identify any steps necessary to reach its goal of becoming
or remaining the best. In many cases, companies form benchmarking partnerships
to permit the exchange of data. The benchmarking partner can be either a primary
competitor, an internal organization, or, ideally, a world-class organization,
which may be more likely to share information than a primary competitor.
There are four primary phases of benchmarking. The first
phase is the planning phase during which the product or process to be
benchmarked is identified and the companies to be used for comparison selected.
The type of data to be gathered is identified, and the data is collected. One
method to gather data is through a questionnaire to the benchmarking partner
that specifically addresses the area being benchmarked.
The second phase is data analysis. In this phase, all
aspects of the identified competition or benchmarking partner are analyzed to
determine variations between the two similar products or processes. The
information is compared for similarities and differences to identify improvement
areas. This is where the current performance gap between the two benchmarking
partners is determined.
The third phase, integration, is where the findings are
communicated; goals are established; and a plan of action is defined.
Implementation, the fourth phase, consists of initiating
the plan of action and monitoring the results. The product or process that was
benchmarked continues to be monitored for improvement and should be benchmarked
often to ensure the improvement is continuous.
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