Benchmarking is the process of determining who is the very best, who sets the standard and what that standard is. In Cycling, Lance Armstrong would be the benchmark having won the Tour de France seven times. Similarly, Don Budge in Tennis, Sir Don Bradman in Cricket and Sergei Bubka in Pole Vault. There are many more greats in various sports. Benchmark is normally decided by the first person to achieve greatness. It is broken only when a new guy breaks the existing record. The same rule applies to benchmarking in business. Who is the best ? After that the standards are set. It then becomes a benchmark.
Once we decide what to benchmark and how to measure it, the objective is to figure out how the winner got to be the best and determine what we have to do to get there. Benchmarking is usually part of a larger effort, like a Business Process Re-engineering or Quality Improvement initiatives like Six Sigma.
Why Benchmark ?
If you don't know what the best standard is you cannot compare yourself against it. If a customer asks what is your MTBF ? First you should know what it stands for. It means mean time between failures. Let us say you are a manufacturer of a relay switch. The MTBF may be a million operations before it conks out. It may not be enough if your competitor's product has a higher MTBF. You must know where your competitors stand. If the company against whom you are competing for this order has a lesser MTBF you are probably okay. However, if their MTBF is higher who do you think will get the order?
What can be Benchmarked ?
Most of the early work in the area of benchmarking was done in manufacturing. Now benchmarking is a management tool that is being applied almost anywhere and everywhere. In the beginning, companies were benchmarking against others in the same industry. However, the modern day practice is to benchmark against the very best practices from outside the industry.
How to go about Benchmarking ?
It is important to find out the best practices in the industry. While it is mostly large organizations that have this advantage, it not always the case. US Steel is the biggest steel manufacturer in USA. But Nucor is rated the best in USA in steel because of its overall practices. Quality is just one of the key aspects of benchmarking. However, it is important to keep the costs down and at the same time delivery must be high. In any BPR or TQM initiative, benchmarking is to be done first. Everything else follows in a logical and sequential order.
© Copyright, Oct 10-08 . Without prejudice. All rights reserved
What is Benchmarking - To learn more about this author, visit Madhavan T Gopalachary's Website.
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Madhavan T Gopalachary
(Visit Madhavan's Website)
Madhavan Gopalachary, nick name "madgopes"
(g pronounced as in go) given by IIT
classmates, is a Mechanical Engineer and
an alumnus of Indian Institute of
Technology, Madras having passed out
specializing in IC Engines &
Thermodynamics.
He has nearly 35 years of experience in
the Corporate World. He started off as a
trainee and handled sales, marketing,
manufacturing, product management, profit
center management, strategic planning and
corporate development including R & D in
various organizations and at various
levels before becoming a CEO. His last two
professional assignments were at CEO level
before embarking to start management
consultancy business on January 01, 1998.
He has worked for British, Swedish MNCs as
well as very large Indian business houses.
He has spent a large portion of his time
from June 1998 till date in East African
Countries practicing as an independent
Management Consultant.
More details can be obtained at the
following web sites:
mmg.name
/mtg.html;
mmgconsu
lting.biz/
Madhavan's articles can be accessed at www.madgopes.com
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