Benchmarking has increasingly been utilized over the past century as a way through which organizations analyze its performance by comparing against other firms in the same industry. For example, a firm’s management team may decide to analyze the firm’s market performance by comparing its performance with another firm over a given time. The term originated from cobbler’s operation whereby they would use a customer’s foot to draw an outline on a benchmark. This enabled them to determine the exact size of the shoe to make to fit the customer satisfactorily. Afterwards, the cobbler made a shoe whose size and shape matched that the initial drawing. A significant number of companies have incorporated this idea in an effort to sustain their company growth. Benchmarking demands a considerable level of collaboration, agreement and trust from either company.
Lack of such collaboration can result into benchmarking being ineffective. Using specific indicators depending on the target of the company, figures related to number of products per cycle, time taken per cycle or cost per one measurement of the quantity taken. Depending on the type of benchmarking method applied, the performance of the company in question is evaluated. Through the analysis, the company undertakes certain measures some of which involve development of certain plans such as improvement plans and reconstruction of certain figures in the original business plan that the company has been utilizing over the past. The idea has been known to be effective if it is carried out in the right way and with patience. This arises from the fact that intensive analysis need to be conducted in order for the company to come up with a viable idea to be used from the research done.
The paper entails a comprehensive analysis of the concept of benchmarking. The criterion currently used by most companies in their benchmarking process is also evaluated. At this point, it is important to note that no one benchmarking process is a hallmark. Different processes are adopted by different companies since each of them come on board with its own unique nature. The paper will evaluate the logistical nature of each criterion in order to determine whether it makes sense or not.
Criteria Being Used
According to Leonard and Zairi, many managers have come to the belief that the measure of degree that a company’s success has depends primarily on the methodology that the company will decide to assume. Attached to the quality of the methodology adopted, success in benchmarking also depends on the nature in which the company conducting the exercise commits itself to the practice and the time-quality culture of the company. The most widely used method is the Rank Xerox methodology which involves such intricate stages as planning of the company, analysis of what the company wants to achieve, interrogation methods that the company is willing to involve itself in, the action plan in place and finally scrutiny of the action plan that was carried out (Leonard & Zairi 51-52). Certain modifications can be done to this methodology. However, others consider the method adopted to be standard. Below is a list of criteria that have considered essential in choosing the most optimal method to adopt.
This type of focus involves the company having their objective such discovering new ideas that will push it to discover new ideas within itself. The company hopes to get a breakthrough by conducting process of benchmarking that will give a business competitive advantage over other companies. Therefore, the main challenge is to identify a potential breakthrough point that it can generate high levels of profitability or productivity. In the process, a company must identify the specific areas under which change needs to take place after which the company finds alternative methods that it can use to carry out the most effective change. The fundamentals of the company areshaken to a point that the original vision of the company can be changed to another in order to take advantage of the potential breakthrough that result. Markers such as strategic direction, investment strategies and the general structure may also shaken along this process in order for the same advantage to occur (Watson 8).
Advantageous opportunities are realized through strategic focus of benchmarking. These are improvement concepts that are applied to certain areas of the company that will create a huge difference in performance. For example, change in the business process may be what a company has been lacking all along. This kind of a change will therefore trigger better results. Some good examples of strategic benchmarking focus include a change in the design that a company organizes its governance. It can also involve certain methods that can be used to implement and improve the level of technology that a company is currently using. Such strategies as creating web pages for improved business opportunities and managing these types of technologies makes part of the strategic focus of modern day benchmarking criteria.
The logical foundation of strategic focus can be investigated by the success it has had so far. For example, a non-governmental organization (Oregon) takes certain figures and numbers used in benchmark surveys and certain private companies to make comparisons with other companies. Cutt asserts that certain private sector companies acquire these data in order to make strategic plans for their own company. Public sector companies have already used these figures in establishing a number of plans for economic and social development programs. In addition, non-profit making organizations in the country use the same figures to develop grants and performance levels of the agencies are compared (Cutt 126).
