1.0 Introduction

Benchmarking in a dictionary meaning refers as a point of reference from which measurements may be made or something that serves as a standard. Several definitions were evolved to define benchmarking and the most often quoted definition is the one by Xerox Corporation: Benchmarking is the continuous process of measuring products, services and practices against the competitors or those companies recognized as industry leaders (Fitz-enz, 1993 p.23). Camp, the first author of a book on benchmarking, regards benchmarking as an investigative process to search for industry best practices that lead to superior performances (Camp, 1989). Various models of benchmarking were compared with the focus on benchmarking, namely, the types of benchmarking. The following are the main types of benchmarking:

Benchmarking Types:


a.    Industry Group Measurements: Measurements of various facets of operation and comparing them with similar measurements.

b.    Result Benchmarking: Inter-firm comparison of quantitative data.

c.    Product Benchmarking: Customer perception of goods and services of a company is compared with that of the competitors in the market place.

d.    Process Benchmarking: Benchmarking discrete process against organizations that are considered leaders in those processes.

e.    Competitive Benchmarking: The study and measurement of a competitor without their cooperation.

f.     Cooperative Benchmarking: Is done with the assistance of the entity being studied the benchmarking partner.

g.    Benchmarking Centre: It operates like a Exchange wherein the Centre pools relevant information on industry-wise key result areas of members.

h.    Best Practice Study: These studies can be useful stimulators.

i.     Business process Benchmarking: Study the best one followed either in the same or in other industries.

j.     Internal Benchmarking: Benchmarking against internal operations-the performance of business divisions or geographical operations.

k.    Strategic Benchmarking: This is a systematic process for evaluating alternatives.

As reported by several organizations, carrying out the process of Benchmarking entails several problems like, constraints in obtaining reliable unpublished data, greater tendency to use financial indicators as compared to non-financial indicators, difficult to move from perception to facts. Within the organization, the problems are, lack of skills to usher change, status conscious and reluctant to accept change, lack of effort and initiative for excellence. Given the typical problems, the challenges are, hard for organizations to get out of history, old behavior sneaks back, changing of organization as business changes, preparing human resources for the impending change, getting qualified, experienced and knowledgeable people




Based on the above types there are several models of benchmarking that are used in various industries. Benchmarking is usually done within the same industry. However, benchmarking is often done between organizations that have similar business process, but are in different industries. By benchmarking the business process across industries, the organizations sometimes achieve greater results than by sticking to their own industry. Benchmarking a process across industries causes people to challenge some of the assumptions that are part of the problem.

Several models that are available couldnt be directly applied as a benchmarking process to the textile industry, given the method of operations and practices of the Indian textile industry. This is mainly due to (a) the lack of openness within the industry to have partnership benchmarking with a centralized agency being the facilitator between two mills (b) non-availability of data on technical performance, functional areas and business processes. Hence, a textile specific model was developed that can be used by the industry through ATIRA.




For the study, spinning mills were selected for the organized mill sector. The metrics were tailor-made for a given mill based on the condition of the mill, performance, existing systems and the level of improvements that can be achieved and the benchmarks are developed for the all the three metrics. Thus the model is more dynamic.

  • The technical metrics relate to the operational performance of spinning mill
  • Financial metrics include key financial performance indicators based on the annual financial performance of the mills.
  • Managerial metrics refers to the management systems across the functions of management
  • Business process metrics include core and sub process i.e. a set of processes cutting across functions

2.1 Technical Metrics

It covers both market related factors which, to a large extent, beyond control of an individual management at least in a short span of time and a large number of production related factors - labour employment, material wastage, machine productivity, utilisation and so-on, are to a large extent within the control of mill management. It is important to note that the purpose of the entire analysis is towards identifying the areas, which need priority attention from the management, and not to predict the profits accurately, if actions were being taken. Out of the many controllable production related factors, which influence the profitability of a spinning mill, the model considers only major factors that contribute about 90% of the profits.


2.2 Financial Metrics

Financial metrics are for assessing the financial performance of the mills and they include performance indicators along the following:

  • Cost Structure
  • Profitability
  • Solvency and Liquidity
  • Asset Turnover
  • Inventories

2.3 Managerial Metrics

Managerial metrics here refers to managerial system benchmarking. A managerial system of a best in class of another textile mill can either be emulated else the existing system that is present in the mill is improved for benchmarked performance. The systems such as cost management, cash flow analysis, MIS, Production Planning, Recruitment, selection and training of manpower to name a few can be taken up for benchmarking.

2.4. Business Process Metrics

Organizations are made up of processes, and all work is a process, whether production, delivery of product to the market, selling, collection of payments, preparation of annual report, filing tax return and so-on. Work process defines the supplier and customer, i.e. defines the outputs that are produced and handed off to the next step in the overall process. It defines the sequence of the various steps in the process. It forces the organisation to define that produces the output. It reveals the boundaries of the elemental processes. It clarifies the boundaries of the processes, often the most ambiguous and unclear of understandings: the interface handoffs where much of the organisations inefficiencies exist. Besides, this classification forces the organisation to define who owns the process and who, therefore, is accountable for its detailed understanding and improvement through benchmarking. There are several processes that can be identified in a manufacturing organisation and few processes are key or core processes to the organisation and any favourable / unfavorable impacts on those processes will have respective impacts on the performance of the organisation.

Benchmark those key processes for performance improvement in terms of cost, quality, time, efficiency and response time as the case may be in a systematic and attaining them are in the domain of Business process Metrics. Here, Business process improvement methodology is used to improve the processes. There could be many processes that can be important for a textile company to improve upon and for benchmarking business metrics; such key processes will be identified in consultation with the top management.


3.0 Finalised Benchmarking Methodology for all the four Metrics:

  • Selection of areas for benchmarking
  • Identification of Key Performance Factors
  • Identification of persons responsible for the selected areas
  • Collection of relevant data/information/analysis
  • Development of measurements for a given area
  • Identification of benchmarks/best practice/best systems
  • Deciding areas for improvement
  • Developing actions required for improvement
  • Implement plans to monitor results
  • Repeat benchmarking

The above methodology of benchmarking has been successfully implemented in one EOU spinning mill.

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