TYPES OF BENCHMARKING 1.

INTERNAL BENCHMARKING Internal benchmarking will involves benchmarking between business units within the same company. It is being limited within the boundaries of a single organization. In many large organizations there are departments and business units performing similar activities that need to be compared and analysis. When best practices are being identified, each department or location is encouraged to adapt them to its own environment and bring its performance up to the level of the internal benchmark, thereby raising the performance of the organization as a whole. This is the simplest form of benchmarking, as access to benchmarking partners and the flow of information in an organization is easily to gain. However, it may not provide the worlds best benchmarks, as companies outside the business group, including competitors, may be better performers. 2. COMPETITIVE BENCHMARKING This type of benchmarking will involves a company identifying the strength and weaknesses of competitors in order to assist them to priorities areas for improvement. The management will shift their focus to compare the performance of an organization with other competitors in the same industry. The objective is to catch up or surpass the competitors performance, using continuous improvement processes. However, it may be difficult to arrange with direct competitors, so companies may rely on other external sources for data. For example, they may compare with the competitors regarding their ability to manufacture and deliver product to customer within three days of customer order. 3. INDUSTRY BENCHMARKING Industry benchmarking involves comparing performance against companies that have similar interests and technologies. As there may be technological processes that are common to the business and the benchmarking partners, performance measures and practices are directly comparable even if the companies are in different industries. For example, a retail bank may gather benchmarking data on the new forms of automation used in the financial services industry, and the various processes used to manage customers within the branches. Direct access to companies may be possible if those companies operate in the same type of business but compete in different markets. As industries become more globalised and directly compete in the same markets, opportunities of this nature diminish. 4. BEST-IN-CLASS OR PROCESS BENCHMARKING The last type of benchmarking is involving benchmarking against the best practices that occur in any industry. It is used in identifying and learning and learning from the best practices in other organizations using similar processes but achieving superior performance. This requires firstly a thorough understanding of an organizations current process and its performance, and secondly an ability to identify the enablers to outstanding performance in the benchmark process. It requires the most effort and resources than in other types of benchmarking but it will enables potentially much greater improvement in performance. The difficulty of this approach is that some characteristics of best practice company may not be common to other companies such as for deliveries time for company that have smaller amount of customer may have efficiently manage their customer.

Therefore, managers will usually do normalization to make them directly comparable by removing the effects of factors outside the control of the organization, so that narrowing the performance gap is achievable.