Key Concepts of Benchmarking.
While there were many management practices touted as cure-alls in the late 80's and early 90's, benchmarking is one of the most widely utilized and accepted. Over two thirds of larger organizations in the US currently utilize a benchmarking approach, with 67.9% using either a formal or informal approach. (Inventory Management Report, no author listed, 2003) Even with the popularity of this tool, a seasoned manager will tell you that there is no silver bullet when it comes to improving the performance of and organization or department. There are also some tactics, benchmarking included, that may work well in one organization that will fail miserably in another based on the management style and corporate climate of the organization in question. For instance a company with a strong "management by objectives" attitude would be unable to fully utilize benchmarking due to its focus on objectives as opposed to processes. (Hacker and Kleiner, 2000) Few will question the benefits that benchmarking offers, but all will caution managers to fully understand the concepts before undertaking the task. .
Benchmarking can be thought of as the act of continually judging one company's products, services, practices and procedures against either that company's staunchest rivals or against the companies regarded as world-leaders. While many will argue whether or not an organization should include competitors as potential benchmark partners, all will agree the main reason that companies do this is because today's global economy is continually improving. The most popular way to sustain or gain a competitive advantage among managers today is to model one's company after those exhibiting the best practices in a given field. Once one knows the current capability of their firm, the insights gained from observing the world's frontrunners can be translated directly into improvements in efficiency and productivity.
