Question

Benchmarking can be done internally (organizational stats year over year), or against other facilities.

Discuss when each method might be used.

What are some advantages/disadvantages to each method?

Answer 1

Benchmarking is the process of measuring the performance of an organisation by comparing with standard company within the industry and outside of industry.

This process is useful to identify the best performance and useful to develop competitive advantage.

Benchmarking can be classified in two different types

Internal and external benchmarking

Internal benchmarking

It means comparing the performance between different functional departments, groups and teams within the organisation

External benchmarking

Process of comparing the performance of one company with another company in the industry.

It can be divided into different types

Competitive benchmarking

It is the process of comparing the performance of company with its competitor

Advantages

Threats are very less

Confidence will improve

Disadvantages

It is difficult to convince the competitors

Many conditions like legal, ethical will prevent the success

Functional benchmarking

It is a process of comparing similar practices within the similar functions outside the immediate industry

Advantages

Ethical and political preservation due to similar function

Similar functions provide opportunity to understand world class easier

Disadvantages

Data accessibility is less

Expectations are very high

Generic

This is the process of comparing practices with pioneer company in the industry

Advantages

It is more useful for stimulation

Breakthrough achievements is tremendous

Disadvantages

It is high profile activity due to involvement of best practice corporation

High expectations for change