Benchmarking

Benchmarking

Benchmarking started out in the corporate sector. It was originally started when Xerox

Corporation realized it was losing a lot of money and market share to its Japanese competitors.

Its competitors were able to sell photocopiers for the same price that it cost Xerox to make

them. Benchmarking was started by Xerox's Manufacturing unit when it analyzed its photo-

copier manufacturing compared to Fuji-Xerox, an affiliate Xerox's Logistics and distribution

unit benchmarked with L.L. Bean in the way it handled its materials handling and warehouse

operations. This was a very famous study that became part of the first book on Benchmarking

by Robert C. Camp (http://www.sla.org/division/dmil/mlw97/gohlke/sld006.html).

Benchmarking is the process of measuring your operations against similar operations

for the purpose of improving your business processes. The purpose of benchmarking is to

improve products and processes to better meet customer needs The linkage of the business

process to customer needs is critical to effective benchmarking (McNamee, D., 1994).

Benchmarking is usually done within the same industry. However, benchmarking is

often done between organization that have a similar process, but they are in different industries.

By benchmarking the process across industries, the organization sometimes achieves greater results than by sticking to their own industry. Benchmarking is a process across industries which cause people to challenge some of the assumptions that are part of the problem (McNamee, D., 1994).

Benchmarking as a tactical planning tool originated with Xerox Business Systems in the

late 1970's. One of the first experiments in benchmarking was in the production logistics area (warehousing, picking, packing, and shipping). Xerox Business Services benchmarked with L.L. Bean, a clothing manufacturer who had one of the best logistics operations in the world (McNamee, D., 1994).

The process of benchmarking must fit into a change management framework. The

Management of change includes project management skills as well as understanding the

behavior aspects of change. The overall process usually requires three different teams

(different charters, not necessarily different people):

1. A Needs Assessment Team to identify key customer needs and their status:

* Needs that are not being met (cost, quality, timeliness, etc.)

* Needs that are met better by the competition (hiring consultants)

* Needs that are being met but can be improved.

2. The Benchmarking Team takes the Needs Assessment results to design the required

benchmarking project.

3. A Problem Solving Team to take the action required to change the process identified by the

Benchmark Team. The Problem Solving Team also helps to identify new customer issues for

a continuous management loop (McNamee, D., 1994).

Benchmarking is not a one-time project. It is a continuous improvement strategy and a

change management process. Once begun, the entity should continue to benchmark against "best

practices" in order to continuously improve (McNamee, D., 1994).

Benchmarking has been used extensively in the private sector as a part of quality manage-

ment processes. The four stages of the benchmarking process are:

1. Plan - Decide what process is to be benchmarked, who is going to be benchmarked,

and how you will obtain information about the benchmarked organization.

2. Analyze - After the data is gathered, it must be analyzed. The analysis of the data is

designed to shed light on such questions as: Is the benchmarked organization really

better in the area of interest? If they are, how much better are they? What makes them

better? What are they doing