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Benchmarking is
Measuring your performance against that of the best-in-class companies, determining how the best-in-class achieve those performance levels, and using the information as a basis for your own companys targets, strategies, and implementation.
L.Pryor, Benchmarking: A Self Improvement Strategy, Journal of Business Strategy, Nov.Nov.-Dec. 1989.
Types of Benchmarking
Comparison:
Internal Best in Firm Competitive Best in Industry World Class Best in World
Form:
Performance Benchmarking Process Benchmarking Strategic Benchmarking
Performance Benchmarking
Pricing, quality, technical features, performance characteristics Usually through 3rd party intermediary
Process Benchmarking
Analysis of most effective practices on key work processes Comparison is usually World Class
Distribution, order entry, procurement. NASCAR pit crews
Strategic Benchmarking
Project selection Goal and scope Understanding current process - metrics Selection of partner or clearinghouse Data collection - metrics Assessment and recommendations Planning the change Implementation Recalibration update the metrics
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Identify what is to be benchmarked Identify comparative organizations Determine datacollection method and collect data Determine current performance levels
Benchmarking Pitfalls
Project not aligned with competitive strategy Outcome cannot be adequately measured Scope of project too large Omission secondary but important measures Failure to establish a baseline