BENCHMARKING

Most of the companies maintain some sort of quality in their working environment. And these
natures of work can be compared with the rest of the companies involved in the same field of work.
To specify that comparison, these companies use some sort of benchmarking process.
In the 1970s, the concept of a benchmark evolved beyond a technical term signifying a reference
point. The word migrated into the lexicon of business, where it came to signify the measurement
process by which to conduct comparisons. In the early 1980s, Xerox Corporation, a leader in the
business process of benchmarking, referred to benchmarking in rather narrow terms that focused
primarily on comparisons with one's primary competitors. "Benchmarking is the continuous
process of measuring products, services, and practices against the toughest competitors or those
companies recognized as industry leaders," observed former Xerox CEO David Kearns.
The benchmarking process helps to increase the competitive nature in different companies
working in the same field of business.
Benchmarking also provides a sense of awareness regarding the maintenance of quality in
their field of work.
The term benchmarking was first used by cobblers to measure ones feet for shoes. They would
place the foot on a "bench" and mark to make the pattern for the shoes.
Meaning and Definition
 Benchmarking is the systematic search for best practices, innovative ideas and highly
effective operating procedures.
 Benchmarking is simply the process of measuring the performance of one's company
against the best in the same or another industry.
 Benchmarking is referred to as the process by which an organization measures their
products, services, and practices against its most difficult competitors, or those
organizations recognized as leaders in the same industry.
 Benchmarking is a process where different companies compare their nature of work with
other companies in the same field of business and they set certain type of standard of
working.
 "A process for rigorously measuring your performance versus the best-in- class companies
and for using the analysis to meet and surpass the best- in-class." [Kaiser Associates, a
management consulting firm that has actively promoted benchmarking.]
 "A standard of excellence or achievement against which other similar things must be
measured or judged." [Sam Bookhart, former manager of benchmarking at DuPont Fibers.]
 "Benchmarking is the search for industry best practices that lead to superior performance."
[Robert C. Camp, a Xerox Corporation manager, author of Benchmarking: The Search For
Industry Best Practices, and one of the foremost benchmarking experts at Xerox
Corporation.]
Benchmarking Concept

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Reasons to Benchmark
► Bench Marking is a powerful tool to achieve business and competitive objectives
► Bench Marking is a SWOT tools to help organizations develop those strengths and reduce
weakness
► Bench Marking can notify the organisation if it has fallen behind the competition
► Bench Marking enhances innovation by requiring organisation to constantly scan the external
environment,
► Benchmarking is a more efficient way to make improvements. Managers can eliminate trial and
error process improvements. Practicing benchmarking focuses on tailoring existing processes to fit
within the organization.
► Benchmarking speeds up organization’s ability to make improvements.
► Compare business practices with those of world class organizations
► Challenge current practices and processes
► Create improved goals and practices for the organization
► Change the perspective of executives and managers.

Benchmarks and Benchmarking

 A benchmark was originally a sighting point from which measurements could be made or it
implied a standard against which others could be measured.
 Benchmarking is the on- going search for best practices that produce superior performance
when adapted and implemented in one's own organization.
 The benchmarks are like divining rods that lead the organization to hidden opportunities to
innovate and improve performance.
 Benchmarking is the actual process of investigation and discovery that emphasizes the
operating procedures as the things of greatest interest and value.

