Can You Explain Benchmarking?

Another way that managers can improve quality is through benchmarking, the process of comparing an organization's processes and products to the standards of the world's best and then working to match or exceed those standards. Managers who apply quality benchmarks seek out and emulate the best anywhere in the world, not just in their own industry or their own country, so that they can gain competitive superiority, not just competitive parity. This means rating the manufacturing process, product development, distribution, and other key functions against those of acknowledged leaders; analyzing how these role models achieve their outstanding results; and then applying that knowledge to make quality improvements.

Among the world-class organizations frequently cited as benchmarks are Toyota, IBM, and Hewlett-Packard for production; L.L. Bean and Federal Express for distribution; American Express and Nordstrom for customer service; and Xerox for benchmarking programs themselves.

By going outside their own industry for key benchmarks, organizations can often identify and emulate quality practices that far exceed those of competitors. For example, when GTE's customers complained that the firm's telephone-service billing system was confusing, GTE managers used benchmarks to identify the performance leader in billing, American Express. As a result, the company developed a billing system so superior that competitors are paying GTE to help them with similar installations.

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