Benchmarking in the Internet era

Citation

Gunasekaran, A. (2004), "Benchmarking in the Internet era", Benchmarking: An International Journal, Vol. 11 No. 5. https://doi.org/10.1108/bij.2004.13111eaa.001

Benchmarking in the Internet era

Benchmarking in the Internet era

We now have a different market environment than we had about ten years ago. The current market can be characterized by global economy, Internet-marketing, and strong competition. This requires organizations to operate with different vigour and approach than operating organizations 10-15 years ago. Considering the global market, operations and competitiveness, companies around the world are in a race for achieving competitive advantage by improving productivity and quality. It requires organizations (such as manufacturing, service and non-profit) to develop suitable strategies for not only surviving in the competitive global market but also to prosper. In this process, both manufacturing and service organizations seek new ideas and technologies. This can be achieved by benchmarking exercises to facilitate companies to select suitable best practices for improving productivity and quality (Miller, 1992; Mittelstadt, 1992).

Organizations have undergone numerous changes in operations in order to meet the changing technology and market requirements. Different organizations have used various strategies and technologies for competing in a global market. These include strategies such as supply chain management, lean production and agile manufacturing and technologies such as the Internet, electronic data interchange, automatic guided vehicle systems, robots, etc. Now the real challenge for companies is to identify the best practices through benchmarking in these areas. Before the Internet revolution, exchanging information on best practices occurred through in-person meetings, telephone, fax and regular mails. Nowadays, we have open platform communication systems such as the Internet and WWW which facilitate easy and more accurate information exchange in a timely manner. Also, information is available through the Internet and WWW on various organizations' successful strategies, methods and technologies. From this perspective, we would like to highlight various methodologies of benchmarking and also the implications of the Internet and WWW on benchmarking processes and practices.

In a dynamic global market, companies need to be responsive and make quick decisions. Benchmarking helps identify the best practices in a particular field. It is a continuous and systematic process for evaluating the products, services, and work processes of organizations that are recognized as representing the best practices for the purpose of organizational improvement (Spendolini, 1991). The following are the approaches for benchmarking:

1. 1.

   industry group measurements;

2. 2.

   best practice studies;

3. 3.

   cooperative benchmarking; and

4. 4.

   competitive benchmarking.

Depending upon a company's business goals, strategies and industry characteristics, suitable benchmarking methods can be selected (Brueck et al., 2003). Benchmarking emphasizes the effort to identify practices and performance that are outstanding, and then transfers those through adaptation and learning into another organization (Brueck et al., 2003; Ettore, 1994; Harrington, 1996).

In another classification, benchmarking methods have been classified into three categories that include metric benchmarking, process benchmarking, and practice benchmarking (Brueck et al., 2003). Metric type benchmarking is a quantitative comparative assessment that enables firms to track internal performance over time and to compare this performance against their past performance baseline to that of similar firms. Process benchmarking involves first identifying specific work procedures to be improved through a step-by-step “process mapping” and then locating external examples of excellence process elements for standard setting and possible emulation. Practice benchmarking focuses on gathering profiles of practices and correlative metrics. Business practice benchmarking is the process of seeking out and studying the best business practices that produce superior performance. Consortium benchmarking is very popular nowadays and that too it is facilitated by WWW. This includes secondary research, plan, collect, analyze, report, pilot and adapt (Ettore, 1994; Harrington, 1996; McNamee, 2000; Miller, 1992; Mittelstadt, 1992).

In this editorial, we will discuss how the Internet and WWW can be used for this benchmarking methodology based on the above three benchmarking approaches. However, online benchmarking may not always replace conventional project-based benchmarking. But it will be a necessary element of “virtual organizations”, particularly in the information world (Zairi, 2000).

Metric benchmarking

Internet and WWW can be used to gather information about the kind of measures and metrics that should be employed in a particular company/industry. Measures and metrics are important from the perspective of measuring the performance in different areas and compare them with that of the best-in-class to identify suitable best practices. Numerous portals are available on the Internet for benchmarking consortiums. These could be used to collect information on measures and metrics. Becoming a member of these consortiums provides an opportunity to get acquainted with other best practice companies. Empirical analysis would be useful for identifying the best practices. Many publishing companies publish online journals, magazines and trade journals that could be used for collecting information on performance measures and metrics in different areas.

Process benchmarking

Internet and WWW will be a helpful platform for gathering useful information by putting up a questionnaire on the process benchmarking by a particular company or industry. Feedback on process mapping and elements of best practices which can be exchanged between companies in the same industry using the Internet and WWW. Moreover, trade and academic journals publish articles from time to time on process benchmarking in a particular industry.

Practice benchmarking

Companies publish successful strategies, techniques and technologies about their productivity and quality. Companies' Web sites can be used for publicizing the information on any change process towards improving productivity and quality. Industrial surveys on benchmarking the best practices can be conducted with online surveys. This will facilitate data collection and analysis. Moreover, consortium is one of the best platforms for practice benchmarking. For practice benchmarking, conventional methods, such as visiting best practice organizations, joint venture, strategic alliance and partnership with best-in-class companies and case studies are used.

More interactive Web-based data collection and analysis facilitates the effective benchmarking exercise in all those three areas. IT can be used to develop a benchmarking tool that provides an alternative and paperless technique to collect data rather than by external observations or interview-based data acquisition techniques. IT-enabled benchmarking systems should provide immediate and accurate feedback as they directly involve participants in the data collection process and ensure the quality and acceptance of study results. IT-integrated benchmarking tools will enable quick, easy, and accurate measurement of the process that are key to business success and offer a cost-effective, objective, and paperless system for data collection and analysis (Gunasekaran, 2001).

The next question is what to benchmark? Although benchmarking is done in almost all areas, the questions about what to measure and where to focus are yet to be fully resolved, particularly in the 21st century global market and operations. IT plays a major role in improving organizational productivity and in turn the competitiveness. Considering the importance of supply chain management and globalization, the following areas require further attention for benchmarking exercise:

• •

  benchmarking supply chain design, development and function;

• •

  benchmarking information technology productivity and effectiveness;

• •

  benchmarking knowledge management;

• •

  benchmarking performance measures and metrics;

• •

  benchmarking e-commerce implications and performance;

• •

  benchmarking logistics; and

• •

  competitive benchmarking

Application of IT in benchmarking has changed the overall perception of benchmarking exercise. Earlier it was considered that certain information is not possible to obtain, now that can be obtained easily using the Internet and WWW. This paradigm shift in communication has provided a new dimension to benchmarking exercise. Data mining and warehousing become essential when a large volume of information is available. Suitable algorithms and search engines need to be developed to filter the required and useful information to save time and to be more effective in the overall benchmarking exercise in a company or industry. Organizations should first identify critical areas which clearly contribute to the competitiveness and then suitable metrics for the rest of the benchmarking exercise such as plan, research, observe, analyze, implement and improve. The benchmarking exercise team should understand the critical processes and how they are measured. Then the team should decide what kind of data are needed and how it will be collected.

Based on the above overview of benchmarking and its methodologies, we can conclude that there is a need to identify critical areas of benchmarking and devise suitable methodologies for benchmarking exercises in the Internet era. Confidentiality of the information is important while having open access to best practices. Benchmarking researchers now face the challenge of addressing these issues in this century.

The editors of BIJ welcome articles and special issue proposals covering the benchmarking methodologies and implications of the Internet on them.

A. Gunasekaran