Oregon is simply a benchmark company that gives certain specific guidance to various services in the public and private sectors of the country. Non-profit making organizations also benefit from the same. Through this benchmark service, companies are able to formulate certain strategic goals for them in order to advance successfully into the future with a shared vision.
An operational focus is a basic subsidiary of the objectives that have been set in place. In this case, the focus goes beyond setting the goals in place. It drives at implementing the issues that have been addressed. Through operational focus is easier to narrow down since the best way to evaluate the strategies to implement is by looking for the best possible performer in the market in that particular field. Ct is easy to identify the best names in the market since most often they will appear more frequently than the others in advertising tools such as newspapers, billboards and the media. These companies are the best in the market. One will most likely stand the chance to gain a lot from these kinds of people when it comes to operational focus of ideas. Condrey mentions that the process of benchmarking contributes significantly to the success or failure of the company in question. He further asserts that it differs significantly from the focus on the performance level of a company. For instance, it does not target the social conditions that the country or the region faces. It relies though significantly on the performance records and the economic values of this company, targeting the performance records that the company has. Having had acquired such figures, a managing team in a company can gain a forward view of the type of company he will want to have in the future (Condrey, 697).
A good example of this kind of focus is given by Zairi’s writings in his book, where Shorts’ vision of what it would want to achieve in the future was derived directly from a program called “Focus 2000”. The company’s main target here is to capture the practices that are being implemented by other companies taking hold of the best practices that are available in the market and implementing the same for Shorts Company. Significant improvement for the company is realized when carefully applying some of the principles acquired in the benchmarking process, in order to give the company a push in terms of performance. Largely, Shorts looks to reduce the gap between the expectations of the customer and the current performance level of the company. In such instances, the best method to counter this threat is by benchmarking. Learning from others is one of the best ways that a company will relieve itself from the pain that the company may be going through now (Zairi 282).
The strategy adopted by the company going through this particular shift must be market driven. Any company that does not have a certain threshold of favor from the customer is currently going through losses and should reconsider changing its marketing goals and strategies. This is the reason why sometimes the benchmark focuses more on the customer. Cook states that many organizations are now shifting their focus on this benchmark strategy since it is one of the safest ways of acquiring customers. She continues to add that one of the most important steps begins with engaging the customers about a certain field. For example, in the case of a service provider, customers can be engaged in order to tell the company exactly what they feel about the company (Cook 126).
Customers play an important role in a company’s growth. They enable comparison to be made from amongst various companies. They are direct differences between companies and they give evidence as to the best performing company and the rest. By engaging the customer as part of a benchmark strategy, a company will be on the road to learn exactly why the top company remains at the top and backdate on how it made it at the top. By doing so, the company doing the benchmarking can develop a strategic plan in which it will bypass the “best”, and in essence bring about success and overall improvement in its company. The down side to this is that it takes a lot of strategizing to bring down some of the companies that are in the market. Such companies that have been pioneering the market, for example, Ford and retail storeowners Wal-Mart present a difficulty. It will take more than customer interaction to develop a strategy that will shake big international companies that are operating within a region of focus. Customers tend to have some kind of loyalty attached to these companies since they have proven themselves not only in terms of prices, but also quality and the packaging that comes with the product.
According to Paap, this is a preferred mode of benchmarking as a logical explanation. With the creation of a customer-focused plan, Paap says that the company is in the process of asking itself some of the most fundamental questions that are related to the customer (Paap 2). One will have to ask himself who the customer is and the consequent relevance of these customers. The other question that one will want to ask himself is which products our potential customers get attract to quite often. In other words, which products do our customers value? In the case of a plan that will need a technological boost, a decision has to be made as to which is the best kind of technology to be used in order to bring about a significant change in the products quality? In doing this, a number of factors come into play, one of which is the amount that a company is willing to risk in order to change the technology that they have been using. It is evident that an upgrade in technology is not necessarily equal to improvement in the profit margin. Having this in mind, one needs to identify the exact investment that is required in order to improve the product. The customer is the focus for any business venture and benchmarking without a focus on how a well-doing company achieves its relation with its customers is an injustice to the company in need of benchmarking.
