The Pros and Cons of Benchmarking Essay

1884 Words 8 Pages
According to Keith Sisson, the practice of Benchmarking or “continuous improvement” was first introduced in the 1950’s by Toyota. Benchmarking is the process used by organizations to improve specific processes within the organization. Benchmarking focuses on obtaining the “best practice” for the company and not measuring based on the maximum performance. Benchmarking is done by obtaining information from one organization and improving that information to be used in another organization within the same market. The two primary types of benchmarking are Internal and External. Internal benchmarking compares practices and performance between teams, individuals or groups within the organization. External benchmarking compares the organizational …show more content…
By looking at the warehouse performance, the strategies and tactics used at this location can be used at the other locations in order to improve the other warehouse performance. Another effective means of improving performance is by asking the employees which process to improve and taking those ideas and turning them into projects. By asking employees, the company will save time and money trying to research and find any issues on their own. As previously mentioned, a major advantage of internal benchmarking is the effortlessness transition and the reduced requirement of both time and resources. The disadvantage of internal benchmarking is that the focus is only on one company, neglecting the advances done by its competitors. In order for a business to continuously make a profit, it requires them to stay at the forefront of its competition. Internal Benchmarking does not compare the standards between businesses as a result the company does not know where they stand when it comes to its competitors. External benchmarks provide the additional benefit of comparing against competitors. Without external benchmarks, an organization and its managers may perhaps lack an understanding of what “good” performance consists of. Management theory and practice have long established a link between effective performance measures and effective management (Drucker, 1995).
Companies have the option to different types of Benchmark other than Internal and External depending on the goal they

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