Bench Marking

Benchmarking: Definitions and Overview by Joseph Blakeman Center for Urban Transportation Studies University of Wisconsin-Milwaukee June, 2002 Contents Introduction History of Benchmarking Advantages/Disadvantages Benchmarking Process Gov't vs Private Roles in Benchmarking Do's and Don'ts Awards A Case Study References Introduction: What is Benchmarking? The term benchmarking was originally used by early land surveyors, who used the term to identify a fixed point from which all other measureme
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  Benchmarking: Definitions and Overview   by Joseph Blakeman   Center for Urban Transportation Studies   University of Wisconsin-Milwaukee   June, 2002   Contents  Introduction History of Benchmarking Advantages/Disadvantages Benchmarking Process Gov't vs Private Roles in Benchmarking Do's and Don'ts Awards A Case Study References  Introduction:   What is Benchmarking?  The term benchmarking was srcinally used by early land surveyors, who used the term toidentify a fixed point from which all other measurements are made. In the late 1970's however,it took a broader meaning. Applied to an organization, benchmarking is a process to determinewho else does a particular activity the best and emulating what they do to improve performance.A more formal definition is simply the systematic process of searching for best practices,innovative ideas and highly effective operating procedures that lead to superior performance(1). Businesses such as AT&T, Motorola, Xerox, as well as most major corporations and manysmaller ones have embraced benchmarking as standard operating procedure since the mid- to late1980's. It has a particular significance in technology, where the rapid change of the businessclimate can leave a company out in the cold. However, governmental and non-profitorganizations have begun implementing benchmarking as late as the early 1990's.The issue of government benchmarking was among many in Vice-President Gore's NationalPartnership for Reinventing Government Report (NPR). The report states that federal agencieshave been reinventing their operations to become more businesslike, many have been benchmarking against worldclass private sector companies, other organizations, and other federal  agencies that have become really good at what they do (2). This led to the FederalBenchmarking Consortium Study Report in February 1997. It is being used by agencies such asthe EPA and NASA, as well as the City of Reno and the Salt Lake City and various other federal,state, and local government agencies to improve their procedures and practices.Benchmarking is both different and similar in ways to other types of business improvement practices. These practices include total quality management (TQM), reengineering, and performance measurement.  Benchmarking vs. TQM   Total Quality Management, or TQM for short, consists of three main points (3). First,collaboration with suppliers to ensure that the supplies utilized in work processes are welldesigned and fit for use. Second, taking continuous employee analysis of work processes toimprove their functioning and reduce process variation. Third, maintaining close communicationwith customers to identify and understand what they want and how they define quality.TQM works by either one of two processes, consultant-oriented TQM or project-oriented TQM.Consultant-oriented TQM typically involves the creation of separate quality control bodies thatoversee the implementation of improvement and the control of quality improvement procedures.This process is generally problematic in the public-sector because the TQM bodies exist outsidethe chain of command, confusing accountability. These bodies often fail to become a part of thehierarchical structure of government organizations. In project-oriented TQM, some of theshortcomings of consultant-oriented TQM are addressed. This entails including all employees inthe process and including their needs as well as the customer's, as well as using established procedures as a foundation instead of implementing new ones.In general, TQM uses internal methods and the ideas of people within an organization to improveitself from the inside out. This does not include comparing one's organization to that of another,which is critical in benchmarking. However, due to the potential unwillingness of employees toaccept ideas without understanding their logic, both TQM and benchmarking require the input of everyone in an organization and a general resistance to change must be overcome.  Benchmarking vs. Reengineering   Another type of method of performance review and improvement is reengineering.Reengineering has been defined as the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in contemporary measures of performance, such ascost, quality, service, and speed (4). This generally involves discarding old practices withcompletely new ones. The new practices are usually determined from a process that requires ateam and consultant to come up with, measure, and convince others to take up new ideas.Reengineering can be problematic in government because they are don't have profits andcompletely discarding old processes and breaking down barriers between departments run into political, trade union, or other pressures. This sometimes results in the creation of new agencies  rather than overhauling old ones. Reengineering is very expensive and prone to failure rates inover fifty percent of cases. It also requires TQM after its successful implementation.While reengineering is cutting-edge and dramatic, and encourages employees to think big, it isstill an internal process. It does not involve the practices of one organization to compare itself tothose of another. While benchmarking may result in the use of completely new ideas similar toreengineering, it often is simply improving on existing ones. In addition, after performingreengineering, organizations often turn to TQM, to maintain their success.  Benchmarking vs. Performance Measurement     Performance Measurement is government's way of determining whether it is providing aquality product at a reasonable cost (5).  In fact, more than half of all U.S. cities collect performance measures of some type (6). Performance measurement is also used in bothgovernment and the private sector for reporting to management.Performance measurement can be used to measure such things as productivity, effectiveness,quality, and timeliness. When performance measures are used extensively and consistently theycan be quite effective improving an organization  s output. Government agencies used for thefollowing reasons (7):  Better decision-making: it provides managers with information to perform their managementcontrol functions;  Performance appraisal: it links both individual and organizational performance to aspects of  personnel management and motivates public employees;  Accountability: it fosters responsibility on the part of managers;  Service delivery: Improvements in public service performance;  Public participation: clear reporting of performance measures can stimulate the public to takea greater interest in and provide more encouragement for government employees to providequality services; and  Improvement of civic discourse: it helps to make public deliberations about service deliverymore factual and specific.What benchmarking does is to use data collected as performance measures and compare it toother organizations that perform those duties or processes. By comparing to other organizationsthrough benchmarking, performance measurement becomes something other than beancounting . However, since performance measurement is a prerequisite to benchmarking, the twohave become intertwined, but they are not the same.  S  ummary   TQM   PerformanceMeasurement   Re-engineering Benchmarking   Focus  Internal Internal Internal External  MainPrinciples  Develop dialoguewithin a process toimprove it throughgradual incrementsTakemeasurements for comparison andimprovementDevelopcompletely newmethods for obsolete or failing processesCompare processeswith others who do thesame and determine best methodsThese processes can be thought of as the following situation. An organization is seekingimprovement. First, it takes performance measures and determines what processes need to beimproved. Then, TQM can be employed to improve these processes internally. In addition, anorganization may look beyond itself to other organizations for insight, and benchmark. If bothTQM and benchmarking are not enough of an improvement, an organization may seek re-engineering, and restructure the whole process. In any case, performance measurement andTQM will need to be employed to insure that the processes developed remain at the proper levels. Finally, the whole process will need to be repeated as new improvements are needed. The History of Benchmarking:    Brief History  G.H. Watson outlines the development of benchmarking in five phases (8):Phase 1 1950-1975 Reverse EngineeringPhase 2 1976-1986 Competitive BenchmarkingPhase 3 1982-1988 Process BenchmarkingPhase 4 1988+ Strategic BenchmarkingPhase 5 1993+ Global BenchmarkingReverse engineering was tearing things apart, examining them, improving them, and puttingthem back together. Benchmarking really began in its modern form with the introduction of competitive benchmarking began with Rank Xerox, and its implementation of benchmarking in beginning around 1976. This was followed by process benchmarking which included looking for ideas outside of the direct competition. Strategic benchmarking involves fundamentallychanging the business, not just the process (9). Global Benchmarking is the newest and involvescomparing your organization on a global scale. The Xerox Case  In the 1970s, Xerox was the largest manufacturer of copiers in the world. However, Japanesemanufacturers were making better copiers, selling them for less, and making a good profit. This prompted the company to directly compare itself with its direct and best competitors todetermine what it could do to increase productivity while decreasing costs.The results from their benchmarking were astonishing. They found (10):
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