Management Concepts & Organisational Behaviour - Benchmarking

Types of Benchmarking

   Posted On :  19.05.2018 11:46 pm

Three major types of benchmarking that have emerged in business are:

Types of Benchmarking
Three major types of benchmarking that have emerged in business are:
1. Performance benchmarking or operational benchmarking,
2. Process benchmarking or functional benchmarking, and
3. Strategic benchmarking.

Performance Benchmarking 

Involves pricing, technical quality, features and other quality or performance characteristics of products and services. Performance benchmarking is usually performed by direct comparisons or “reverse engineering” in which competitor’s products are taken apart and analyzed. This process is also known as “operational benchmarking: or competitive benchmarking” and involves studying of products and processes of competitors in the same industry.

Process Benchmarking 

Centres on work processes such as billing, order entry or employee training. This type of benchmarking identifies the most effective practices in companies that perform similar functions, no matter in what industry. For example, the warehousing and distribution practices of L.L.Bean were adapted by Xerox for its spare parts distribution system. Texas Instruments studied the kitting (order preparation) practices of six companies, including Mary Kay Cosmetics and designed a process that captured best practices of each of them and thereby cutting the cycle time by 50 percent. Companies should not aim benchmarking solely at direct competitors and it would be mistake if they do so. If a company simply benchmarks within its own industry, it may be competitive and have an edge in those areas in which it is the industry leader. However, if benchmarks are adopted from outside the industry, a company may learn ideas and processes as well as new applications that allow it to surpass the best within its own industry and to achieve distinct superiority.

Strategic benchmarking 

Examines how companies compete and seeks the winning strategies that have led to competitive advantage and market success. One way to determine how well a company is prepared to compete in a segment and to help define a best-in-class competitor is to construct a Key Success Factor (KSF) matrix similar to the one shown in figure

Tags : Management Concepts & Organisational Behaviour - Benchmarking
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