Benchmarking involves comparison of one firm’s processes with that of other firm while reengineering is concerned with redesign of operational processes. Benchmarking involves thorough research into the best practices followed by other organisations in the industry where the company operates and it helps in breaking down the organisations’ activities down to process operations and modifies them to the best-in-class for a particular operation.
The word benchmarking has been derived from the set of activities used by cobblers to mark the size of the foot of their customers. For measuring the size of the foot they used to ask the customer to put their foot on the “bench” so that they can “mark” the foot using a pen. In Benchmarking processes of one company are compared with the processes of the industry leader to see the practices and the ways in which these industry leaders operate and to modify their own processes.
Process benchmarking is a popular method for developing requirements and setting goals. In general, Process benchmarking can be considered as measuring one firm’s performance against that of firms which are leaders in their respective industries, it helps in knowing how the industry leader firms achieve excellence in their processes, and then using that information as a reference for processes in one’s own company’s mission, long term and short term strategies, and implementation.
Steps involved in Process Benchmarking
Process benchmarking methodology mainly includes the following steps;
- Identifying problem areas: Process benchmarking requires inputs in the form of information for comparison. The type of information required by benchmarking process depends on the process which needs to be compared. A range of research techniques are used for the processing of the information, so that comparison can be made quickly and effectively. It includes getting information on all the necessary sources. Customers are vital for any business and are the best source of information for the firm and hence their inputs should be included and processes should be designed in ways which include their suggestions and processes should take care of their issues related to the processes. Exploratory researches based on one to one interviews and group interview can sometimes prove to be very useful during this exercise.
- Identifying industries with similar processes: In this step we look for industries which have similar processes. Sometimes different industries use some similar processes, in that case one can chose companies from other companies to compare particular processes. Say for example boiler is used in cement industry as well as sugar industries. Hence, a sugar company may compare its boiler processed steam operation with that of cement industries’ boiler processed steam.
- Identifying industry leaders in these areas: In this step we look for firms with whom one has to compare its processes. Normally industry leaders are chosen for the comparison and it’s because of their superior processes which play vital role in the overall performance of any firm. For this one has to do through research, customers of the company, its staff and internet can be used to get this information.
- Involving domain experts for measures and practices: Domain experts and survey companies are very useful in selection of comparable companies and processes as they are expert in getting information and masking the confidential information of the client firm which provide data theft security to the client.
- Visit companies to find their “best practices”: In this step one needs to visit different companies, those who are considered as good companies in that industry. During the visit he should notice all the best practices followed by the company and think logically whether he can apply those practices in his company or not since every organisation is different in its nature. Generally companies readily exchange those details and information which are helpful to all members in the benchmarking group.
- Implement new and improved business practices: After knowing all the business processes of one’s company and best practices of other leading companies, one can compare the operation processes of his company to the leading company.