BENCHMARKING – THE SEARCH FOR INDUSTRY BEST PRACTICES THAT LEAD TO

SUPERIOR PERFORMANCE
BY Robert C. Camp

Benchmarking: The continuous process of measuring products, services and practices against
the toughest competitors or those companies recognized as industry leaders – David T. Kearns,
CEO Xerox

Dantotsu – The Japanese term which means striving to be the “best of the best”

The Japanese do not accept the notion that goods and services could be competitive by simply mimicking
the past. They recognized that new methods, processes, and practices had to be uncovered, and more
important, they recognized that the best of these had to be combined to provide a competitive advantage.

Basic philosophical steps of benchmarking:

 Know your operation (strengths and weaknesses)
 Know the industry leaders or competitors
 Incorporate the best across companies, industries
 Gain superiority

Benchmarking Process

Benchmark Metrics Benchmark Practices

Benchmark Gap How to Close the Gap

 How much  Improved knowledge
 Where  Improved practices
 When  Improved processes

Management Commitment

Organization Communication

Employee Participation

Superior Performance

Benefits of Benchmarking
 It enables the best practices from any industry to be creatively incorporated into an operation
 It can provide stimulation and motivation to the people whose efforts are required to bring
about change
 It breaks down ingrained reluctance to change - It has been found that people are more
receptive to new ideas when those ideas did not necessarily originate in their own industry
 It may identify a technological breakthrough from another industry that would not have been
recognized and applied in one’s own industry for some time to come, e.g. bar coding,
originally created for the grocery industry
 It establishes valuable professional contacts and interactions

The focus is on practices - it is only through the change of current practices or methods of
performing business processes that overall effectiveness will be achieved. Benchmarking metrics
are seen as a result of understanding best practices.

Benchmarking is not a panacea or program - it must be an ongoing management process that

requires constant updating. It is not a fad, but a winning business strategy, a new way of doing
business.
It is important to project future performance levels for both your company and the benchmarked
companies, since industry practices will change. This will give an indication of whether your gap
will become positive, negative, remain the same, etc.

Helping and hindering factors regarding benchmarking:

Helping (+) Factors Hindering (-) Factors
Desire toward leadership Lack of understanding
Desire for satisfied customer Fear of exposure
Image Fear of rejection
Profit Time

Benchmarking’s relation to business planning

 Goals of the organization are based on benchmark findings
 Goals established as a result of benchmarking are accepted by functional management,
derived from the mission, and cascade to objectives and operating principles
 Strategies and action plans are developed, based on industry practices to meet approved
goals
 Plans and target performance are built into the performance appraisal and recognition
processes

Benchmarking action plan success factors:

 Acceptance: How can the acceptance of the benchmark practices be gained from others?
What benefits can be shown for the industry best practices? How can these benefits be
demonstrated?
 Anticipation: What objections to the best practices being proposed can be anticipated? What
should be the most effective response?
 Assistance: How can other organizations or groups assist with the implementation of the best
practices?
 Location: What place or location would be best suited for putting the initial application of the
best practices into operation?
 Timing: How can special timing, days, or dates provide advantage in the implementation?
What dates should be avoided?
 Precautions: How can the implementation be piloted, pre-tested, or simulated to ensure an
effective solution?

Guiding principles for the benchmarking process

 A high degree of ownership exists for the benchmarking process and findings
 The benchmarking effort is continuous
 Benchmarking is eventually performed by those who will be responsible for implementing the
findings
 The organization is encouraged to have pride in benchmarking because it makes the work
easier
 Operations reviews inspect for and include a compulsory discussion of progress toward
attainment of benchmarking findings

What lies beyond benchmarking:

Benchmarking Extended Benchmarking
Objective Efficiency Effectiveness
Requirements Internally Defined End User Defined
Process Current Industry Standard
Practices Best Best
Non-conformance Partially Reduced Eliminated
Results Productivity Business Simplification