Benchmarking Approaches

Benchmarking is a tool for quality control; a method of objective systematic comparison of company’s activities with those of the best companies, understanding the causes of efficiency of business partners; and organization of appropriate actions to improve company’s performance indicators and their implementation. The method used to create a competitive advantage in solving problems related to quality, cost and delivery, price, customer care and service, diversity of products, and innovation (Bendell, 1998).

There are several methods and approaches of benchmarking. Basing on the information on the situation in the industry and the strategic plan of the company, managers responsible for making decisions can make a choice in favor of one of the ways of monitoring, including the following ones, described in this paper: 1. Technological Benchmarking; 2. Consumer Survey Benchmarking; 3. Model Company (Camp, 2006).

Today, for example, many companies have started to work with Technological Benchmarking since its frame of reference suits the production approach of activity quality improvement.

Technological Benchmarking is aimed towards selective production processes rather than the production in general. The aim of the benchmarking process is to improve various stages of the process and increase efficiency by adopting the best practices. For example, comparing some of the specific indicators for a sampling of companies, it is possible to identify the best practices and implement them to weak enterprises to improve their effectiveness (Camp, 2006).

Thus, Technological Benchmarking involves the comparing of one company with similar businesses in order to improve its performance by adopting the structures and methods that have proven to be successful in other enterprises.

Another method of benchmarking is Customer Survey Benchmarking, since the perception of service quality by consumers plays a central role in the evaluation of enterprises. Five key parameters determining the service quality according to the estimations of consumers include: appearance, reliability, timeliness, credibility, compassion (Camp, 2006).

This method involves developing an understanding of the requirements for service quality and goals of consumers. Further, this perception of quality of service can be compared to the companies-leaders in the field. The gap between the rates can then be used as a motivation to improve.

Surveys can reveal the operational gap and identify areas requiring special attention. Consumer complaints directly point to the users’ perception of service. Classification of complaints by customer type, complaints location and type can help managers identify problem areas. In addition, trends in opinions over time can be used by regulatory authorities and the Administration to assess the performance of the enterprise.

However, it’s necessary to pay attention when using the ratings model for determining the service quality, since, for example, citizens who don’t use the company’s services do not refer to this study. Also, the use of different assessments in the calculation of model for determining the service quality leads to reliability problems and discriminated, convergent and predictive validity of measurements. Finally, this model requires that the results of market studies are as precise as possible, and that customer opinions are documented, saved and available during the entire process (Bendell, 1998).

The next technique of performance comparing is called Model Company method. This is an optimized economic and applied model; it differs from others, because it is based on an idealized benchmarking specificity for each regulated industry. The method involves identifying the needs of the industry to develop the most appropriate benchmarking for the set requirements. The study includes both application efficiency (analysis of the structure components industry networks) and economic efficiency (the use of the most affordable options for obtaining the optimal operating costs) for the formation of an optimized model of the enterprise or industry (Camp, 2006).

Applied models do not require collection and analysis of real companies’ data. This fact is important for two reasons. First, Model Company study avoids the problem of information about the inefficient activity of the enterprise, on which the company’s inefficiency can be estimated. Secondly, it avoids the evaluation of the enterprise as “ideal” in that case, when the company clearly has some disadvantages due to intellectual or physical wear or because of mismanagement. This method determines the optimal level of efficiency, on the basis of which it is possible to compare companies, thus avoiding the problems of measurement arising from the similarity of enterprises or performance data.

However, applied models supporting such a study may be very difficult, and the structure of industrial relations can be confusing because of the artificial factors used in the optimization process (Bendell, 1998).

Despite the fact that the method involves the consideration of techniques of other companies, their approaches should not be copied, because they may not meet the business environment, product, market or culture. The reference object for comparison should be indicators that correlate with the key success factors in the competition (Bendell, 1998).

It is important to remember that benchmarking is an ongoing process. Since consumer demands are constantly changing, the characteristics of the competing companies are changing too. Therefore, the benchmarks against which benchmarking is carried out, are also changing; and only continuous benchmarking can help the company quickly learn about all the innovations and use them profitably in practice.

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