Page 139 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Production and Operations Management

Notes  “Benchmarking is systematic and continuous measurement process: a process of
continuously measuring and comparing an organizations business processes against
process leaders anywhere in the world to gain information which will help the organization
to take action to improve its performance” (APQC/IBC cited in Watson, 1993, p. 3).

Notes The characteristics of benchmarking are:

 Measurement via comparison;
 Continuous improvement;
 Systematic procedure in carrying out benchmarking activity.

7.2.1 The Benchmarking Process

Benchmarking involves looking outside a particular business, organization, industry, region or
country to examine how others achieve their performance levels and to understand the processes
they use. In this way benchmarking helps explain the processes behind excellent performance.
When the lessons learnt from a benchmarking exercise are applied appropriately, they facilitate
improved performance in critical functions within an organization or in key areas of the business
environment.
Application of benchmarking involves four key steps:

1. Understand in detail existing business processes,
2. Analyze the business processes of others,
3. Compare own business performance with that of others analyzed,
4. Implement the steps necessary to close the performance gap.

!
Caution Benchmarking should not be considered a one-off exercise. To be effective, it must
become an ongoing, integral part of an ongoing improvement process with the goal of
keeping abreast of ever-improving best practice.

7.2.2 Types of Benchmarking

There are a number of different types of benchmarking, as summarized below:
1. Strategic Benchmarking:
(i) Where businesses need to improve overall performance by examining the long-
term strategies and general approaches that have enabled high-performers to succeed.
(ii) It involves considering high level aspects such as core competencies, developing
new products and services and improving capabilities for dealing with changes in
the external environment.
Changes resulting from this type of benchmarking may be difficult to implement and
take a long time to materialize.
2. Performance or Competitive Benchmarking:
(i) Businesses consider their position in relation to performance characteristics of key
products and services.

134 LOVELY PROFESSIONAL UNIVERSITY