Definition of Benchmarking

Benchmarking, as the definition of the CEO of Xerox -D.T. Kearns- is the continuous process of
measuring the products, the services, and practices against the best competitors or the leader in
their industry (Kolarik, 1995).
Freytag and Hollensen (2001) states that 'benchmarking involves measurement of business
performance against the best and makes continuous effort in reviewing process practice and
method'.

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Fernandez et al. (2001) also states that 'benchmarking was a process that facilitates learning and
understanding of the organization and its operations. It enabled organizations to identify the key
processes that need improvement, and to search for applicable solutions from the best in class'.
Various definitions have been put forward describing the practice of benchmarking; they are
primarily concerned with the concept of performance improvement centered on measuring
current practices against exogenous entities and their subsequent implementation. (Anon, 2007)

Type of Benchmarking
Elmuti and Kathawala (1997) had identified four types of benchmarking which are internal
benchmarking, competitive benchmarking, functional benchmarking, and generic or process
benchmarking. It was obvious that many types of benchmarking had emerged and according to
Slack et al (2001), benchmarking can be classified into a various types, firstly, at the company
level, which considers the existing process in the firm... Secondly, the competitors or non
competitor firms which is the market level (Keegan, 1998)... thirdly, the particular processes or
strategies in the firm (Bogan and English, 1994). For example, at the company level, Microsoft
Corporate launched Windows XP, by benchmarking it with their NT series. Or direct
benchmarking with competitor, like Microsoft Corporation, benchmarked the Apple Macintosh
and, then, launched Windows operating systems.
Kumar and Chandra (2001) suggested that when choosing the benchmarking procedure or the
type of benchmarking we should be very caution in order to acquire desired results. Also, Bhutta
and Huq (1999) argued that it is not useful to compare strategy at internal level but it will
provide many ways of improvement when comparisons made between the competitors. Ahmed

and Rafiq (1998) recommended that organization should use multiple benchmarking because it is
not necessary to utilize only one tool but to integrate a range of techniques, since it could help to
address different sets or sub-areas for improvement.

The use of benchmarking

According to the research of benchmarking activity, benchmarking is implemented usually in
industries such as service, utilities, health, and education. (Hinton et al, 2000). Moreover,
benchmarking activity tend to the size of the organization, a larger organization is more likely to
be benchmarking rather than a smaller one (Hinton et al, 2000).
Traditionally, the organization usually enhances their products or process performance by
focusing on the internal activities (Kolarik, 1995). For example the organization may use
different techniques in the quality function to achieve their customer satisfaction. However, Juran
(1993) argue that this conventional performance improvement seems not to be sufficient for a
competition in the highly competitive markets. Therefore, benchmarking become a significant
technique facilitating an improvement of organization performance as it regards competitor
issues (Juran, 1993).
In order to benchmark effectively, a company needs a strong strategic focus and some flexibility
in achieving management's goals. To effectively implementing benchmarking, adequate
planning, training, and open interdepartmental communication needed. Developing and using
measures helps to identify the current performance and monitor the direction of changes over a
period. Measures identified during the planning stage of benchmarking may also help to
determine the magnitude of the performance gaps and select what is to be benchmarked (Vaziri,
1992; Karlof & Ostblom, 2003).

Advantage of benchmarking
Benchmarking has multiple advantages like bringing the latest innovations and the inventions to
manage the processes, It constitutes an efficient instrument for team work, It improves the
knowledge of costs and performance of the products and services comparing to those of the
concurrent companies, It brings together all the divisions and helps creating a common front to
keep up with the competition and It emphasizes the importance of the personnel's implication
and in consequence it encourages the recognition of the individual and of the team merits.

Disadvantage of benchmarking
Cassell et al. (2001) stated that 'most companies chose not to benchmark due to the lack of time
and resources'. This also was supported by Henczel (2002), that 'benchmarking requires a
significant commitment of resources such as time, people and money... , without any guarantee
any cost benefit'. Other limitation also was the difficulty in finding partners (Holloway et al.,
1999), the misunderstanding of the need to benchmark and the concept of benchmarking, failure
to link benchmarking to competitive priorities and difficulty to benchmark untenable factor such
as skills and services (Freytag and Hollensen, 2001).

The organization may face some difficulties in benchmarking activity. Like, the sensitive
information from the best organization (the model firm in the market) is difficult to obtain
(Kolarik, 1995). Also, the benchmarking process with direct competitors in the same industry
will face more difficulties in collecting the information (Ralston et al, 2001). Moreover,
according to case study of benchmarking of research and development in buyer-supplier
relationships, Hurmelinna (2002) claimed that benchmarking tend to be time-consuming and
costly process, if not implementing properly.
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