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CEM 515
Term Paper
Benchmarking
Prepared for:
Prepared By:
ID # 986453
June, 2009
TABLE OF CONTENTS
1. Introduction……………………………………………........ 3
1.1 Definition………………………………………………... 4
1.2 Origins…………………………………………………… 5
2. Benchmarking Process………………………………... 7
4. Types of Benchmarking……………………………………. 17
5. Criticisms of Benchmarking……………………………….. 22
7. Conclusion ………………………………………………… 24
8. References………………………………………………...... 25
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1. Introduction
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form of developing strategic plans and for making improvements within an
organization. This is not true. Benchmarking is a process that allows
organizations to improve upon existing ideas. In order to eliminate myths
and misconceptions about benchmarking it is important to know exactly
what benchmarking is, the different types of benchmarking, the criticisms
of benchmarking, and the ethical practices concerning benchmarking.
1.1 Definition
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performance and noting the strengths and weaknesses of the
organization and assessing what must be done to improve.
Although, benchmarking is the systematic process of
measuring one’s performance against recognized leaders for the
purpose of determining best practices that lead to superior
performance when adapted and utilized.
1.2 Origins
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1.3 Important of Benchmarking
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2. Benchmarking Process
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Determine the data collection method and agree on
definitions of indicators and performance measures to be
used.
Collect data.
2.2 Analysis:
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Once the causes are understood then solutions can be
identified and action taken to apply the solutions. It is at this stage
that the desired performance targets are formulated. The final target
values established during the integration stage when the feasibility of
achieving these values are discussed and agreed with key personnel
within the organisation. In this stage benchmarking helps:
2.3 Integration:
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2.4. Action and Monitoring:
Data Gathering
Planning
and Analysis
Benchmarking Process
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2.2 Questionnaire to Apply Benchmarking
To determine if business, unit or organisation is ready for
benchmarking, they have to complete the following questionnaire,
based on American Productivity and Quality Center (APQC)
material. The organization Studies the statements and tick one box to
reflect the level to which the statement is true for its business, unit or
organisation (the questionnaire format shown below). Finally the
total score will indicate the organization appellate to the
benchmarking.
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American Productivity and Quality Center (APQC)
Questionnaire
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3. Benchmarking Methodology
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air traffic control, cell phone switching between towers,
transfer of patients from surgery to recovery rooms.
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3.1.6) Finding the source for benchmarking
Internal External
Customer
Internal Similar Organization
External
Best Practice
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3.2 Estimated Time and Effort for Benchmarking Process
BEST IN CLASS
COMPETITIVE
IMPROVING
BASELINE
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4. Types of Benchmarking
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This is a comparison among similar operations within one’s
own organization. This is achieved by the establishing of good
practice organization-wide through the comparison of internal
activities or operations. The key driver is the sharing of good
practice in crosscutting activities, for example, by carrying out
process improvement.
2. Competitive benchmarking
3. Functional benchmarking
4. Generic benchmarking
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5. Strategic benchmarking.
6. Performance benchmarking.
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However, in the commercial world, it is common for
organizations to undertake this type of benchmarking through trade
associations or third parties to protect confidentiality. A process
whereby organizations use performance measures to compare
themselves against similar organizations. Benchmarking using this
approach can also be undertaken within an organization by
comparing the performance of individual business units.
7. Process benchmarking.
This approach focuses on specific processes or operations.
Process Benchmarking is used when the focus is on improving
specific critical processes and operations. Benchmarking partners are
sought from best practice organizations that perform similar work or
deliver similar services.
8. External benchmarking.
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to others. In addition, this type of benchmarking may take up more
time and resource to ensure the comparability of data and
information, the credibility of the findings and the development of
sound recommendations.
External learning is also often slower because of the “not
invented here” syndrome. External benchmarking seeks to compare a
firm with organizations with the same or very similar characteristics.
The benchmarking partner may be a direct competitor or a firm
operating in other market segments. The main characteristic of
external benchmarking is high degree of comparability between the
organizations or products being benchmarked.
9. International benchmarking.
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4. Criticisms of Benchmarking
As with any new concept there are those who are in favour of the
idea and those who oppose or criticize it. Benchmarking should not be used
as is a way to set goals. Those who are responsible for meeting specific
goals must understand all of the processes that are required to make the
goal a reality. One of the criticisms of benchmarking is that it can be
considered as spying on the competition. This is not truth. Benchmarking is
not spying on the competition but keeping up with what they and the rest of
the industry are doing. In Japan, benchmarking is a part of their manager's
job descriptions. This is one of the ways that the Japanese are able to keep
up with and surpass others in industries such as automobiles, motorcycles,
electronics, etc.
Another criticism of benchmarking is that it is copycatting. This is
what many think that benchmarking is. They feel that those who
benchmark do not develop their own ideas. Copycatting and Benchmarking
are not one and the same. Copycatting leads to lessened creativity and stale
ideas. Benchmarking is not supposed to take the place of managers
bringing insight and original strategies into the organization. Although
copycatting is an easy trap for managers to fall into, it is important for
managers to realize that benchmarking will never be an excuse for
managers to stop being creative and innovative.
Some organizations do not utilize benchmarking because they feel
that if it’s not broke, don’t fix it. When a company is doing well
financially, they have a tendency to resist change and not worry about
competitors. Many organizations shy away from benchmarking because
they do not understand what benchmarking is and they feel that they do not
have anything to gain.
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5. Advantages & Disadvantages
5.1 Advantages
5.2 Disadvantages
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disadvantages of benchmarking such as: poorly defined
benchmarks may lead to wasted effort and meaningless
results. Incorrect comparisons will effect the result of required
improvement and what is best for someone else may not suit
to other. Some organizations have reluctance to share the
information. Finally, benchmarking cannot change all required
improvement at once.
6. Conclusion
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7. References
1. Bruce T. Barkley and James H. Saylor (2001), Customer – driven (Project Management.
5. http://www.qualityamerica.com.
11. http://www.dti.gov.uk/quality/benchmarking.
14. http://www.accompli.com.uk.
16. ECRI & ISMP under contract to the Pennsylvania Patient Safety Authority (2004),
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