Benchmarking

What does it mean?

Benchmarking is a continuous, systematic process for comparing your own efficiency in terms of productivity, quality and practices with those companies and organizations that represent excellence.

  • You are able to locate good practices in your company
  • You appropriate valuable nuggets of information and perhaps recombine it. This stage includes personal or organizational routines which locate the information that becomes the stuff of one's work
  • Benchmarking should be conducted by managers themselves and be driven by business needs.
  • It should focus on learning to improve performance. It implies humility, a willingness to acknowledge that others are better, and to learn from them.
  • Knowing what the company does with efficiency and what others (competitors or not) do.

The five stages of the benchmarking process from Karlöf and Östblom

2 types of Benchmarking process

  • Internal benchmarking is a process of making comparisons with other parts of the same organisation. This internal benchmarking already exists in terms of financial data but can be develop in terms of productive, technological, human, quality management or human management.
  • External benchmarking means that you compare your organisation with similar organisation or identical process elsewhere.

In a KM perspective, benchmarking means being able to acquire/ adapt best practices. That implies an identification of these best practices.

Example

At HP, benchmarking is both internal and external and especially in the manufacturing area. The company has decided to implement a benchmarking process to analyse all its manufactures. They use Industry and HP internal best practices to evaluate key divisional processes such as manufacturing cycle times, order processing and financial performance. They also use "story telling process" through which, 20 managers meet each month to present in detail a success story to the other. The notes of the meeting are available for the rest of the company and complete the best practices base.

They also use product and service testing benchmarking. They buy competitor products to evaluate their quality. They use knowledge in four main ways: tactical information for sales and marketing; engineer education, manufacturing costs estimation, strategic indication of competitors' strengths.

From Bendell et al., 1993