Benchmarking process
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wk_8_discussion.docxHeather Cushingham
MG495/ Business Policy
Park University
Week 1 Discussion
1. Please fully describe the benchmarking process (advantages and disadvantages).
Benchmarking process compares ones performance metrics and business processes from other industries. It measures cost, time and quality. In it management distinguishes the best firm in other or their industry in which same process exists. It also compares processes and results to the study. In order to measure the people’s feet for shoes, this process was first used by cobblers. Benchmarking use specific indicator to measure the performance. It may be one off event, but considered as a continuous process where an organisation want to improve their practices continuously. It looks outward to examine and understand how other are achieving their set performance. It helps to understand the processes which are behind the good performance.
It involves four steps:
· Understanding the process of existing business.
· Analyzing others business process.
· Comparing the performance of business with others.
· Implementing those steps which are necessary to close the gap of performance.
Advantages of benchmarking:
· New paradigms
· Performance improvement
· Focus on change
Disadvantages of benchmarking:
· It involves danger of arrogance and complacency.
· Difficulty in finding it as a stand-alone activity.
· Inadequacy in measuring the overall effectiveness of metrics.
2. Explain in detail when and why a firm should employ this process.
If benchmarking is applied in the proper way then it helps in performance improvement in key areas and critical functions involved in organisation. This includes much more except comparison with the competitors in order to understand the practices that close the gaps in between the performance. This is used as a reference point for the measurement of performance. It can be used at any time. It generally performs when company has its need.
It is used because it creates awareness related to competitive disadvantages. It helps in establishing goals and measurement of performance. It promotes team work
Works Cited:
Suttle, R. (2014). The advantages of benchmarking for an organization. Retrieved from http://smallbusiness.chron.com/advantages-benchmarking-organization-30952.html
Wheelen, T. L., & Hunger, J. D. (2012). Strategic management and business policy: Toward global sustainability (13th ed.). Upper Saddle River, N.J: Pearson Prentice Hall.
Johnna:
1. Please fully describe the benchmarking process (advantages and disadvantages).
Benchmarking is the continual process of measuring products, services, and practices against the toughest competitors or those companies recognized as industry leaders. Benchmarking is an increasingly popular program and is based on the concept that it makes no sense to reinvent something that someone else is already using. It involves openly learning how others do something better than one’s own company so the company not only can imitate but perhaps even improve its own techniques. Benchmarking identifies best practices in key business processes and determines what constitutes superior performance. It then quantifies the gap between the expected performance and the actual state; in the process it drives home uncomfortable facts and harsh realities about the business. A permanent benchmarking program forces organizations out of their comfort zones and provides specific and measurable short-term improvement plans based on current reality rather than historical performance. Very often, organizations set goals based on past trends and established internal patterns. Benchmarking helps remove such “paradigm blindness” and forces the organization to take a fresh approach to goal setting based on a broader perspective, including the external perspective, the most critical factor that drives customer expectations. Benchmarking help place organizational focus on change and provides the direction for the change process.
Benchmark brings change by:
1. Making explicit the competitors' standards that provide the organization with minimum standards of excellence.
2. Providing new ideas and better ways of doing things.
Benchmarking opens minds to new ideas, heralding a process of continuous learning that leads to a learning organization.
A major limitation of benchmarking is that while it helps organizations in measuring the efficiency of their operational metrics, it remains inadequate to measure the overall effectiveness of such metrics. Benchmarking reveals the standards attained by competitors but does not consider the circumstances under which the competitors attained such standards. If the competitor’s goals and visions were flawed or severely restricted due to some specific factor, an organization by benchmarking such standards runs the risk of trying to ape such flawed standards or settling for extremely low standards.
A bigger disadvantage of benchmarking is the danger of complacency and arrogance. Many organizations tend to relax after excelling beyond competitors' standards, allowing complacency to develop. The realization of having become the industry leader soon leads to arrogance, when considerable scope for further improvements remains.
Finally, many organizations make the mistake of undertaking benchmarking as a stand-alone activity. Benchmarking is only a means to an end, and it is worthless if not accompanied by a plan to change.
