Benchmarking

The daily life of a company is a globalized and competitive environment, leading to a continue dependence of information about the development of new methods of organization that enable companies to absorb and adapt quickly to technological and strategic changes that are taking place on the market and the global economy.

In this environment, firms need to overcome their critical points and achieve a position ahead the competition. The problem that arises is the way to locate effectively failures on the company managing, and be able to create new solutions, seeking the best way to optimize the resources that are available.

This essay will explore the definition of Benchmarking from different reference points, as well as some ways this tool can be classified and a couple of successful Benchmarking case studies developed in Peru and China. Finally, the essay will be finished with a conclusion.

There are many definitions of the word benchmarking like the one provided by David Kearns, a Xerox´s CEO who describes this tool as "the continuous process of measuring products, services and business practices against the toughest competitors or those companies recognized as industry leaders." Camp (1989, p.250)

Bramham (1997,pp.10-13) defines Benchmarking as a “systematic process of comparing your business with others, or a part of your own with one another to test how you stand and to see whether change is needed.”

Chandra, S. (2010, pp.882-885) states that this tool “is a comparative method where a firm finds the best practices in an area and then attempts to bring its own performance in that area in line with the best practice.”

There are several definitions of benchmarking; most of them argue it is a continuous process and not a silver bullet that solves problems within the organization. It is a process that must be applied more than once, due to it pursues a constant search for the best industry practices and all sectors are in constant change, and adaptation involves developing new practices, so it can not be accurately ensure that the best techniques developed today, would be also successful in the future.

In addition, it is important to consider that Burke (2010) has divided Benchmarking into four different categories which are internal, competitive, functional and generic. It is known that many types of benchmarking have been emerging over time and according to McNair (1992), Benchmarking projects can be also classified in many different ways; in first place, by the subject matter of the analysis, by the type of participants, defining the mission statement, or by methodology. Secondly, the complexity of the benchmarked system Walter (2010), also it can be divided by the company’s current process performance gaps. For instance, the German automobile company, BMW states that its mission in to be the world´s largest provider of products of high quality and excellent services for individual mobility. DeLayne (2012).

As indicated by Greene (1993,p.114) "To understand how Benchmarking has became so popular and how it gained wide acceptance among international companies, it is important to become familiar with the history of strategic planning as a discipline and the tools developed for managers to discuss strategic issues. "

What might be thought as the time span during which strategic planning began his "great expansion and popularity" Boxwell (1995,p.145), located in the sixties, reaching its peak in the seventies. Also Camp (1989, p.180), said that through strategic planning seeks to predict the future, for which "requires an extensive knowledge of the market, the likely competitive activities, the latest in products and services, financial requirements for trading in the market and customer base, among other factors”.

On the other hand, strategic planning involves high level analytical tools useful for macro level decisions on major strategic issues that often tend to take big business. Moreover Benchmarking should be "directed only to the strategy and worry about some execution" McMillan (2011).

However, there are other people that consider Benchmarking not useful at all. Leinwand & Mainardi (2011, p.18) declare that “too many companies use benchmarking as a crutch and rely on it as a competitive guide and a stand-in for real strategy, the way benchmarking is practiced at most companies provides no insight into what they need to do to actually break away from the pack."

Public Management

Among the ideas of reform and modernization, as a way of action to achieve a state with capacity development in design and effective implementation of public policies and the active participation of civil society, it have been used some techniques provided by private management.

On the one hand, Watson (1993) considers that the need for social change and modernization is growing every day, so public management should possess increasingly, innovation capacity and entrepreneurial spirit that exists in private management.

As Owen (2003) said, “management is the activity of managing resources to achieve a particular purpose, and in a very generic can be established that the distinction between public and private management is level of ends, in the sense that, for the purpose of public management is the common good and private management is the increasing wealth of their owners.”

Public management deals with the use of appropriate ways to achieve a collective purpose. It is about decision mechanisms for the allocation and distribution of public resources and the coordination and encouragement of public officials to achieve collective goals Camp (1989).

For all the authors above, it is considered that public administration would be related to the way of achieving the greatest social benefit involving the least possible economic cost through proper rationalization of available resources, unless this practice is highly difficult to achieve, the contributions ensure optimum management of public organizations.

Benchmarking in the Public Sector

Although the first experiences of Benchmarking were perceived in the private sector, it have not been rejected it application in the public sector. Moreover, this tool has become increasingly more noticeable between those that have power and the ones that develop public functions, in order to find suitable mechanisms concern aimed at the modernization of the state and structure in order to achieve a more efficient and effective sector. At the same time, it is important to satisfy the requirements of its target who are only members that make up civil society.

For instance, in Peru, in the water sector particularly, companies and governments were managing a bad performance,

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