Types of Benchmarking
A copier company has benchmarked against a camping goods store. An ammunition
supplier has benchmarked against a cosmetics company, comparing shell casings
and lipstick holders. An airline company looked at a racing crew to see how to
perform quick equipment maintenance and repairs. Within the federal government,
agencies have benchmarked their customer service lines for promptness, accuracy,
and courtesy against other federal agencies as well as the private sector. The
type of study undertaken is not as important as recognizing that benchmarking,
both inside and outside an organization, can be enormously beneficial for
different reasons and in different ways. Due to the vast differences in
resource investments and possible outcomes associated with different types,
management must make the decision and identify which type the benchmarking team
is to use.
No
one type is the best way. One type might be more appropriate for an
organization than another depending on its environment, products, services,
resources, culture, and current stage of TQ implementation. There are four
primary types of benchmarking: internal, competitive, functional, and generic.
A more detailed explanation of these four types of benchmarking follows, along
with: a brief description of each type; possible outcomes; examples from DON,
DOD, federal government, and private industry; and some of the pros and cons
for each type.
Internal benchmarking
Internal benchmarking is a comparison of a business process to a similar process inside
the organization to acquire the best internal. business
practices. At the federal level, two
Department of Transportation sites might prepare their budget submissions for
Congressional approval. In the private
sector, a retail food store chain selects its most profitable store as a
benchmark for the others.
Pros
+ most cost efficient
+ relatively easy
+ low cost
+ fast
+ good practice/training with benchmarking process
+ information sharing
+ easy to transfer lessons learned
+ common language
+ gain a deeper understanding of your own process
+ makes a great starting point for future benchmarking studies
Cons
- fosters mediocrity
- limits options for growth
- low performance improvement
- can create atmosphere of competitiveness
- not much of a stretch
- internal bias
- may not yield best-in-class comparisons
Competitive benchmarking Competitive benchmarking is a direct competitor-to-competitor comparison of a product,
service, process, or method. This form of benchmarking provides an opportunity to know yourself and your competition better; combine forces against another common competitor. An example of competitive benchmarking within the Department of Defense, might include contrasting
Army and Air Force supply systems for Joint initiatives. Within the private
sector, two or more American car companies might benchmark for mutual benefit
against common international competitor; or, rival chemical companies benchmark
for environmental compliance.
Pros
+
comparing like processes
+
know your competition better
+ possible partnership
+ useful for planning and setting goals
+ similar regulatory issues
Cons
- difficult legal issues
- relatively low performance improvement
- threatening
- limited by .trade secrets.
- may provide misleading information
- may
not get best-in-class comparisons
- competitors could capitalize on your weaknesses
Functional benchmarking
Functional
benchmarking is a comparison to similar or identical practices (e.g., the
picking process for assembling customer orders, maintaining inventory controls
of spare computer parts, logistics to move operational forces, etc.) within the
same or similar functions outside the immediate industry.
Pros
+ provides
industry trend information
+ quantitative comparisons
+ better improvement rate; about 35
Cons
- diverse corporate cultures
- great need for specificity
- not invented here. syndrome
- common functions can be difficult to find
- takes
more time than internal or percent
- must
be able to visualize how to adapt the best practices
Generic benchmarking
Generic
benchmarking broadly conceptualizes unrelated business processes or functions
that can be practiced in the same or similar ways regardless of the industry (e.g.,
transferring funds, bar coding, order fulfillment, admissions, replenishing
inventory, warehousing, etc.). Generic means without a brand. It is a pure form
of benchmarking,. (Camp, 1989).
The focus is on being innovative and gaining insight into excellent work
processes rather than on the business practices of a particular organization or
industry. The outcome is usually a broad
conceptualization, yet careful understanding, of a generic work process that
works extremely well. Generic
benchmarking is occurring when a Veterans Administration hospital's check-in
process is contrasted against a car rental agency's check-in process. Adapting grocery store bar coding to control
and sort airport luggage might be another example.
Pros
+high payoff; about 35 percent
+noncompetitive/nonthreatening
+broad,new perspective
+innovative
+high potential for discovery
+examines multiple industries
+can compare to world
Cons
- difficult concept
- can be difficult to identify best-in- class
- takes a long time to plan
- known world-class companies are inundated with requests
-quantum changes can bring high risk, escalate fear
-class organizations in your process
Source: USN Benchmarking Handbook
Disclaimer: This material is for training purposes only. Its purpose is to inform employers of best practices in occupational safety and health and general OSHA compliance requirements. This material is not, in any way, a substitute for any provision of the Occupational Safety and Health Act of 1970 or any standards issued by OSHA.