Benchmarking is the process of continuously measuring and comparing one’s business performance against comparable processes in leading organisations to obtain information that will help the organisation identify and implement improvements (Benson, 1998). In this process, company needs to analyse leading companies to understand why they can become the leaders in his business and what their advantages are.
Like the way to go backstage and watch another company’s performance from the wings, where all stage tricks and hurried realignments are visible (Juran, 1964). In fact, benchmarking is the continuously process of imitating and then marking innovations. Through comparing and analyzing other outstanding companies, managements rethink and improve their company’s operation in order to become or even beyond the world class company. Benchmarking benefits As with many approaches to improving performance, benchmarking has its enthusiasts and its detractors.
There is no doubt that, conducted sensibly, a benchmarking project can be of benefit to an organization, not least because it forces the participants to look closely at their own organization’s processes and question them (Alan Rushton, 2000). 1. Becoming competitive: the main benefit is to understand your competitors much better by analysing their advantages and disadvantages; rethinking your process and improving them to become more competitive.
2. Improving process: understanding the external environment will get more solutions to the problems which you are facing; focusing on the process which you need to improve will help your company have superior performance. 3. Establishing effective goals: understanding the gap between your company and other leading companies will provide foundations to establish achievable goals. The Xerox case Xerox, the company invented the photocopier in 1959, is one of the best-practices companies in benchmarking. At first, Xerox was a leader, even monopoly, in the area of photocopier.
By 1981, however, the companies market shrunk to 35% as IBM and Kodak developed high-end machines and Canon, Ricoh and Savin dominated the low-end segment of market (Vincent K. Omachonu, 2004). Xerox benchmarked companies both inside and outside the industry. For example, the distribution function was compared to L. L. Bean. The benchmarking process results included: Quality problems cut by two-thirds, manufacturing costs cut in half, development task cut by two-thirds, direct labour cut by 50% and corporate staff cut by 35% while increase volume (Vincent K. Omachonu, 2004).