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CMA Final · Strategic Cost Management · Benchmarking

Kaveri Auto Components benchmarks its monthly machine set-up time against the best-in-class plant of a non-competing firm in a different industry that is known for very fast tooling changeovers. Which type of benchmarking is Kaveri using?

It is functional (generic) benchmarking. Kaveri compares one specific process, set-up time, with the best performer from a different, non-competing industry. Competitive benchmarking needs a direct rival and internal benchmarking compares units within the same organisation, so neither applies here.

  1. AInternal benchmarking
  2. BCompetitive benchmarking
  3. CFunctional (generic) benchmarkingCorrect
  4. DStrategic benchmarking of a rival's business model

Explanation

Comparing a specific process with the best performer in a different industry, outside the direct competitors, is functional or generic benchmarking. Competitive benchmarking would require comparison with a direct rival, and internal benchmarking compares units within the same firm.

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