Benchmarking dates back to the 1980s, when companies looked for the best practice in the industry in order to overtake their competitors. In the early stage, most companies relied only on competitive analysis and quantitative comparison to gain competitive advantage. However, there are two differences between benchmarking and competitive analysis in nature. First, benchmarking analyzes companies' products or services as well as the process of how companies design, produce and sell their products and services. Second, when a company is searching for a benchmark, it does not limit its search to just include its our competitors, but extends the search to companies outside the industry, abroad and even the whole world.
The term benchmark was first used in geographical surveying, which means a predetermined reference point when a relative distance is to be measured. In a Quality Improvement dictionary, benchmark indicates the best-in-class achievement. Corporations with the same operation processes will follow this achievement as a model.
In 1985, the American Productivity & Quality Center (APQC) defined benchmarking as; the process of continuously comparing and measuring an organization against business leaders anywhere in the world to gain information that will help an organization to improve its performance"
According to the definition of Kulmala (1999), benchmarking refers "basically to the process of evaluating and applying best practices that provides possibilities to improve the quality." Meanwhile, Bhutta and Huq (1999) contend that benchmarking is "first and foremost a tool for improvement, achieved through comparison with other organization recognized as the best within the area." Ahmed and Rafig (1998), on the other hand, argue that "the central essence of benchmarking is the learning how to improve activities, process and management."
In 1991, Spendolini chose 57 companies to learn their benchmarking processes. He interviewed companies with satisfying accomplishment in benchmarking to understand how they defined benchmarking and how they process benchmarking. Integrating 49 definitions of benchmarking, Spendolini came up with an itemized chart for defining benchmarking as the graph below.
Summing up the abovementioned definitions of benchmarking, our team believes that benchmarking is an on going learning process. Through evaluating and adopting the best practices of other companies, a company can enhance its performance on quality, process and management.
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