This is another way to analyze a benchmark focus. Through this criterion, the underlying process is brought into focus more deeply than it is done on other forms of focus such as the customer focus. Rojas, in his study states that many managers in the process of benchmarking focus more on the outcome that is achieved by a certain company and look less into the construction process that the company went through in order to come up with the outcome they have at the moment. He explains that in many cases, managing teams that use the benchmark do not realize that the benchmark is a metric that companies adopt in order to gain some insight into the process that was used in reaching an outcome that is seen by the rest of the world. The outcome is simply given birth through the process.
Rojas intuitively believes that benchmarking is an on going process of evaluation. One cannot achieve the full potential of a benchmark if he makes it a one-time project. It should be a long-term plan. It should have within itself a well laid out plan of action in terms of the integral processes that the company is willing to carry out in order to learn from the best. A disastrous result is often achieved for any benchmark that is unplanned or poorly planned out (Rojas 35). In addition, the benchmark should be broken down into steps that are to be accomplished in a way that everyone is able to understand and adhere to. To do this, data that is being picked out needs to be accurate, reliable and should be presented in a systematic way in order to achieve the desired results. Finally, while focusing on benchmarking through the process dimension, we do have to realize that the benchmark needs to be realistic. Adoption to the best practices of a company does not happen in a direct way. A certain system of adoption needs to be put in place since all companies come with different unique characteristics. Companies are created out of different situations and directly adopting characteristics from other companies may cause far damaging effects than a company is currently experiencing.
Link to Time Quality Management
Quality time management is one of the ways through which a company can ensure that its human resource becomes more productive. As it is well known, the human being must function in a certain way in order achieve the maximum efficiency in their workstations. Many companies have a hard time in allocating the best job to particular people and for how long they get a hold of these jobs. A manager who is able to realize the workers’ qualities and talents and able to transform these qualities into some useful resource is one that is on his way to achieving success. In the end, these qualities might be the only difference between a company that is leading and a company that is experiencing constant amounts of losses.
Leitner writes that when a team is on the process of learning from a company that is making it at the top, certain activities are actually necessary. Process mapping becomes a priority. This is simply profiling the activities that the company has been carrying out, giving priority to the workforce and its different behaviors. After acquiring such information, the company then makes comparison with those of high achievers in the industry, both in the public sector and in the private sector. Such details as methodologies, approaches and different practices put into comparison. The best companies, both in the private and the public sector use certain performance measurements in order to get a certain way in which to move forward. They come up with certain indicators within their evaluation framework and outline these issues in a specific way as to know where certain changes need to take place in the workforce. If a benchmark would be in line with the evaluation procedure of such a company as this one, it would create a certain doorway into getting a company reach its potential. Leitner uses the federal government in explaining how it has been using performance indicators to gain particular budgetary information in the process of allocating funds for that particular sector. The Cater Administration, for example, used this method to acquire the amount of funds that needed to allocate for that particular sector (Leitner 323).
In essence, the logics behind quality time management are a bit subsidiary to the rest of the criteria. There are definitely better reasons to have a benchmark done on a certain company. Nevertheless, one cannot disregard the impact that might be caused if human resource does not perform as required. As much as a company will get a lot of leverage through customer or process based focus of benchmarking, it still stands a great deal of loss if it does not do its best in making sure that its human resource is not of highest quality.
This is another subsidiary criterion in benchmarking focus with equal importance for positive results. It goes without saying, that for any company to get money, it has to spend money. Many mangers misinterpret this saying so that they try as much as possible to get systems in which they will be assisted in saving the last coin used in expenditure in order to get a profit. Yet in the modern system of business, more needed in order to give a company some advantage over the others. For a company to know its position, an analysis has to be carried out. Analysis also shows whether a company is improving or simply sliding into a downfall.
