Contributed by Senior Manager of the Malaysia Productivity Corporation Kabir Ahmad Mohd. Jamil, resource speaker for the APO training course on the Development of Productivity Practitioners: Advanced Program. Kabir has extensive experience in the field of operation and process improvement, particularly in the manufacturing and service sectors.

Introduction

It is often said that “If we don't know where we are going, we might end up somewhere else” and “Those who benchmark do not have to reinvent the wheel.” There is a lot of truth in both statements. Today, whether we are in the private or public sector, most of us are rightly concerned with our per-formance. However, while performance indicators give an indication of the level of performance that we are at, benchmarking can pinpoint specifc ar-eas of good or poor performance. This will enable us to seek improvements in those areas. Benchmarking also will eliminate trial and error in process improvements. In the competitive world of today, time is of the essence.

What is benchmarking?

In general, we can defne benchmarking as a systematic process for compar-ing performance or processes in different organizations, or between dif-ferent parts of the same organization, to learn how to do things better. The main purpose of benchmarking is to improve performance or service by identifying where changes can be made. Benchmarking does not mean simply copying others’ practices. It requires the organization to adapt and adopt what has been learned from others according to our organization’s needs and cultural setting. It goes beyond comparison of the pricing or features of competitors’ products or services. In benchmarking, we consider not only the result, but also the process and the practices that enable an organization to achieve superior performance.

Types of benchmarking

Generally, benchmarking initiatives can be categorized depending on the scope or the approaches the organization adopts to pursue the initiatives. They are:

• Process benchmarking:
This focuses on improving specifc critical proc-esses and operations. It invariably involves a study of how top-performing organizations accomplish the specific process in question. Such studies can take in the form of research, surveys/interviews, and site visits.

• Performance benchmarking:
This focuses on assessing competitive po-sitions through comparing performance characteristics of the products and services of competitors. Benchmarking partners are mainly drawn from the same sector.

• Internal benchmarking:
This is used to identify and compare one par-ticular operation within the organization. The main advantages are that access to sensitive data and information is easier and usually less time and resources are needed.

• Competitive benchmarking:
This is the process of comparing an opera-tion with that of direct competitors. It provides opportunities for learning from those who are at the “leading edge.” This benchmarking can take up signifcant time and resources and is the most diffcult to carry out.

• Functional benchmarking:
This is a process of comparing an operation with that of similar ones within or from different business sectors to fnd ways of improving functions or work processes.

• Cooperative or collaborative benchmarking:
This is the most widely used type of benchmarking because it is relatively easy to conduct. Vari-ous organizations are invited to form a benchmarking group and share their best practices.

The benchmarking process

Benchmarking is a very structured process and generally can be organized into three main signifcant phases, as depicted in Figure 1. Before deciding to benchmark, an organization needs to review and determine what it wants to benchmark, as proposed in Phase 1. Phase 2 focuses on the perform-ance analysis of the benchmark organization, identifying its best practices and reasons for its success. In phase 3, the best practices are adapted and adopted to close the performance gaps.

Conclusion

Benchmarking can be complex or as simple as browsing through the annual reports of organizations and making comparisons. Any form of comparison can bring an insight into knowledge of our own level of performance. How-ever, one of the biggest mistakes organizations make is to limit their bench-marking activity to their own industry. Benchmarking within an industry is essential. However, it is imperative to reach outside and beyond our own industry into other industries that perform a similar process in our journey toward breakthrough performance.