The
objective of benchmarking is to understand and evaluate the current position of
an organization in relation to ‘best practices’ and to identify areas for
improvement.
A
search for ‘best practices’ can take place both inside (internal benchmarking)
and outside an organization (external benchmarking). Benchmarking that involves
looking for best practices outside an organization, examines how other
organizations achieve their performance levels.
Benchmarking
involves four key phases: Planning, collection, analysis, and adapting improvements.
To be effective, benchmarking must become an integral part of an ongoing
improvement process with the purpose of keeping informed of ever-improving best
practices. When a senior executive in the business unit prepares the strategic plan,
an organization can obtain best results. The senior executive should also be involved
in the benchmarking of the project. Following are some of the types of benchmarking:
·
Strategic Benchmarking: Involves
understanding and evaluating the current position of the organization in
relation to the "best practices" and identifies areas for improvement.
·
Internal Benchmarking: Involves
comparing similar operations within the organization. For example, comparing
processes of business units located in different areas
·
Competitive Benchmarking: Involves
the analysis of competitor processes for a specific product or service.
Typically, organizations conduct this type of benchmarking through trade
associations or third parties to protect confidentiality.
·
Functional Benchmarking: Involves
comparing and improving similar functions or work processes that may be common
within an industry.
·
Generic Benchmarking: Involves
comparing processes across industries. For example, an insurance company may
benchmark a bank loan application process against its insurance claims process
While the processes may appear
dissimilar, they both require timely and consistent adjudication.
