BENCHMARKING

Benchmarking

Innovation and Sustainability

Introduction

Changes are rapidly occurring in the economy. The modern economy is no longer based on mass production and consumption of goods and services. Since global competition is rising, with more and more national economies becoming liberalized, it is imperative that companies must have:

quality beyond the competition;

technology before the competition; and

costs below the competition.

In other words, many companies must strive to be better, faster, and cheaper than their competitors, for which, benchmarking should be recognized as a catalyst for improvement and innovation (Fridley, 1997, pp.96). Benchmarking has been a popular topic for the last two decades and its significance as a practical method in developing critical areas of business is indisputable. It can be said as a management tool for attaining or exceeding the performance goals by learning from best practices and understanding the processes by which they are achieved.

Benchmarking

Key themes include measurement, comparison, identification of best practices, implementation and improvement. One of the most commonly quoted definitions is “Benchmarking is the search for the best industry practices which will lead to exceptional performance through the implementation of these best practices” (Graham, 2005, pp.99-111). There are plenty of definitions available in the literature and according to Nandi and Banwet (2000), Spendolini has found out 49 definitions for benchmarking. Maire et al. (2005) have proposed that the multiple definitions which were proposed express various stages in the evolution of benchmarking and based on the definitions they have concluded that benchmarking passed four important stages of evolution (Harrington, 1996, pp.78).

It is the process of identifying, understanding, and adapting outstanding practices from organizations anywhere in the world to help an organization improve its performance. It is an activity that looks outward to find best practice and high performance and then measures actual business operations against those goals. Analysing various definitions, benchmarking can be described as:

Benchmarking can be a major investment. It is portrayed as both resource and time intensive and hence should be done meticulously. Hence, articles in the past were more focused on organisational pre-requisites and criteria for successful benchmarking (Henderson, 2006, pp.143-55).

Currently, the focus of benchmarking literature has shifted and addresses issues on improving the benchmarking process, i.e. it focuses on in-depth study of benchmarking to identify the missing links. Dattakumar and Jagadeesh (2003) supported this fact and according to them, “it can be said that the benchmarking technique has seen a steady growth and appears to be heading towards maturity level, considering the gamut of publications”.

For example, Dervitsiotis (2000) has discussed about how benchmarking has serious limitations if it has to be applied in organization under a paradigm shift (transition of an established organization from the present to the future competitive environment). Similarly Ungan (2004) said that although many companies are involved in benchmarking, adoption of best practices is not as high as might be expected (Jackson, 1994, pp.60-5). Hence, he has studied about the factors that have an impact on the adoption decision of manufacturing best practices. Anderson and McAdam (2004) discussed that traditionally, benchmarking has ...