Benchmarking – Access to Performance and Progress of an Organization

It helps in improving performance by continuously identifying, understanding, and adapting new and better practices and processes within or outside an organization.

According to the sources, it was pioneered by Xerox Corporation in the 1979s, as part of their response to international competition in the photocopier area. Its scope was then enlarged to include business services and processes. As per the study, Xerox now benchmarks nearly 240 performance elements.

Benchmarking of business processes is usually done with those companies which at the top level in comparison other industry sectors. Considering the fact of having almost all the business processes management services the same from various sectors, hence, making it more feasible to practice.

The systematic approach of benchmarking is focused on identifying, studying, analyzing, and adapting best practices and implementing the results. Development of benchmarks is an ongoing process that is likely to involve sharing information with other organizations and working towards those gathered information.

The primary focus should be to involve identifying problem areas, selecting top competitors who excel where a company falls short and making the relevant changes. 

There Are Several Key Advantages To Using Benchmarking in An Organization:

Enhancing Product Quality

Organizations may use benchmarking to improve product quality. It has been observed that companies often buy competitors' products. These products are later studied determined how the competitors' products outlast or outperform others in the industry.

Decrease in Cost of Labor

This can be explained through example – a manufacturing unit has got robotic based machines to perform various tasks in lesser time, now other company may study how that company is using those machines and saving labor cost. This will benefit in performing work at speed in lesser cost.

Increase in Sale and Profits

Benchmarking helps in improving overall business and may enjoy increases in sales and profits. This makes the customers notice these improvements. The benchmarking company may also promote is improvements through company brochures, social media marketing, its sales representatives, magazine and television ads also proved to be one of the benefits of benchmarking.

These efforts are likely to increase sales, especially among core customers. Companies that operate more efficiently due to benchmarking can drastically lower their expenses. These savings can be lead to greater profits.

There Are, Broadly 4 Types of Benchmarking:

1 - Competitive Benchmarking:

This is a type of Benchmarking which is studied by the competitor and analysis is performed as to what causes the superior performance of the competitor. It can be, in some respects, easier than other types of benchmarking and in some respects more difficult

2 - Internal Benchmarking:

This process could be applied in organizations having multiple units (for e.g. multinationals, companies with sale offices around the country, with multiple factory locations within the same country). This also proved to be less costly and less time consuming

3 - Process Benchmarking:

Here we look at processes, which may be similar, but in different organizations, producing different products

4 - Generic Benchmarking:

This benchmarking would involve the technological aspects i.e. the implementation and deployment. This is later compared with the competitor as how they do it and if required make necessary amendments

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