April 14, 2013


Benchmarking is “measuring our performance against that of best-in-class companies, determining how the best-in-class achieve those performance levels and using the information as a basis for our own company’s targets, strategies and implementation.” Simply, it is “search of industry best practices that lead to superior performance”. Whereas best practices refers to the approaches that produce exceptional results, are usually innovative in terms of the use of technology or human resources and recognized by customers or industry experts.
Benchmark  is a point of reference against which things are measured. In business, the reference points and standards can take many forms. They are measured by questions about the product or services.

The concept of benchmarking has been around for a long time. In 1800's, Francis Lowell, a New England colonist studied British textile mills and imported many ideas along with improvements he made for the burgeoning American textile mills.
It is believed that formally, benchmarking may have evolved in the 1950's when W. Edwards Deming taught the Japanese the idea of quality control. The method was rarely used in the United States until the early 1980's when IBM, Motorola and Xerox became the pioneers. Xerox is one of the best known examples of organizations that have implemented benchmarking.
Advantages of Benchmarking:
It promotes through understanding of the company's own processes i.e., the company current profile is well understood.
It involves limitation and adaptation of the practices of superior competitors, rather than invention thereby saving time and money for the company practicing benchmarking.
It enables comparison of performance measures in different dimensions, each with best practices for that particular measure.
It allows organisations to set realistic, rigorous new performance targets and this process helps convince people of the credibility of these targets.