Comparing the pros and cons of benchmarking, the advantages of benchmarking overshadow disadvantages. The 2008 Global Benchmarking Network survey finds organizations preferring benchmarking over any other performance analysis tools, including SWOT. Most organizations include benchmarking as a part of continuous improvement initiatives such as Total Quality Management and Six Sigma.
Wood, Brad. 7 Steps to Better Benchmarking. Retrieved from http://bpmmag.net/mag/7-steps-better-benchmarking-0507/index1.html
Wheelen, T. L., & Hunger, J. D. (2012). Strategic management and business policy: Toward global sustainability (13th ed.). Upper Saddle River, N.J: Pearson Prentice Hall.
2. Explain in detail when and why a firm should employ this process.
In the article, Use Benchmarking to Improve Your Business, by Sheila Queen (2013) Benchmarking shows you whether your performance is stronger or weaker than your competitors. It will give you a clear picture of where improvements are needed and how to increase profits.
For example, financial benchmarking data will help you to see how much you earn and how much you spend on advertising, rent, staff, training and other expenses compared to your competitors.
You may discover that:
· you are spending too much on rent and need to consider negotiating lower rental rates
· your inventory costs are higher than your competitors, so you may need to reduce waste or negotiate better rates from your suppliers
· your income per employee is lower than the industry average, meaning you may need to examine productivity and training.
When benchmarking, you should analyze in detail how your business compares to others. Once you understand where you can make improvements, you are ready to develop a plan to put changes in place.
Remember to keep your employees and customers informed as you make changes to your business. If any problems arise, act on them immediately. Learn more about managing people through change.
Benchmarking is a process of continual improvement. Once you have implemented changes, you should benchmark your business again to see the results. This will tell you what is working, and where you can still improve.
Queen, S (2013) Use Benchmarking to Improve Your Business. Business and Industry Portal. Retrieved November 15, 2013. http://www.business.qld.gov.au/business/starting/market-customer-research/benchmarking-business/benchmarking-improve-business
Leah:
a. Please fully describe the benchmarking process (advantages and disadvantages).
When running a business, it is easy to get caught up in managing your own operations and forget about what your competitors are doing. As Martin explains, “It is easy to believe that the level of quality and service that is being provided is the best, until you learn that someone else is doing it better” (Pallardy, 2014 ). Benchmarking is a tool that can help businesses overcome this limitation. Benchmarking is a continuous comparison that allows businesses to determine the standard of their industry and who sets it. This is done by “finding examples of superior performance and then understanding the processes and practices driving that performance” (Pallardy, 2014). Because businesses vary greatly (goals, policies, culture, etc.), so will the ideal way to benchmark. It is important to find a method that works for your individual company and that can provide the best chance for success.
Advantages include that:
· It can lead to greater sales and overall performance, as it promotes innovation
· It improves the goal setting of the business (Wheelen & Hunger, 2012, p. 344)
· It can provide a boost in employee motivation (Wheelen & Hunger, 2012, p. 344)
· It can provide access to a much larger data pool (which allows for easier trend identification)
· It can improve the business’ motivation to become more efficient and effective
· It can lead to greater competition in the industry, which benefits the customers
Disadvantages of benchmarking include that:
· It can be overwhelming for a business if there is a large discrepancy between the benchmark and their performance (Wheelen & Hunger, 2012, p. 344)
· The costs associated can be significant (Wheelen & Hunger, 2012, p. 344)
· One businesses way of doing something will not be the best method for all (ICANN Wellington, 2006)
· If a benchmark is poorly defined, it can lead to misinterpreted results (ICANN Wellington, 2006)
b. Explain in detail when and why a firm should employ this process.
The purpose of benchmarking is simple – to “know where you stand so you can map out your strategy for future growth” (Slater, 2012). You can think of it as a check-up for your business. After completing the benchmarking process, your business is presented with a “comprehensive view of [their firm’s] current health” compared to others in the industry (Slater, 2012). In today’s fast paced world, businesses need to take advantage of any benefit they can get to have a leg up on the competition.
