Benchmarking Frameworks

A substantial number of benchmarking models developed by academicians, practitioners and independent organizations can be found in the literature (Anand &

Sophis tic a ti on First Generation Reverse Benchmarking Second Generation Competitive Benchmarking Third Generation Process Benchmarking Fourth Generation Strategic Fifth Generation Global Benchmarking Network Benchmarking Sixth Generation Competence Benchmarking or Bench-learning

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Kodali, 2008; Zairi & Ahmed, 1999; Zairi & Al-Mashari, 2005). Zairi and Ahmed (1999) reported that the literature on benchmarking has reached its maturity and criticized that most, if not all, of the benchmarking methodologies preach the same basic rules. Anand and Kodali (2008) identified 60 benchmarking models and classified them into: academic-based models, consultant-based models, and organization-based models. For understanding purposes, the categorization of benchmarking methods given by Stapenhurt (2009) is helpful. Stapenhurst (2009) organized existing benchmarking methods into seven categories: public domain, one-to-one, review, database, trials, survey, and business excellence models. However, one-to-one benchmarking frameworks and business excellence (BE) models are prevalent in literature.

One-to-one benchmarking is performed between two organizations considering one of them as a benchmark. This type of benchmarking is performed by a benchmarking team from the organization being benchmarked. The benchmark organization shares information voluntarily. The Xerox benchmarking methodology developed by Robert Camp (1989) is a well know example of one-to-one benchmarking. On the other hand, BE models refer to a set of standard criteria for comparing performance of organizations by scoring each one against the standard. The subsequent section expands on these two categories of benchmarking.

The literature on benchmarking methods is full of one-to-one methodologies developed by researchers in the past. The commonly used frameworks developed by academicians, practitioners, and individual organizations are presented in table 3.1. Majority of the benchmarking methods are developed and used by practitioners. However, balanced scorecard and SCOR model have been used and validated by academic research as well. Stewart (1995) reported Pittiglio, Rabin, Todd and McGrath (PRTM) as a comprehensive set of performance measures which describes a world-class supply chain of planning, sourcing, making, and delivering activities. The PRTMs’ concept of benchmarking supply chains extends to the supply chain operations reference (SCOR) model (Stewart, 1997).

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Table 3.1 Benchmarking Frameworks

Benchmarking Frameworks Remarks

Xerox benchmarking methodology by Robert Camp (1989).

A ten-step process organized into five phases: planning, analysis, integration, action, and maturity.

Balanced Scorecard by Kaplan and

Norton (1992) A performance measurement framework that complements financial indicators with performance measures for customers, internal business processes, and innovation and improvement activities.

Spendolini’s five-step benchmarking

process (1992). These steps are: determine what to benchmark; form a benchmarking team; identify benchmark partner; collect and analyze benchmarking data; and take action.

Codling’s twelve-step benchmarking

process (1992). Twelve steps are categorized into four operational stages: planning, analysis, action, and review and recycle. Business Performance Improvement

Resource (2012). The BPIR improvement cycle is a nine-step benchmarking process. TRADE methodology by Center for

Organizational excellence Research (2012)

Ten step TRADE methodology stands for: Terms of Reference, Research, Act, Deploy, and Evaluate. Supply Chain Operations Reference

(SCOR) model version 10 by Supply Chain Council (2012)

A cross-industry reference model structured around five processes: Plan, Source, Make, Deliver, and Return and four levels of process detail.

Gilmour (1998) developed a framework comprising of 11 capabilities in order to benchmark supply chain operations. Simatupang and Sridharan (2004) acknowledged SCOR model as the most suitable for benchmarking purposes due to its comprehensiveness and standard process and metrics definitions which enable companies to evaluate and improve performance at individual as well as entire supply chain levels. Moreover, the model has been used by a number of researchers for benchmarking at supply chain level (Eryuruk et al., 2014; Jolly-Desodt et al., 2006; Reiner & Hofmann, 2006).

Business excellence models are fundamentally diagnostic in nature and focus on identifying, developing, and promoting best practices leading to superior performance at organization level. The key performance indicators used by BE models focus individual firms and not the network of businesses such as supply chains which ultimately leads to local optimization. The conflict of local versus global optimization provides the basis for performance measurement in supply chain management. Moreover, BE models are poor in replication best practices having potential for incomplete or inaccurate analysis

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leading to dubious conclusions for individual organizations (Stapenhurst, 2009). Renowned BE models are given in table 3.2.

Table 3.2 Business Excellence Models

Business Excellence Models Administered By

Global Benchmarking Network Informationszentrum Benchmarking (IZB) Germany

Process Classification Framework American Productivity and Quality Center, USA Baldrige Criteria for Performance Excellence National Institute of Standards and Technology,

USA European Foundation for Quality Management

(EFQM) Excellence Model

European Foundation for Quality Management, Europe

Singapore Quality Award (SQA) Framework SPRING Singapore, Singapore Canadian Framework for Business Excellence National Quality Institute, Canada Australian Business Excellence Framework Australian Quality Council, Australia

Source: (BPIR, 2014)

According to Andersen et al. (1999) the core interpretation of almost all of the benchmarking processes found in literature is a four step process: measuring ones’ own and the benchmarking partners’ performance; comparing performance levels, processes, practices etc.; learning from the benchmarking partners’ best practices; and improving ones’ own organization.