Business Process & Training

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.

1.Internal benchmarking is a comparison of a business process to a similar process inside the organization.
2.Competitive benchmarking is a direct competitor-to-competitor comparison of a product, service, process, or method.
3.Functional benchmarking is a comparison to similar or identical practices within the same or similar functions outside the immediate industry.
4.Generic benchmarking broadly conceptualizes unrelated business processes or functions that can be practiced in the same or similar ways regardless of the industry.

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.

Benefits:

• 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

Challenges:

• 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