Because it is time-consuming and can be very expensive to implement on a regular basis, businesses need to be sure the benefits it is providing are worth the resources they are expelling. It should be on a regular basis to ensure the business is keeping up with industry trends and standards.
References
ICANN Wellington (2006, March 26). Benchmarks & Benchmarking. Retrieved March 3, 2014, from http://www.wwtld.org/meetings/cctld/20060326.Wellington-PossibleBenchmarkingExemples-dotNZ-NickGriffin.ppt
Pallardy, C. (2014, February 27). ASC Benchmarking in 2014: Where to Start & Best Practices. Retrieved March 3, 2014, from http://www.beckersasc.com/asc-turnarounds-ideas-to-improve-performance/asc-benchmarking-in-2014-where-to-start-best-practices.html
Slater, J. (2012, February 24). Why You Should Benchmark, and Tips for Effective Benchmarking: Pt. 1. Retrieved March 3, 2014, from http://www.thinkadvisor.com/2012/02/24/why-you-should-benchmark-and-tips-for-effective-be
Wheelen, T. L., & Hunger, J. D. (2012). Strategic management and business policy: Toward global sustainability (13th ed.). Upper Saddle River, N.J: Pearson Prentice Hall.
-WWTLD is the primary website of the country-code top-level domain managers and registries that participate in the activities of ICANN, which gives presentations worldwide. Contains links to the five regional ccTLDs organizations (AFTLD, APTLD, CENTR, LACTLD, and NATLD).
-BeckersASC is a leading source of cutting-edge business and legal information for healthcare industry leaders through publications, webinars, and conferences.
-Thinkadvisor is website that provides access to professional development, education and certification, industry news and analysis, reference tools and services, and community networking opportunities for investors and academicians.
Robert:
Please fully describe the benchmarking process (advantages and disadvantages).
Answer: According to our text, “benchmarking is ‘the continual process of measuring products, services, and practices against the toughest competitors or those companies recognized as industry leaders” (Wheelen & Hunger, 2012, p. 344). Benchmarking is a common process used to foster improvement and is based on the concept of why reinvent the wheel when you can barrow from the best with pride. It involves delving into the operations of your competitors and learning what they do well and how they do it. The steps in the benchmarking process are as follows:
a. Identify the area or process to be evaluated
b. Find behavioral and output measures of the area or process and obtain measurements.
c. Select an accessible set of competitors and best-in-class companies against which to benchmark.
d. Calculate the differences among the company’s performance measurements and those of the best-in-class and determine why the differences exist
e. Develop tactical programs for closing performance gaps.
f. Implement the programs and then compare the resulting new measurements with those of the best-in-class companies.
Benchmarking like any other process has its advantages and disadvantages. One of the primary advantages of benchmarking is performance improvement. It provides a means to enhance a business’s competitiveness and better its competitors (Nayab, 2010, p. 1). Benchmarking is also a great tool for shifting paradigms and focusing an organization on change. Benchmarking will provide new ideas and show better ways of doing things. It is important to make clear the competitors standards that provide them the competitive advantage are you company’s minimum standards (Stuttle, n.d., p. 1).
Benchmarking also has some disadvantages that must be looked for when engaging in the benchmarking process. One of the most important disadvantages of the benchmarking process is although it helps a business measure the efficiency of their operations metrics; it remains inadequate to measure the overall effectiveness of the metrics. Another sometimes bigger disadvantage is the danger of complacency. Many businesses tend to get complacent after excelling beyond competitors standards and fail to realize benchmarking needs to be a continual process to be effective long term. Finally, another disadvantage is businesses can view benchmarking as a stand-alone process, but they need to realize it is only a means to an end and is not very valuable unless accompanied by a plan to change. (Nayab, 2010, p. 1).
Nayab, N. (2010, August 14). Pros and cons of benchmarking. Retrieved from http://www.brighthub.com/office/entrepreneurs/articles/82292.aspx
- Bright Hub is a website dedicated to providing Technology, Science and Education information that you can act on.
