Sample Article

The Search for Best Practices

An introduction to the process of benchmarking

In a Nutshell

Benchmarking is one of a number of advanced quality improvement methodologies which may be integrated into a Total Quality Management system as it matures.

Benchmarking is the search for best practices that will lead to superior performance in some business activity. It can enable quality improvement efforts to reach new heights by providing information about other organizations – about their levels of performance and about the methods they use. This information enables more challenging goals to be set, and provides valuable insights and ideas for accomplishing these goals.

Benchmarking is a disciplined process with a number of phases which are repeated in a continuous cycle. The cycle includes: identifying other organizations which excel in a specific activity; investigating how they achieve this outstanding performance (and thus discovering ideas which could be usefully adapted); projecting the performance gains which could be achieved; and setting future performance goals based on these projections. The final essential phase of the Benchmarking cycle is for the organization to adapt and put into practice the ideas and best practices chosen.

History

The word 'benchmarking' is borrowed from land surveying, where it indicates a fixed reference point for comparison. In a quality context, Benchmarking has a different meaning – it refers to a quality improvement methodology. While external comparisons (e.g. reconnaissance, competitive analysis, industry analysis, etc.) have been used for centuries, this approach was significantly extended by Xerox during the 1980's.

Xerox's work in this area was triggered by the humbling realization that the company's dominance of the market they had invented was rapidly slipping away. The first Japanese copiers to enter the US market were sold at prices below Xerox's manufacturing costs for similar products. Although the first reaction was to suspect dumping, Xerox decided to investigate in depth the performance of its Japanese competitors.

One of the most valuable sources of information (and of ideas for improvement) was the systematic study of the Japanese subsidiary, Fuji-Xerox, and comparisons between Japanese and USA operations. This experience proved so valuable that it prompted Xerox to set out a standard approach for such work and to include it as one of the key elements of their corporate strategy for quality improvement – Leadership Through Quality. The term 'Benchmarking' was used to describe the approach.

Benchmarking is now recognized as a very important component of the family of advanced quality improvement methodologies. It is arguably the most important contribution by the Western world to quality improvement methodology since the foundations of the quality revolution were laid by Shewhart, Deming, and Juran. Many of the recent innovations in quality improvement methodology – between 1950 and 1990 – such as Just in Time production methods, Hoshin Planning, and Quality Function Deployment, have been the work of a few pioneering Japanese companies.

Comparisons between organizations, and the search for information about competitors, are not new. The practice of seeking inside information about the opposition's technology, designs, and plans – sometimes by covert methods – is as old as history. The purchase of competitors' products for detailed technical analysis is also a long-standing industrial practice.

However Benchmarking is quite different from such traditional approaches:

The focus is not just on products or plans, but also on business practices.
The aim is to discover the best practices, and thus to obtain a leadership position, not to emulate industry common practices, or to play catch-up with competitors.
In order to find the very best practices, the search may go far beyond local competitors or the industry sector. The target companies used for comparison are often drawn from other industry sectors and from other countries.
The information search is conducted in an open and ethical fashion. There is often a high level of co-operation between the parties involved, with agreements to share information in both directions and to protect the confidentiality of sensitive information provided.

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