In modern business environment, benchmarking and best practices help companies to analyze and examine competitive moves and create unique pratices in order to compete on the market. Competitive benchmarking is a technique of gathering information about competitive practice. The primary objective of applying benchmarking techniques is to supply management with the practices that deliver customer value.
The increased competitive pressures created by global markets have led to a number of new analytic techniques. Modern corporation have use benchmarking technique to compare various aspects of its products, services, and processes against various referents. Benchmarking was integrated into Xerox’s Leadership Through Quality Strategy. Benchmarking became internalized as an analytic technique used at all levels of the organization (Baron and Kreps 270).
Benchmarking can be viewed as either a reactive tool (i.e., problem fixing) or a proactive process for system improvement. The proactive use of benchmarking should be tied to corporate strategies for creating superior customer value. Benchmarking is valuable in that the process forces managers to look externally at what customers value and how other practices meet those needs. Then, an internal examination of processes becomes much more valuable to management in that some comparative data exist. The practice of competitive benchmarking fits with the primary themes of this book:
- creating value for customers and
- continuously improving the systems that create and deliver value to customers.
With an emphasis on satisfying customer requirements, competitive benchmarking orients all employees toward reducing sacrifice and increasing realize benefits that customers derive from the products and services. Note that the breakthrough is shown to be the result of strategic policies and aims. For instance, the main attribute that customers may identify as a critical enabler of satisfaction is accurate and timely invoices (Baron and Kreps 284).
Best practices allow companies to deliver the particular desired outcome and introduce changes. The nature and focus of the best practices process ensures that the means of creating and delivering value to the customer are improved. Thus, the first theme, customer value, is integrated with the second theme, continuous improvement of systems, which are the means of satisfying customer requirements. One major point of difference in the figure is that benchmarking focuses on “practices” that satisfy customer needs.
While market research focuses on identification and competitive analysis is usually employed at the strategic level, best practices is unique contribution is in examining “how” things are done to satisfy needs. As such, best practices provide a better awareness of what Xerox is doing, how the company is doing it, and how well Xerox is doing it. Similarly, this technique provides an awareness of what, how, and how well competition and/or the best are doing. By best practices the methods, rather than simply financial outcomes or other end result measures, managers learn more about how to achieve competitiveness in satisfying customer requirements through best practices (Baron and Kreps 454).
Best practices the methods directly translates into action implications for improving systems, and lends guidance to how to improve, what to change, and what new systems or alternative practices might be put in place. Best practices process offers a rational way to set performance goals — goals that help firms gain market leadership. Best practices also provide a logical and equitable change approach. Unique environment can be used to introduce strategic perspectives of what is required to obtain market leadership. The benchmark gap shows the degree of required productivity improvement to bring about competitive parity.
Baron, J., Kreps, K. Strategic Human Resources; Frameworks for General Managers. Wiley; 1 edition, 1999.