Benchmarking

What is Benchmarking?
Benchmarking is the continuous,
systematic process of measuring
ones output and/or work
processes against the toughest
competitors or those recognized
best in the Industry
 What is Benchmarking?
Author Definitions
Camp the continuous process of
1989 measuring products, services and
practices against the toughest
competitors or those companies
recognised as industry leaders.
Geber a process of finding the world-class
1990 examples of a product, service or
operational system and then
adjusting own products, services or
systems to meet or beat those
standards.
 What is Benchmarking?
Author Definitions
Codling An ongoing process of measuring
1992 and improving products, services
and practices against the best.
Vaziri 1992 a continuous process comparing
an organisations performance
against that of the best in the
industry considering critical
consumer needs and determining
what should be improved.
Watson The continuous input of new
1993 information to an organisation.
 What is Benchmarking?
Author Definitions
Evans measuring own performance
1993 against best-in-class
organisations to determine how
they achieve their performance
levels and use the knowledge to
improve own performance.
Kleine an excellent tool to use in order
1994 to identify a performance goal for
improvement, identify partners
who have accomplished these
goals, identify applicable
 What is Benchmarking?
Author Definitions
Cortada A method for finding how to
1995 improve processes quickly by
learning from others dealing
with similar issues.
Cook 1995 A kind of performance
improvement process by
identifying, understanding and
adopting outstanding practices
from within the same
organisation or from other
businesses.
 What is Benchmarking?
Author Definitions
APQC 1999 the process of continuously
comparing and measuring an
organisation against business
leaders anywhere in the world to
gain information which will help
the organisation take action to
improve its performance.
 Benefits of Benchmarking
helps organisations understand
strengths and weaknesses
helps better satisfy the customers
needs by establishing new standards
and goals
motivates employees to reach new
standards and to be keen on new
developments
 Benefits of Benchmarking
allows organisations to realise what
level(s) of performance is really possible
by looking at others
documents reasons as to why these
differences exist
helps organisations improve their
competitive advantage
is a cost-effective and time-efficient way
of establishing a pool of innovative ideas
 Benchmarking Process
BM must for Key Business
Processes (KBPs)
Product Development
Customer Service
HR Practices
Inventory Control
Research & Development etc
 Benchmarking Process
BM must for Critical Success
Factors (CSFs)
Cost Management
Product Quality
Product Design
Organisation Image etc
 Benchmarking Process
4 questions
What should we benchmark?
Whom should we benchmark?
How do we perform the process?
How do they perform the process?
 Benchmarking Process
Benchmarking Process

Benchmarking Standards Benchmark Practices

Benchmark Gap: How to close the Gap:

* How much * Improved Knowledge
* Where * Improved Practices
* When * Improved Process

Management Commitment

Organization
Communication

Employee Participation
Benchmarking Process and
its 5 Stages
v e
pro
Im
apt
Ad
opt
Ad

Decide Identify Gather

What to BM info Analyse Implement
BM Partners
 Benchmarking Process
PLAN
Select the process
Form Team
Understand & document process
Establish performance measure
SEARCH
Listing Criteria for partner selection
Conduct general / secondary research
Decide the level to Benchmark
Identify potential partners & contact
 Benchmarking Strategy
OBSERVE
Questionnaire sent to partner
Telephone contact
Direct observation / site visit
ANALYSE
Sort information & data
Quality control information & data
Normalise data if necessary
Identify gaps in performance Level
Identify causes for gaps
 Benchmarking Strategy
ADAPT
Identify improvement opportunities
Set target for improvement
Develop implementation plan, monitor the
progress
Write final report
 Approaches to
Benchmarking
Internal & External Benchmarking
Performance or Competitive
Benchmarking
Functional and Generic
Benchmarking
Strategic Benchmarking
Process Benchmarking
International Bench marking
 Internal Benchmarking
Establishing good practices in the
organisation
Comparison of similar functions in different
operating units within the organisation
Advantages
Easier to implement
Easier to access data
Disadvantages
No external ideas
Time-consuming
 External Benchmarking
Comparison of organisation functions and
key processes against Good Practices
Advantages
Helps to measure ones own performance
Helps to search for best practices
Disadvantages
Takes time
Requires support
Cross-cultural differences
 Functional Benchmarking
Comparison of similar functions
against external best in any industry
Advantages:
Developing networks
Discovering innovative practices
Disadvantage:
Not suitable for every organisation
 Process Benchmarking
Focus on specific operations or
processes
Examples:
in higher education-enquiry
management, enrolment
in Logistics- delivery, safety
in hotelshousekeeping, customer care,
 Generic Benchmarking
Comparison of functions which are
generic in nature in any industry
Example
Hospitals in the U.S. routinely
benchmark their patient management
against hotels guest management.
Mobil benchmark their customers
service with 5 star hotels
Performance or Competitive
Benchmarking
Organizations using performance
measures to compare themselves
against similar organizations
Example
FMCGs comparing with each other for
Market share, Retention rates, profits,
costs
 Strategic Benchmarking
Used where organizations seek to
improve their overall performance by
focusing on specific strategies or
processes
Example
Benchmarking against organizations
which have won awards or some other
distinctions
 What to Benchmark?
Products & Services
Finished Goods
Product &
Services Features
 What to Benchmark?
Work Processes
Manufacturing
Supplying
Ordering
Maintenance
 What to Benchmark?
Support Functions
Human Resource Department
Financial Management
Marketing
 What to Benchmark?
Organizational Performance
Sales
Profitability
Cost
Quality
Manpower
 What to Benchmark?
Strategies
Cost Leadership
Differentiation
 Benchmarking Partner
A benchmarking partner is any
person or organisation that
participates in open exchange of
information for the purpose of
learning from each other in areas of
interest
 Benchmarking Partner
Identification Steps
Design a list of criteria for focused
search of partners
Conduct general / secondary research
Decide the level to benchmark
Identify potential partners and establish
contact
 Benchmarking Partner
Criteria for Selection
Similarity of process
Geographical location
Size of the organsiation
Product
Technology
Management style
Company culture
Easy accessibility of information
Benchmarking Components

