Benchmarking Is The Process Of Comparing Management Essay

Benchmarking Is The Process Of Comparing Management Essay Benchmarking  is the process of comparing ones business processes and  performance metrics  to industry bests or  best practices from other industries. Dimensions typically measured are quality, time and cost. In the process of benchmarking, management identifies the best firms in their industry, or in another industry where similar processes exist, and compare the results and processes of those studied (the â€Å"targets†) to one’s own results and processes. In this way, they learn how well the targets perform and, more importantly, the business processes that explain why these firms are successful. Benchmarking is used to measure performance using a specific  indicator  (cost per unit of measure, productivity per unit of measure, cycle time of x per unit of measure or defects per unit of measure) resulting in a metric of performance that is then compared to others. Also referred to as â€Å"best practice benchmarking† or â€Å"process benchmarking †, this process is used in management and particularly strategic management, in which organizations evaluate various aspects of their processes in relation to best practice companies’ processes, usually within a peer group defined for the purposes of comparison. This then allows organizations to develop plans on how to make improvements or adapt specific best practices, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to improve their practices. Also referred to as â€Å"best practice benchmarking† or â€Å"process benchmarking†, this process is used in management and chiefly strategic management, in which organizations evaluate various aspects of their processes in relation to best practice companies’ processes, usually surrounded by a peer group distinct for the purposes of comparison. This then allows organizatio ns to develop plans on how to make improvements or adapt specific best practices, usually with the aim of increasing some aspect of performance. https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj3xT4RJYiOdOcFmRF43QMsA99JrzzZOjb_IcagoSEzWvXjGDy5BmqJ9wswIWZ1SXmwwrCMab2ouieH1DmLwtoEeA-xs-r90tDMXbjneO8-fYRX6N4TQO09DXC71VTvxZZ1Asw2U1nJemaO/s1600/BENCHMARKING.gif Benefits and use Lowering Labor Costs One advantage of benchmarking may be lower labor costs. For example, a small manufacturing company may study how a top competitor uses robots for several basic plant functions. These robots may help the competitor save a significant amount of money on labor costs. Company managers may obtain information on these robotics systems through the competitor’s website or online articles. They may also identify the company that sold the competitor the robots. Subsequently, the company using benchmarking may call the robot manufacturer to help set up its own system. Improving Product Quality Companies may also use benchmarking to improve product quality. Engineers sometimes purchase leading competitors’ products. They may then take them apart, study them and determine how the competitors’ products outlast or outperform others in the industry. Chemical engineers may study food or cleaning products in a similar manner. They can then compare various elements contained in competitive products to their own product line. Subsequently, improvements can be made to product quality. Increasing Sales and Profits A company that uses benchmarking to improve its functions, operations, products and services may enjoy increases in sales and profits. Customers are likely to notice these improvements. The benchmarking company may also promote is improvements through company brochures, its sales reps, magazine and television ads. These efforts are likely to increase sales, especially among core customers. Companies that operate more efficiently due to benchmarking can drastically lower their expenses. These savings can be lead to greater profits.