Various methods can be adopted in order to show whether a company is really improving. An economic engineering analysis is a necessary tool in finding out the status of the company. Nevertheless, an expensive process takes up many funds from the company. Instead, many economists tend to think that a quick survey using benchmarking will give a revelation of whether or not the company is on track. A systematic approach is adopted for the comparison to take place. Secondly, in order come up with improvement objectives, a great deal of data is collected from various large players in the specific sector. Integration is then carried out making sure that the existing improvement objectives are met. The priorities are laid out in terms of what the results from the integration are. With such information, a market strategy is carried out in order to become competitive in the market, giving reference to such indicators as product, technical and manufacturing issues (Perry 275).
Instead of going through rigorous activities that engineering analysis will present for the company, the company can simply use a strategic benchmarking method that will cost less and give better analysis compared to other big players in the market. Nevertheless, these engineering analyses are still accurate methods of analyzing a company.
Learning is a futuristic activity. Benchmarking therefore presents the company an open ground in learning what to do in the future. Whether or not the company is ready to deal with the other uses of benchmarking is debatable. Nevertheless, it can as well just perform the exercise to know what it will do in the future. The benchmark has been used of late more than a tool of survival for most companies and is used effectively as a tool for future innovations.
One can say that the essence of benchmarking is learning. The practice when done in an effective way brings about a raise in the organization from a low level to a higher level of competition. The wake up call effect of the benchmark through problem solving gives the company this advantage. Acquisition of data from the internal and external sources in the company, having changes made in the implementation of the strategies that the leadership has come up with and also an uplift of the basic standards of practice that a company shows are all indicators that the company is heading to wards the right direction. Moreover, they are tools that can be used effectively in the future, for the company to develop better fitting goals into the future (Shandler 196).
The idea of replenishing the mind with new type of knowledge is a process that causes this kind of innovative ability. The company will in the future require newer ways to tackle the problems that it will face in the near future. Using the same ways of tackling a recurring problem will cause resurfacing of the same problem. Newer and more innovative ideas of tackling new challenges and even the old ones are needed in order to bury some problems in the past for the last time. In essence, effective performance in a company is defined by the ability of the company to constantly redefine itself, and constantly reinvent ways in which it can maintain the customer base, in a cheaper way. This it needs to do without necessarily reducing the quality of its product or service. The only way this can happen is by being constantly innovative. Knowledge that comes with such innovation is widely a factor of comparing what the company does with the activities done by some of the bigger players in the same industry. How these companies attract customers, address human resource issues, manage the time allocated to each worker, structure their leadership, maintain their quality and how they generally maintain their competitive advantage compared to others firms are some of the answers that are given through benchmarking practices. Therefore, companies should incorporate the concept of benchmarking no matter how they are valued in the market in order to attain future growth.
There are standard steps that are used in order to make any benchmarking exercise effective for a company. However, the criterion used in analyzing the applicability of the method is determined by the company’s priorities. It must also be understood that in any benchmarking exercise, the process is more important than any other activity that is carried out. Lack of care in conducting the exercise may result into the activity being a waste of time and resources for the company. It is therefore important to note that the company needs to choose the criteria that it is willing to use in order to make the process effective. In addition, one should understand which area of the company in question lacks great amounts of focus. Intrinsically, one should have a feel of what exactly the company lacks so that it can objectively zero in the most appropriate benchmark, that is, having in mind the criterion that will best suit the situation. Companies, whether or not trying to find a route for survival must come to the realization of the importance of the future of the company as a going concern entity. Managers must realize the need to acquire information that will contribute towards improvement of the firm’s competitive advantage (Browne384). One of the ways through which this can be attained is by incorporation of the concept of benchmarking in the firm’s operation.
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