Integrated Benchmarking Performance Measures

Article excerpt

EXECUTIVE SUMMARY

The focus of this article is to show how a thorough understanding of organizational strategy and deployment of the strategy into consistent functional strategies is critical for improving the effectiveness of a benchmarking process. The article examines the impact of managerial positions and organizational sizes on utilization of strategic and operational benchmarking performance measures. Statistical results indicate evidence of misalignment between organizational mission and goals, competitive priorities, and manufacturing performance objectives. Evidence of miscommunicatian among managers at various levels, lack of proactive strategy to develop organizational core competencies, and inconsistent decisions with respect to managerial positions and organizational sizes is also the result of the article. Successful resolution of such inconsistencies is crucial before committing resources to benchmarking activities.

Key words: Integrated, Benchmarking, performance Measures.

INTRODUCTION

Benchmarking can be defined as a process where an organization tries to learn from the best-inclass organizations, determines how the best-in-class achieve those performances, and utilizes the best practices to their own organization (Watson, 1992, 1993; Camp, 1989; and Whiting, 1991). During the last two decades, world-class organizations have utilized benchmarking to improve aspects of their competitive advantages such as cost, quality, delivery, and customer service. Bogan and English (1994) stated benchmarking as a flexible tool that can be used for gradual continuous improvement, as well as for major changes of process reengineering. Benchmarking is an effective means for learning and change because it exposes employees to new approaches, systems, and procedures (Welch, 1993; Kuebler, 1993). Deming (1982) and a number of other quality advocates (Graham, 1993; Ishikawa, 1985; Venetucci, 1992) have strongly recommended the use of benchmarking as an essential component of continuous improvement.

The use benchmarking as an effective quality improvement tool was started by Xerox in the early 1980's to overcome severe international competition. Also, since 1987, benchmarking has been a major component of the Malcolm Baldrige National Quality Award criteria. According to Began and English (1994), since 1987 out of a total of 1000 Baldrige points benchmarking have consistently influenced more than 500 points. No other quality elements such as process management, employee involvement, and quality planning, have had such a broad influence on the Baldrige criteria than benchmarking. More recently, the practice of benchmarking is being widely used for six sigma process and for organizations seeking ISO 9000 certification.

LITERATURE REVIEW

Since the early 1980's, application of banchmarking in various areas of businesses ranging from manufacturing to health care, marketing, supply chain, human resources, and accounting have been widely reported. Harrison (1999) presents a detailed analysis of the evolution of different aspects of benchmarking activities. A comparison of the Xerox and Kodak benchmarking process has been reported by Bogan and English (1994). Although the two benchmarking methods utilize different number of steps, their overall logic is quite similar. Zairi and Whymark (2000) report successful results of the application of benchmarking at British Royal mail. Applications of benchmarking to world-class purchasing and to U.S. service sectors have been reported respectively by Newman, Hanna, and Duffett (1995) and Roth et al. (1997). The use of benchmarking as an effective organizational learning tool has bean presented by Sange (1990), Garvin (1993), Ford and Evans (2001), Smith (1997), Hambly (1997), Watson (2001), Chan and Paetsch (1995), O'Dell and Grayson (2000), and Evans and Dean (2003). A comprehensive list of legal and ethical issues of benchmarking is presented by Brue and Greg (2002), Vaziri (1992), and Bogan and English (1994). …