Benchmarking: In Theory and Practice

By Ken Stork andJames P. Morgan -- Purchasing, 2/8/2001

Following is the first installment of a series of excerpts from one of the newest books from the PURCHASING bookstore, "Benchmarking: In Theory and Practice." The book is available for a special price while these installments are running in PURCHASING . Please send $29.95 plus $3.50 shipping and handling to PURCHASING Bookstore, P.O. Box 497, New Town Branch, Boston, MA 02456.

Why benchmarking is so important, p. 19

"The goal of those who are most successful at benchmarking is not a mere identification of some internal differences but the understanding of what enables the best-in-class firm to compete in an ever-expanding global market. Members of benchmarking teams need to understand the obstacles that their benchmarking partners (best-in-class) also encountered and then understand the kinds of obstacles their companies are likely to encounter."

What makes good benchmarking, p. 39 (SA)

"Benchmarking is essentially a four-step process consisting of planning, analysis, integration and action. How well it will be done is affected by how well answers are provided at each of the four steps or phases. For instance, a good plan for continuous comparison should answer these questions:

• Who does the benchmarking?

• What will be benchmarked?

• Who will be benchmarked?

cHow will the data be collected?"

Pitfalls to avoid, p. 69

"Many-especially large-companies are incredibly naïve about how quickly and effectively they can bring about change in their operations.

So in many companies, the success or failure of benchmarking is a planning and execution issue. At the top management level for instance, there often is unprecedented interest in the fact that people haven't really looked at supply in a strategic way. They work from the basic premise that there is an unprecedented opportunity to bring benchmarking into supply management and gain an unprecedented competitive advantage to their companies. Unfortunately, they often overlook the fact that there frequently are a large number of pitfalls to avoid or overcome before they can chalk up any of that competitive advantage."

The smell of success, p. 153 (SA)

"Keep in mind that obvious benchmarking candidates are also obvious to others. Leading firms may think of benchmarking as a curse and are likely to have erected effective barriers to prevent access by amateurs. Indeed, many would-be benchmarkers are unable to gain access to leading companies because it is obvious they don't understand the benchmarking process. One solution is a well-conceived plan, attractively presented in terms of how the host company will benefit."

Winning support, p. 195

"Typically presidents are very busy people with little time for benchmarking. Often they have a staff chartered for the task. Few subordinates feel secure enough to suggest that if all functions need to apply best practices in achieving benchmark status, the same principle should apply to top management. The problem becomes: How do we get appropriate information delivered to the executives who will benefit from the communication process?"

Measurement drives success, p. 213

"Measurements are critical elements to accelerating the rate of change in an organization. Peter Drucker has concluded that few factors are as important as measurement to the performance of an organization."