Service and manufacturing firms often evaluate their performance in relation to the performance of industry competitors. The term "benchmarking" is often used to describe this process of comparing practices or strategies to other companies. The benchmarking process sometimes helps a firm find documented strategies and tactics employed by highly admired companies. Such practices are often referred to as "best practices."

According to the consulting firm Best Practices LLC, companies exhibiting a best practice may not be best-in-class in every area. But due to industry forces or the firm's goal of excellence, practices have been implemented and developed that have brought the firm recognition in a certain area. Typically the best practices result in a higher profit for the firm, and these more competitive business practices ensure a firm's survival or limit entry by new competitors.


Some firms are so well known for best practices in certain areas that it is not necessary to consult books, magazines, libraries, or the Internet to find the information. For example, Federal Express is often cited as having best practices among competitors in the expedited small package industry for their on-time delivery and package tracking services. Microsoft, the computer software developer, is cited as being innovative and creative, while the L.L. Bean outdoor products and clothing company is frequently lauded for their customer service practices and return policy guarantees.

When a firm is benchmarking to learn about the best practices of others, often these superior methods are found in companies outside the firm's key industry segment. Thus it is important to research and observe companies in a wide variety of settings, countries, industries, and even in the not-for-profit arena to learn better ways to continuously improve.

Information on best practices and innovative technologies can also be found on the Best Manufacturing Practices (BMP) web site. This site has as its goal to increase the quality, reliability, and maintainability of goods produced by American firms. One way BMP accomplishes this goal is to identify best practices, document them, and share the information across industry segments. They believe that by sharing best practices, they allow companies to learn from others'attempts and to avoid costly and time-consuming duplication of efforts. Companies profiled have submitted abstracts of what their organization does well and they include previous practices, changes to new processes, and information on implementation as well as quantitative details and lessons learned.


Other ways to identify best practices include observing businesses as a consumer or a mystery shopper. It is also possible to identify best practices by examining professional journals and business periodicals. Companies that win various awards often exhibit best practices to emulate. The Malcolm Baldrige National Quality Award winners are a good group of companies to benchmark for best practices. They have met the rigorous award criteria and have had success that allowed them to win this prestigious award. The Malcolm Baldrige National Quality Award is given to U.S. organizations that have shown achievements and improvements in seven areas: leadership, strategic planning, customer and market focus, information and analysis, human resource focus, process management, and business results.

Winners of this national quality award have documented practices in the areas of quality and productivity as well as increased profits. The award highlights best practices by recognizing the achievements of those companies that improve the quality of their goods and services. Whether companies apply for the award or not, the criteria can be used by business, industrial, governmental, and other organizations in evaluating their own quality improvement efforts.

Industry Week , a publication aimed at manufacturers, has since 1990 set out to find and share stories of America's best plants. They later extended their coverage to include Europe's best plants. They have set out to define the best practices of world-class competition and highlight quality approaches, lean manufacturing, and employee empowerment. The publication stresses the fact that these practices can be implemented in a wide range of industries to improve competitiveness and productivity.

Learning about the best practices of others is a valuable way for firms to gather fresh insights into possible methods of improving a myriad of aspects of their operations. It should be an important part of an organization's strategic planning activities.


Panchak, Patricia. "The Never-Ending Search for Excellence." Industry Week. October 16, 2000.

Patton, Susannah. "By the Numbers." CIO. October 1, 2000.

SEE ALSO: Benchmarking

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