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What is Benchmarking?
Best Practice Benchmarking is the process of seeking out and studying the best
internal practices that produce superior performance. We supplement the traditional
metrics-focused approach with an analysis of why and how practices produce
exceptional results. Best Practices, LLC does more than help our clients understand
their strengths and weaknesses--we give them a road map for improvement.
Benchmarking can yield great benefits in the education of executives and the
realized performance improvements of operations. In addition, benchmarking can
be used to determine strategic areas of opportunity. In general, it is the application
of what is learned in benchmarking that delivers the marked and impressive results
so often noted. The determination of benchmarks allows one to make a direct
comparison. Any identified gaps are improvement areas.
Benchmarking can take several forms. Internal benchmarking studies the practices
and performance within the client organization. External benchmarking determines
the performance of other, preferably world-class, companies.
"Metrics" give numerical standards against which a clients own processes can be
compared. Metric benchmarks are of the form:

Finished-product first-pass yield of 97%

Scrap/rework less than 1% of sales

Cycle time less than 25 hours

Customer lead times less than 20 days

Productivity levels of $150,000 of more per employee

Plant-level ROA better than 15%

These metrics are usually determined via a detailed and carefully analyzed survey
or interviews. Clients are then able to identify shortcomings, prioritize action items,
and then conduct follow-on studies to determine methods of improvement.
Another form of benchmarking includes "process benchmarking," generally
higher-level and less numbers-intensive than metrics. These studies demonstrate
how top performing companies accomplish the specific process in question. Such
studies can take the form of research, surveys/interviews, and site visits. By
identifying how others perform the same functional task or objective, clients gain
insight and ideas they may not otherwise achieve. Such information affirms and
supports quality decision making by executives. This insight is one key benefit and
value-added feature of benchmarking,
The benefits of process benchmarking are realized when clients employ
recommendations and embark on a change process making marked
improvements in the productivity, costs, and revenues of the company.
Examples of results in this area include:
Norwest, the nations largest mortgage company, embarked on a benchmarking
campaign, and was able to quantify the following benefits:

Sales brochure consolidation: $430, 000 in savings;

Customer and direct mail consolidation: $1 million in savings;

Opportunity lending: $20 million in added growth;

Teller referrals: up 15%, 33% of which result in additional sales;

Use of sales road maps: sales increase up to 102%;

Use of partner letters: 150% increase in commercial sales; and

Performance Coaching: 5.08 products per new customer.

Rank Xerox, the British unit of Xerox, benchmarked the best practices of its
operating countries. Documented benefits of adopting these best practices include:

Country units improved sales from 152% to 328%; and

Over $200 million in new revenue.

Lucent Technologies identified best individual engineer practices which boosted

their productivity levels by 10 percent in eight months, paying for the program
within one year and yielding an ROI more than six times after two years.
By closely working with the client, Best Practices, LLC is able to identify such
improvement opportunities and make recommendations on addressing each of
them, delivering additional and tangible benefits of the benchmarking process.

What is a Best Practice?

To us, "best practices" are documented strategies and tactics employed by highly
admired companies. These companies are not "best-in-class" in every area - such a
company does not exist. But due to the nature of competition and their drive for
excellence, the profiled practices have been implemented and honed to help place
their practitioners as the most admired, the most profitable, and the keenest
competitors in business.
We gather this information from a variety of sources. For the most part, this
information is based on interviews, surveys, and other mechanisms of "primary"
research - information that is simply not available in the public sector. Other
database documents are distilled insights from secondary research -- books,
magazines, libraries, Internet, and other public-domain resources. This ensures that
the contents are truly valuable and are not simple re-hashing or re-publication of
press releases and articles.

http://www.benchmarking.gov.uk/about_bench/whatisit.asp

What is Benchmarking?
There are numerous definitions of benchmarking, but essentially it involves learning,
sharing information and adopting best practices to bring about step changes in
performance. So, at its simplest, benchmarking means:
"Improving ourselves by learning from others".

Most organisations tailor definitions of benchmarking to suit their own strategies and
objectives. Two examples are given below.
"Benchmarking is simply about making comparisons with other
organisations and then learning the lessons that those comparisons
throw up".
Source: The European Benchmarking Code of Conduct
"Benchmarking is the continuous process of measuring products,
services and practices against the toughest competitors or those
companies recognised as industry leaders (best in class)".
Source: The Xerox Corporation

For those approaching benchmarking for the first time the plethora of definitions can be
confusing, so it can help to focus on the learning and sharing that goes on during the
process.
In practice, benchmarking usually encompasses:

regularly comparing aspects of performance (functions or processes) with best

practitioners;

identifying gaps in performance;

seeking fresh approaches to bring about improvements in performance;

following through with implementing improvements; and

following up by monitoring progress and reviewing the benefits.

Although benchmarking involves making comparisons of performance, it is not:

Merely competitor analysis

- Benchmarking is best undertaken in a collaborative

way.

Comparison of league tables

- The aim is to learn about the circumstances and

processes that underpin superior performance.

A quick fix, done once for all

time

Copying or catching up

- Benchmarking projects may extend over a number of

months and it is vital to repeat them periodically so
as not to fall behind as the background environment
changes.
- In rapidly changing circumstances, good practices
become dated very quickly. Also, the fact that others
are doing things differently does not necessarily
mean they are better.

Spying or espionage

- Openness and honesty are vital for successful

benchmarking.

Industrial tourism

- If site visits are undertaken, they should be part of a

structured programme leading to thorough analysis

What is Benchmarking?
An ongoing process of measuring and comparing
the performance of organisations/businesses in
order to encourage continuous improvement
towards best practice

Key Requirements of Benchmarking

A benchmarking club

A willingness to share data

Agreement on common indicators/ honest method

of collecting data
An independent body to facilitate the exchange of
information

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