Benchmarking involves comparing a business operations and performance ranking of a company or industry with top performers from other industries. Factors weighed include quality, time, and value. After benchmarking a company or the industry players need to improve from learning by doing things effectively and efficiently.
My industry is the investment and banking sector. Over the years the investment and banking sector has been hit hard by many challenges which have threatened to tear the industry, even to an extent leading to the winding up of some of the industry players. The most recent scandals were pyramid schemes and scrupulous deals that have seen consumers loose their lifetime investments.
Also banks have been hit by the global economic downturn which saw the closure of several banking halls. This has seen lose of consumer confidence in the industry. Many customers are trading cautiously in, scared of succumbing to any scandals.
The industry needs put in place measures that regulate the investment companies or associations to avoid arise of any loopholes in the industry which could expose investors to any kind of threat of their funds. The industry should improve the customers’ confidence by offering secured means of investing and guaranteeing adequate returns (McNair, Kathleen & Leibfried, 2004)
The industry is vulnerable to changes in the market and needs to insulate itself from rapid changes occurring in the market, to ensure that their operations are not interrupted by changes in the market. For example, the global economic downturn saw the industry players affected adversely leading to negative effects in the market.
Comparing the investment and banking industry with manufacturing industry, the manufacturing industry seems more dynamic and can absorb shock in the market easily.
The management team in the banking sector should to identify the top companies or industries, where they undertake related processes, and compare the results of those targeted to its own performance to study how well the others fair and how they attain that (Damelio 1995).
For a company to appreciate the effectiveness and ineffectiveness of a particular benchmark in use, it has to look at how the practitioners of benchmarking have achieved their goals, the costs incurred or saved by the practice and the organizations insight of the process.
Through benchmarking an organization can increase significantly on its supply-chain efficiency. Therefore organizations that use the benchmark techniques in their supply chains by comparing its performance against that of its competitors have typically reduced their expenses by 81 percent. Thus those who use applicable bench marks have spent less on logistics of doing business than the median.
In addition, applicable benchmarking has provided an upper advantage to companies in the market place. Also bench marking has resulted in an organization taking up other practices that result in improvement of operations such as use of, TQM, tactical planning and reengineering of their products (Pike, & Neale, 2006).
However there are adverse effects that may result in a company while it is benchmarking. If bench marking is poorly introduced and executed in an organization, it can result in waste of the organization’s financial and economic resources which would negatively affect its profitability at the end of the period. Therefore, though a company may introduce benchmarking in its operations it may result in negative results if not implemented in the right way making them very ineffective and costly on organization (CAMP 2006).
Reference list
Camp, R.C. (2006). Benchmarking: The Search for Industry Best Practices That Lead to Superior Performance. MA: Productivity Press.
McNair, C. J., Kathleen, H. & Leibfried, H. (2004). Benchmarking: A Tool for Continuous Improvement. New York: John Wiley & Sons.
Damelio, R. (1995). The Basics of Benchmarking. MA: Productivity Press.
Pike, R. & Neale, B. 2006. Corporate finance and investment: decisions & strategies. New York: Financial Times Prentice Hall.