Benchmarking in Business Many benchmarking professionals believe that the most important type of benchmarking is business process benchmarking. Business process benchmarking is based on the concept of 5w2h which was developed by Alan Robinson. It is labeled as such because the business benchmarking process should result in the answers to seven questions. Five of those questions begin with w which stands for (who, what, when, where, and why), and the h stands for (how, and how much).
The 5w2h questions should be viewed in the context of a process. The inputs are known as people, machines, materials, and design that combine to form a product or service which are all combined into what is known as the conversion process. In the conversion process the inputs are aligned together to form the product or service. The conversion process results in outputs that are eventually sold to customers. Robert Camp developed a business process benchmarking process which has 10 steps.
The steps are as follows: (1) decide what to benchmark, (2) identify whom to benchmark, (3) plan and conduct the investigation, (4) determine the current performance gap, (5) project future performance levels, (6) communicate benchmarking findings and gain acceptance, (7) revise performance goals, (8) develop action plans, (9) implement specific actions and monitor progress, and (10) recalibrate the benchmarks. Benchmarking is a managed process.
Robert Camp also specifies a management process for business benchmarking that includes 5 phases. They are planning, analysis, integration, action, and maturity. Managing the benchmarking process involves establishing, supporting and sustaining the benchmarking program. Other activities for management include providing management awareness training, establishing a benchmarking competency center, developing guidelines for information sharing and overseeing the development of business protocol.
Training is the key to success in quality management especially in the benchmarking process. Any participant must have project management skills and be familiar with benchmarking approaches and protocols. Firms are also facing the decisions of base lining and reengineering. Reengineering is a fundamental rethinking and redesign of a business process. Base lining requires the monitoring of key internal firm performance measures over time to identify trends such as improvement or decline to inform managerial decision making.
The base lining process involves identifying measures, establishing time frames for future data collection, gathering data, and analyzing data on an ongoing basis to identify performance trends and changes. The benchmarking code of conduct is made up of principles which are the principle of legality, exchange, confidentiality, use, first-party contact, third-party contact, and preparation. Managing Quality, Integrating the Supply Chain, by S. Thomas Foster, 3rd Edition, Prentice Hall, 2007