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1. When you think that, your organization is loosing out to your competitor due to certain inefficienceis in the process, it is a right time to benchmark.
2. When you bringing out a product to market and you would like to know where you stand with your competitions similar products, it is a time to benchmark.
3. When you are facing sever issues in the product or process which you are not sure why and you dont know against which target you should improve, you should benchmark. (I had a typical experience of this case - eventhough we had our product results above spec, my customer was prefering the other supplier as cost was same. Benchmarking really helped to decide a target and drive a six sigma project for that).
There may be many other reasons, but, I think these could be primary reasons to benchmark...
When the process performance is declining as being determined by the outcome.
Benchmarking means comparing the operation of your business to other, similar businesses and establishing a performance level that you try to reach. It starts with identifying business processes that are measurable and that exist in other businesses. A survey indicates which business performs the best with regard to this process, and this level of performance is typically chosen as the benchmark. You can then examine why your performance is not as good and take measures to improve it. Such benchmarking allows you to distinguish the business areas that are doing well from those that need improvement and focus on the latter.
Step1: Preparation and planning. As with any other project, thorough preparation and planning are essential at the outset. Recognize the need for benchmarking, determine the methodology you're going to use, and identify the participants in your project.• Step2: Data collection. This stage involves deciding what you're going to measure and how you'll measure it. You need to define the benchmarking envelope -- what is to be benchmarked and what is to be excluded. At this point, you can establish the metrics you intend to use; these, too, must be clearly and unambiguously defined in order to ensure comparability of the datasets that you will collect. Finally, you need to determine the most appropriate vehicle for data collection.• Step3: Data analysis. The key activities here are the validation and normalization of data. Before you can perform any meaningful analysis, it's essential that all data be validated to establish its accuracy and completeness. Some form of data normalization is usually required to enable like comparisons to be made between what may be very different operational subjects. Without it, direct comparisons of performance are normally impossible and may lead to misinformed conclusions. To be of value, the analysis must indicate the benchmarker's strengths and weaknesses, determine (and, where possible, quantify) gaps between the benchmarker's performance and the leaders', and provide recommendations for the focus of performance improvement efforts.• Step4: Reporting. The analysis must then be reported in a clear, concise, and easily understood format via an appropriate medium.
Unfortunately, many benchmarking exercises stop at this point. But to maximize the value of the initiative, organizations must go further: They must build an understanding of the practices that enable the leaders to attain their superior performance levels. This is the purpose of Phase2 of the7-step benchmarking process:
• Step5: Learning from best practices. In this step, the top-performing organizations share their best practices, to the mutual benefit of all of the benchmarkers. Of course, when some of the benchmarkers are true competitors, the options for sharing may be limited, and alternative approaches may be required to establish learning.• Step6: Planning and implementing improvement actions. Once the learning points have been ascertained, each organization should develop and communicate an action plan for the changes that it will need to make in order to realize improvements. The learning points should feed into the organization's strategic plan and should be implemented via its performance improvement processes.• Step7: Institutionalizing learning. The insights that you've gained and the performance improvements that you've achieved must be fully embedded within the organization; it's critical to ensure that the gains are rolled out throughout the business and sustained over time. Benchmarking can take place at the corporate, operational, or functional levels of the organization. Make sure that these levels are linked via a cascading series of interlinked goals to ensure systematic progress toward the vision.
If a company is to be successful, it needs to evaluate its performance by Benchmark every time.
Organization should benchmark a process identified in their core strenght area to achieve excellence and growth to leadership position.
• Identify world-class performance levels;
