Types of Benchmarking

1. Process benchmarking - The initiating firm focuses its observation and investigation of business processes with a goal of identifying and observing the best practices from one or more benchmark firms. Activity analysis will be required where the objective is to benchmark cost and efficiency; increasingly applied to back-office processes where outsourcing may be a consideration.
2. Financial benchmarking - Performing a financial analysis and comparing the results in an effort to assess your overall competitiveness and productivity.
3. Benchmarking from an investor perspective- Extending the benchmarking universe to also compare to peer companies that can be considered alternative investment opportunities from the perspective of an investor.
4. Performance benchmarking - Allows the initiator firm to assess their competitive position by comparing products and services with those of target firms.
5. Product benchmarking - The process of designing new products or upgrades to current ones. This process can sometimes involve reverse engineering which is taking apart competitors products to find strengths and weaknesses.
6. Strategic benchmarking - Involves observing how others compete. This type is usually not industry specific, meaning it is best to look at other industries.
7. Functional benchmarking - A company will focus its benchmarking on a single function to improve the operation of that particular function. Complex functions such as Human Resources, Finance and Accounting and Information and Communication Technology are unlikely to be directly comparable in cost and efficiency terms and may need to be disaggregated into processes to make valid comparison.
8. Best-in-class benchmarking - Involves studying the leading competitor or the company that best carries out a specific function.
9. Operational benchmarking - Embraces everything from staffing and productivity to office flow and analysis of procedures performed.

Application of Benchmarking

1. Understand in detail existing business processes.
2. Analyse the business processes of others.
3. Compare own business performance with that of others analysed.
4. Implement the steps necessary to close the performance gap

Benchmarking should not be considered a one-off exercise. To be effective, it must become an ongoing, integral part of an ongoing improvement process with the goal of keeping abreast of ever-improving best practice.

Leading benefits of Benchmarking

1. Reduce costs.
2. Help earn a 'green' designation, such as LEED-EB, ENERGY STAR, etc.
3. Identify best practices.
4. Add value to your facilities.
5. Support business case for change.
6. Identify strengths and weaknesses.
7. Justify costs and practices.
8. Justify energy efficiency improvements.
9. Conduct trend analysis.

Major Problem regarding Benchmarking??

One of the biggest mistakes organizations make when first benchmarking is that they limit their benchmarking activity to their own industry. Benchmarking within your industry is essential. However, you already have a pretty good idea how your industry performs so it's imperative that you reach outside and above your own industry into other industries that perform a similar process but may have to perform this process extremely well in order to succeed. Here are a couple examples of how one industry can leapfrog their competitor by learning and adapting a similar process from a totally different industry:-

Problem	Solution
Customer surveys indicate long wait times for hotel rooms, especially for repeat Customers.	Benchmarked admittance process with hospital emergency room departments resulting in dramatically reduced check-in times. Also netted less employees needed, automation for frequent hotel guests, and many more process improvements.
Routine maintenance on aircraft between flights such as refuelling, cleaning, tire checks taking too long. Plane on the ground means more planes and personnel are required to maintain high level of service and schedules. Need to reduce ground time required in between flights without sacrificing quality or safety of passengers.	Brainstormed and discovered Indy 500 racing team pit crews have a similar maintenance process and a similar requirement to get their vehicle back on the track as quickly and safely as possible. After benchmarking pit crews maintenance turn-around-times for aircraft between flights were reduced by more than half saving/making the airline millions of dollars within the first few years

Through Benchmarking you will discover:-

1. Who performs the business process very well and has process practices that are adaptable to your own organization?

2. Who is the most compatible for you to benchmark with?

3. If you need to conduct a comprehensive benchmark study or if you can obtain 80-90% of what you need from just using telephone, emails, or an electronic survey to communicate your needs with the other members on The Benchmarking Exchange.

What exactly is BENCHMARKING??

Benchmarking is the process of measuring an organization's internal processes then identifying, understanding, and adapting outstanding practices from other organizations considered to be best-in-class.

The term benchmarking was first used by cobblers to measure people's feet for shoes. They would place someone's foot on a "bench" and mark it out to make the pattern for the shoes. Benchmarking is most used to measure performance using a specific indicator (cost per unit of measure, productivity per unit of measure, cycle time of x per unit of measure or defects per unit of measure) resulting in a metric of performance that is then compared to others.

Most business processes are common throughout industries. For examples: NASA has the same basic Human resources requirements for hiring and developing employees as does American Express. British telecom has the same Customer Satisfaction Survey process as Brooklyn Union Gas. these processes, albeit from different industries, are all common and can be benchmarked very effectively. It's called "Getting Out Of The Box".

In other words, Benchmarking is the process of comparing one's business processes and performance metrics to industry bests and/or best practices from other industries. Dimensions typically measured are quality, time, and cost. Improvements from learning mean doing things better, faster, and cheaper.