Types of Benchmarking
1. External benchmarking:
It is a process of comparing the organizational methods and performance with the other peers of
the same industry.
2. Internal benchmarking:
It is a process of comparing the various methods and performance internally within the
organization. In this internal benchmarking, the internal performances of various departments
across the varied locations in the organization are compared.
3. Competitive benchmarking:
In competitive benchmarking, your performance is compared with the direct competitors. Data
collection is considered tough here but one can gain more inner ideas about the competitor’s
performance and its reasons.
4. Industry benchmarking:
In this type of benchmarking, the comparison is made with the leaders in the field. In this category,
data collection can be considered tough and tedious but you should know that you’re comparing
with the leaders and pioneers in business. There is a good scope for this type of benchmarking
and can bring in a lot of innovative ideas.
Following are the few types of benchmarking derived from the base of internal and external
benchmarking.
1. Process benchmarking:
It is a type of benchmarking, the employee of the organization would demonstrate how other top
performing organisations would perform the same task. Process benchmarking is done by
collecting information about other company’s strategies through research, visiting the sites,
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through workshops conducted by the other companies. Process benchmarking gives a clear
comparison of the other organizations ideas and their market strategies with them.
2. Strategic benchmarking:
Before commencing a new idea, members of the organization would analyze their new strategy in
terms of a long time. In this strategic benchmarking process, they would compare winning
strategies of the companies in the marketplace. Strategic benchmarking has always enabled
choosing a high performing strategy.
3. Product benchmarking:
Product benchmarking is based on the reverse engineering concept. Here any organisation would
purchase the competitors product and break down into pieces to know its various features and
performance ability. By this, they would improve their products performance by analyzing the basic
working of the others product in the market.
4. Corporate benchmarking:
Corporate benchmarking is not about comparing the working or performance of the product but
comparison of various divisions of the organization and basic studies to improve the organization’s
working model. For example, in corporate benchmarking, they would compare other organization’s
marketing division, finance, research team, and testing squad etc to improve the overall efficiency
of the organization.
5. Global benchmarking:
Global benchmarking is an extension of strategic benchmarking where the comparison of the
strategies takes place globally. For example, Microsoft operating in USA would compare its
accounts division with Mazda of Japan and found that they have employed 500 employees to do a
5 people job.
6. Collaborative benchmarking:
Collaborative benchmarking is something which happens within the organization. Where
Information technology team would collaborate with the IT support centre to Information
technology division. Various other team collaborations would also happen by discussing the
various team strategies. This type of benchmarking is very common among all industries.
7. SWOT:
SWOT analysis, this type of benchmarking is something which gathers information about the
company’s strength, weakness, opportunities and threats to help the management do it better.
8. Best practices:
Organisations usually study and do a research on the successful organization’s winning practices.
By doing this type of benchmarking, they would get a clear picture of their practices and there is
more scope of improvement.
9. Functional:
There are many businesses that look forward to get associated with different business sectors or
same functionality so that new and innovative ways can be found out to enhance similar work
functions or process. Improvements and innovations can be brought about in business by following
this method.
10. Financial benchmarking:
This type compares the financial analysis and makes a comparison with the results so that the
complete productivity and competitiveness can be achieved.
11. First in class benchmarking:
In this type, the leading organization or concern which best carries out its function is studied.
12. Energy benchmarking:
This is another category which takes into account analysis, collection and related energy
performance data of various activities with the main intention to compare and analyse the

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performance of various entities. When entities are mentioned, they can be varied such as
buildings, processes or companies.
13. International benchmarking. Is used where partners are sought from other countries because
best practitioners are located elsewhere in the world and/or there are too few benchmarking
partners within the same country to produce valid results.

Benchmarking Examples:
Amazon Inc
Amazon is an American e-commerce and cloud computing organization, established in Seattle,
Washington DC, its headquarters. Amazon has consistently maintained its high reputation as the
largest Internet-based retailer in the world based on its total sales and market capitalization.
(Jopson, 2011) In offering goods for sales, Amazon takes its customer services as a top priority.
Amazon believes in establishing and maintaining long-term relationships with its customers in
order to encourage repeat visits and buying, and even earning customer referrals. Additionally, the
Company constantly seeks to achieve steady communication with its customers and also earn
great feedback from them in order to continually improve their stores and services.
In order to achieve what they do, Amazon offers a number of e-mail addresses to ensure
customers can request for information that bothers them, and also to encourage suggestions and
feedbacks. In addition to this, Amazon provides customers with telephone services, therefore,
users or customers can access the customer service representatives through the telephone 24
hours a day, and 7 days a week. Moreover, to ensure the quality of services provided by the
customer service is prompt and professional enough to meet customer demands, Amazon has
automated some specific tools utilized by its customer support staff and also constantly planning
for future enhancements. (“Amazon Reports”)

Benchmarking benefits
 Improves organizational quality,
 Leads to lower cost positions,
 Creates buy-in for change,
 Exposes people to new ideas,
 Broadens the organization's operating perspective,
 Creates a culture open to new ideas,
 Serves as a catalyst for learning,
 Increases front-line employees' satisfaction through involvement, empowerment and a
sense of job ownership,
 Tests the rigor of internal operating targets,
 Overcomes front-line employees' natural disbelief that they can perform better,
 Creates an external business view, and
 Raises the organization's level of maximum potential performance.

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