The term benchmark originated as a surveying term. It is a distinguishable mark placed on a wall, building or rock that is used as a reference point to determine elevation and position in topography surveys. In business today we use a benchmark in much the same way – to select a reference point to make measurements. It becomes a standard that we measure ourselves to.
How Benchmarking Is Done
The crux of benchmarking is learning by sharing information between businesses. By comparing work processes, inputs and outputs, you can gain valuable information that can help you improve your own process. At a very high level, the process of benchmarking can be broken down into three steps:
1. Evaluate and measure your own operation or specific process to identify weaknesses and strengths.
2. Initiate a benchmarking study and document processes that are more productive or efficient than yours.
3. Determine how to adapt successful processes and procedures from those who may be doing it better than your process.
Look Inside and Outside
You can find best practices via benchmarking in and out of your own industry – even in places you think are totally unrelated. One example comes from a world-renowned ammunition manufacturer. The company wanted to create ammunition that was bright and shiny, but nothing they tried would meet their stringent specifications. One evening a manufacturing engineer’s wife was putting on her makeup and lipstick and he noticed the composition of her lipstick case – how bright and shiny it was after such a long time of use. Immediately he arranged a meeting with the lipstick case manufacturing center to benchmark their processes and a new product was introduced soon after.
How can we be better? One simple question that should drive your business leaders to embrace change and defy the status quo. Benchmarking may be the answer to your process inefficiency question. Because it is so important within the quality profession, the Malcolm Baldridge National Quality Award requires all company entries to benchmark. Benchmarking helps determine the reference point and standard from which world class performance can be measured.