Most organisations exist in an environment with high levels of uncertainty, risk and complexity. The market is becoming increasingly globalised with increased international competition. Customers are becoming much more demanding of their suppliers.
In this environment, only about 20% of the top 100 US corporations in the 1970s were in the same business twenty years later. For example, despite massive efforts to catch the Japanese car manufacturers, the US car companies are still behind the Japanese competition.
If we consider the company’s value chain and the different processes that constitute primary and secondary activities. Every stage of the value chain should be examined to assess its importance.
There are four questions to pose for each benchmarking activity:
- Are we performing better than ever?
- Are we performing better than other units in the company?
- Are we performing better than our competitors?
- Are there other industries that are performing well and from whom we can learn?
The value chain considers “hard issues” such as cost, quality and profitability. Benchmarking can also consider softer management issues such as communication, motivation and commitment.
TNT Express have stated that benchmarking leads to better performance by:
- Gaining a fuller understanding of the processes and costs involved.
- Understanding the company’s position in the market.
- Leading to a cost-effective operation.
- Having a highly motivated and well-organised workforce committed to improved and improving standards.
Other organisations see benchmarking in a broader light as part of a process for change and concerning changing behaviour to achieve the desired results.