Benchmarking Process Tutorial

The benchmarking process consists of five phases:

1. Planning. The essential steps are those of any plan development: what, who and how.

• What is to be benchmarked? Every function of an organization has or delivers a “product” or output. Benchmarking is appropriate for any output of a process or function, whether it’s a physical good, an order, a shipment, an invoice, a service or a report.


• To whom or what will we compare? Business-to-business, direct competitors are certainly prime candidates to benchmark. But they are not the only targets. Benchmarking must be conducted against the best companies and business functions regardless of where they exist.


• How will the data be collected? There’s no one way to conduct benchmarking investigations. There’s an infinite variety of ways to obtain required data – and most of the data you’ll need are readily and publicly available. Recognize that benchmarking is a process not only of deriving quantifiable goals and targets, but more importantly, it’s the process of investigating and documenting the best industry practices, which can help you achieve goals and targets.

2. Analysis. The analysis phase must involve a careful understanding of your current process and practices, as well as those of the organizations being benchmarked. What is desired is an understanding of internal performance on which to assess strengths and weaknesses.

Ask:

• Is this other organization better than we are?
• Why are they better?
• By how much?
• What best practices are being used now or can be anticipated?
• How can their practices be incorporated or adapted for use in our organization?

Answers to these questions will define the dimensions of any performance gap: negative, positive or parity. The gap provides an objective basis on which to act—to close the gap or capitalize on any advantage your organization has.

3. Integration. Integration is the process of using benchmark findings to set operational targets for change. It involves careful planning to incorporate new practices in the operation and to ensure benchmark findings are incorporated in all formal planning processes.

Steps include:

• Gain operational and management acceptance of benchmark findings. Clearly and convincingly demonstrate findings as correct and based on substantive data.
• Develop action plans.
• Communicate findings to all organizational levels to obtain support, commitment and ownership.

4. Action. Convert benchmark findings, and operational principles based on them, to specific actions to be taken. Put in place a periodic measurement and assessment of achievement. Use the creative talents of the people who actually perform work tasks to determine how the findings can be incorporated into the work processes.

5. Maturity. Maturity will be reached when best industry practices are incorporated in all business processes, thus ensuring superiority.

Tests for superiority:

• If the now–changed process were to be made available to others, would a knowledgeable businessperson prefer it?
• Do other organizations benchmark your internal operations?

Maturity also is achieved when benchmarking becomes an ongoing, essential and self-initiated facet of the management process. Benchmarking becomes institutionalized and is done at all appropriate levels of the organization, not by specialists.

Figure 1 Benchmarking process steps

Excerpted from Robert C. Camp, Benchmarking: The Search for Industry Best Practices That Lead to Superior Performance, ASQ Quality Press, 1989, pages 4-6.