Stuttle, R. (n.d.). The advantages of benchmarking for an organization. Retrieved from http://smallbusiness.chron.com/advantages-benchmarking-organization-30952.html
- Houston Chronicle is a regional newspaper and J. Lister writes for Deman Media
Wheelen, T. L., & Hunger, J. D. (2012). Strategic management and business policy: Toward global sustainability. Upper Saddle River, N.J: Pearson Prentice Hall.
- The text book for our class
2. Explain in detail when and why a firm should employ this process.
ANSWER: Benchmarking can be an effective tool, but has been shown to be more effective in well managed companies. Poorer performing companies tend to get overwhelmed by the disparity between the benchmark company and their own performance and will view the new standard as unattainable (Wheelen & Hunger, 2012, p. 344). So it is important for a company to both want to improve and have reached a level of performance which makes the benchmarking results achievable. Once a company has met both criteria, then they can expect to reap the many benefits of the benchmarking process. Once reason a company should benchmark is the potential for lowing labor costs. A competitor may have discovered technology or methods that can reduce the labor associated with a goods or service. The same goes for quality, a competitor may have discovered a manufacturing technique or material that improves the quality of their goods or service. Overall a company can expect benchmarking to improve their sales and profits through find better ways to market, manufacture, distribute, and operate (Stuttle, n.d., p. 1). Benchmarking is a systematic way of comparing processes and performance metric to industry leading practices, in terms of time, quality, and cost dimensions. Making these comparisons can result in doing things better, faster and cheaper (Nayab, 2010, 1).
Nayab, N. (2010, August 14). Pros and cons of benchmarking. Retrieved from http://www.brighthub.com/office/entrepreneurs/articles/82292.aspx
- Bright Hub is a website dedicated to providing Technology, Science and Education information that you can act on.
Stuttle, R. (n.d.). The advantages of benchmarking for an organization. Retrieved from http://smallbusiness.chron.com/advantages-benchmarking-organization-30952.html
- Houston Chronicle is a regional newspaper and J. Lister writes for Deman Media
Wheelen, T. L., & Hunger, J. D. (2012). Strategic management and business policy: Toward global sustainability. Upper Saddle River, N.J: Pearson Prentice Hall.
- The text book for our class
Oralth:
1. Please fully describe the benchmarking process (advantages and disadvantages).
The benchmarking process compares the performance and business from other firms. It is a pretty complex method since it measures the cost, and the time quality of the industry. “Benchmarking is the process of determining who is the very best, who sets the standard, and what that standard is” (Reh).
This is how the the firm can see and distinghuish from the other industries that already exist. When you are running a business you cannot get behind what the competitors are doing so you do not fall behind. According to our textbook, “benchmarking is the continual process of measuring products, services, and practices against the toughest competitors or those companies recognized as industry leaders”(Wheelen & Hunger, 2012, p. 344).
It involves four steps:
Understanding the process of existing business.
Analyzing others business process.
Comparing the performance of business with others.
Implementing those steps which are necessary to close the gap of performance.
Advantages of benchmarking:
New paradigms
Performance improvement
Focus on change
Disadvantages of benchmarking:
It involves danger of arrogance and complacency.
Difficulty in finding it as a stand-alone activity.
Inadequacy in measuring the overall effectiveness of metrics.
2. Explain in detail when and why a firm should employ this process.
Benchmarking is a very important tool for a firm. However, it appears to be efficient just with firms that are well managed. It does not do the same with firms that are poorly managed. If a firm wants to improve its performance and achieve new goals and objectives, benchmarking is the perfect tool for this firm. I believe benchmarking can help a firm to improve their sales and profits through time and quality. I also think that through these comparisons we can make this process of improvement cheaper for the company and faster at the same time.
Reh, John. "How to use Benchmarking." management. N.p., n.d. Web. 5 Mar 2014. <http://management.about.com/cs/benchmarking/a/Benchmarking.htm>.
Wheelen, T. L., & Hunger, J. D. (2012). Strategic management and business policy: Toward global sustainability. Upper Saddle River, N.J: Pearson Prentice Hall.
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