In an era of competition with rapid variations and uncertainties, changes of ideas are everywhere, be it of international markets, regional organizations, or boundaries. Competitors all over the world are growing at high speed. Businesses fall behind not because they are not ambitious. They are simply not growing fast enough.
In the environment of borderless economy and information-oriented industries, businesses going from N (Normal), to A(Good), even A+(Great), are those who are always ready to learn, to drive the innovative function, strengthen their core competence, and those who focus their strategies and resources for the same purpose.
Furthermore, encouraging spontaneous learning and teamwork are the key approaches to sustainable development. Establishing learning organizations, as well as implementing benchmarking, will enhance one’s own competitiveness via learning how others succeed.
“Benchmarking”, an idea first proposed by an American company Xerox, has more than 20 years of experiences in countries such as USA and Germany.
In the 60s’, Xerox swept the market at an astonishing speed. Its name was synonymous to all copy machines. In the 70s’, Xerox led the photocopier business, with rapid growth and high profits.
At the end of 70s’, however, Japanese businesses penetrated US market with its high quality and low price products on a massive scale. With market share gradually eaten away by Japanese companies, Xerox was having difficulties surviving. To confront and overcome this crisis, Xerox implemented external benchmarking to comprehensively review its manufacturing costs, processes, and qualities.
After a series of benchmarking, Xerox’s revenue grew from 8.7 billion USD in 1984 to 12.4 billion USD in 1989, while investment return increased from 9% in 1987 to 14.6% in 1990. Customer satisfaction rose back 38% within four years. Furthermore, Xerox won back 7% of market share from its opponents, rising from less than 12% to 19%.
Except for tangible profits, Xerox was awarded the Malcolm Baldrige National Quality Award in 1989, which enriched it with intangible assets and reputation.
With the success derived from benchmarking, Xerox regained its advantage in the market, which had awoken other corporations to the importance and benefit of benchmarking, and spurred them into benchmarking.
Three Types of Benchmarking
The American Productivity and Quality Center (APQC) defined benchmarking as, “a systematic and continuous assessment procedure that assists in acquiring key information for improving company performance through continuously comparing institutional procedures with other world class enterprises.
In other words, benchmarking starts with learning and comparing the top companies in the field. Through imitating and competing with other companies, businesses will grow through the process of learning. Businesses practicing benchmarking start with defining criteria of evaluating the performance of a company in its functional sectors (e.g. production, marketing, financing, service, etc.) and then assess its performance in these areas. Then they target best practices in certain sectors, comparing the best practice with themselves and measuring the gap in between. In analyzing and transforming their own processes, corporations practicing benchmarking would be able to improve their performance and narrow the gap.
Thus, benchmarking can be interpreted as a systematic and methodical approach for finding and learning from best practices. Through the process of learning, businesses can improve their performance, in hopes of catching up with, and even outrunning the best practices.
Generally, benchmarking can be divided into three categories in accordance with benchmarking targets and range: Internal Benchmarking, Competitive Benchmarking, and Functional/Generic Benchmarking.
Different benchmarking with various approaches, will lead to different outcomes.
Internal Benchmarking
Implementing benchmarking from similar operating process within the company in order to find the best process is called the internal benchmarking. Under the trend of globalization, most businesses today are diversified and transnational, with subsidiaries or offices all around the world. Therefore, there are some functions or operating process that are similar in different sectors to serve as a benchmarking target.
Competitive Benchmarking
Competitive Benchmarking is implemented on competitors providing similar services. Businesses can compare their products, services, function and operating process with their competitors.
The main purpose is to narrow the gap between businesses and their competitors and to further understand the competition within an industry.
Functional / Generic Benchmarking
Functional Benchmarking is comparing similar operating processes with the top business in the field. Generic benchmarking, on the other hand, is not limited to the same industry.
There are many common operating processes among businesses. Therefore businesses can learn from their direct competitors, competitors in the same field and also those in different industries.
In implementing functional benchmarking, businesses can learn new operating processes and thus come up with innovative ideas and practices. In the end, businesses can reach the goal of thinking outside the box.
Businesses need to know that benchmarking is not equal to piracy or totally accepting the best practice as it is. Businesses should put the objective differences between themselves and the benchmarking target into consideration, and then look for the parts that work best in their own companies.
This kind of transformation starts from adaptation so that businesses can develop a set of unique methodology and management, which will bolster up the businesses’ competitive advantages.
Benchmarking can also work in conjunction with other management tools to better improve businesses’ performance and raise their overall competitiveness.
Top businesses, as well as less competitive businesses, need to bolster their competitiveness through benchmarking. China Steel Corporation chose five of Japan’s top blast furnace steel plants as their benchmarking targets. BenQ learns domestically from Hon-Hai (Foxconn) and internationally from Sony and Samsung. Their major benchmarking issues include:
Strengthening core competence, including research and development (R&D), organizing ability, marketing ability…etc
1.Developing global manufacturing skills
2.Global Quality
3.Quality control results index
China Lenovo Group also benchmarked from IBM and Sony. Therefore, there are an increasing number of experts who believe that benchmarking should be a key factor in improving a country’s international competitiveness.
Establishing a benchmarking platform for industry competitiveness.
Benchmarking is budding and draws a lot of attention from domestic businesses, yet businesses are still facing many challenges in implementing benchmarking. It is especially difficult for Taiwan’s small and medium businesses, due to difficulty of being able to obtain information about benchmarking targets.
With this concern, the Department of Industrial Technology brought up an International Benchmarking Project for Domestic Industry Competitiveness, which is implemented by China Productivity Center (CPC). Through this project, a benchmarking center and benchmarking information platform are established to maximize the expansion of benchmarking so that more businesses can implement benchmarking and that benchmarking can become an effective tool to promote Taiwan business competitiveness.
This project is divided into four stages: initial concept promotion, electronized benchmarking, the best practice research and the best practice expansion.
Through promoting this project, we can achieve the following goals in sequence.
1. Defining the best practice
We will invite the academia, related research centers and the industry circles to participate in providing real case study and define the best practice.
2. Planning and establishing a benchmarking platform for industry competitiveness.
We will develop a benchmarking platform for industry competitiveness in accordance with our national conditions to assist businesses to understand the competition within that field. The platform will then analyze the gap between the benchmarking company and its target to enhance the company’s competitiveness through learning from the best practice.
3. Implementing more international benchmarking and promote learning from international exchanges.
Through experience exchanges, information sharing and member contacts among international benchmarking businesses, we will broaden businesses’ vision in an international sense to help domestic businesses follow the international trend.
Ceaselessly learning to reach eminence.
For businesses attempting to enhance their performances through benchmarking, need to realize that endless learning is a must.
Benchmarking is like a moving target. Whenever you reach the target, it automatically moves to somewhere else and forms a new target. If businesses stop their learning once they reach a target, their road toward eminence ends at the same time.
Only through continuously choosing new learning themes and targets and implementing benchmarking can businesses reach substantial development and eminence.
More:
 Business Competition- A Marathon Without A Finishing Line
Fast Learning by Standing on the Shoulder of Giants
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