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According to Xerox Corporation, the company that pioneered this concept in the United
States, benchmarking is “the continual process of measuring products, services, and
practices against the toughest competitors or those companies recognized as industry
leaders.”
Benchmarking, an increasingly popular program, is based on the concept that it makes
no sense to reinvent something that someone else is already using. It involves openly
learning how others do something better than one’s own company so that the company
not only can imitate but perhaps even improve on its current techniques. The
benchmarking process usually involves the following steps:
1. Identify the area or process to be examined. It should be an activity that has the
potential to determine a business unit’s competitive advantage.
2. Find behavioral and output measures of the area or process and obtain
measurements.
3. Select an accessible set of competitors and best-in-class companies against
which to benchmark. These may very often be companies that are in completely
different industries but perform similar activities. For example, when Xerox
wanted to improve its order fulfillment, it went to L.L.Bean, the successful mail-
order firm, to learn how it achieved excellence in this area.
4. Calculate the differences among the company’s performance measurements and
those of the best-in-class companies and determine why the differences exist.
5. Develop tactical programs for closing performance gaps.
6. Implement the programs and then compare the resulting new measurements with those of the best-in-class companies.
Titany answered the question on October 19, 2021 at 13:46
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