Enabler Assessment

Outcomes
 Benchmarking Components
Assessment: Measuring own and partners
performance
Enablers: Practices leading to performance
improvement
Outcomes: Performance outcomes yielded by
implementing the findings.
It is a lot easier to benchmark a process than
to benchmark an output (Kaplan 1993)
Process: a specific investigation
Output: rather complex and extensive
Benchmarking Gap Analysis
Model
 Benchmarking is..
a tool to identify, establish, and achieve standards
of excellence
a structured process of continually searching for the
best methods, practices, and processes and either
adopting or adapting their good features and
implementing them to become the .best of the
best..
the practice of measuring your performance against
world-class organizations.
an ongoing investigation and learning experience
ensuring that best practices are uncovered,
adapted, and implemented.
 Benchmarking is..
a disciplined method of establishing
performance goals and quality improvement
projects based on industry best practices.
a searching out and emulating of the best
practices of a process that can fuel the
motivation of everyone involved, often
producing breakthrough results.
a positive approach to the process of finding
and adapting the best practices to improve
organizational performance.
 Benchmarking is..
a continuous process of measuring
products, services, and practices against
the companys toughest competitors or
those companies renowned as industry
leaders.
learning how leading companies achieve
their performance levels and then
adapting them to fit your organization.
a research project on a core business
practice.
 Benchmarking is..
a partnership where both parties should
expect to gain from the information
sharing.
both a business tool and a quality tool for
improving key business processes.
 Benchmarking will help
you..
find who does the process best and close the gap.
recognize the leading organizations in a process
or activity.
create performance standards derived from an
analysis of the best in business.
ensure that comparisons are relevant.
measure your performance, your processes, and
your strategies against best in business.
measure business processes.
assess performance over time.
 Benchmarking will help
you..
accelerate continuous process improvements
(CPI).
establish more credible goals for CPI.
establish actionable objectives.
discover and clarify new goals.
establish customer expectations of business
standards set by the best suppliers in
industry.
help your organization achieve breakthrough
improvements.
 Benchmarking will help
you..
create a sense of urgency for change.
increase customer satisfaction.
become direction setting.
provide a positive, proactive, structured
process.
 Benchmarking requires..
a thorough understanding of your
organizations business processes before
any comparisons are attempted.
planning to identify the best-in-class for
comparison and data collection.
analysis to determine the performance
gaps.
integration to set new goals and
standards.
 Benchmarking requires..
an action plan to implement the changes
to the process.
constant updating to keep the standard of
excellence.
a means to measure.
commitment by leadership.
resources, including time.
 Benchmarking works best
when..
it supports an organizations strategic
plan.
its done on existing processes that are
well-defined.
the organizational leader is knowledgeable
and committed to total quality (TQ).
it is utilized as a tool in a TQ organization.
 Benchmarking is not..
just looking for a better way to do things; it
looks for the best way.
a mere comparison.
only competitive analysis.
site briefings.
industrial tourism.
spying.
easy.
quick.
 Benchmarking is not..
fool proof.
free.
subjective.
a panacea.
a program.
a cookbook process.
a mechanism for determining resource
reductions.
business as usual.
a management fad.
 Benchmarking does not..
Copy... Instead, you must adapt the
information to fit your needs, your culture,
and your system. And, if you copy, you can
only be as good as your competitor, not
better.
Steal... To the contrary, it is an open,
honest, legal study of another
organizations business practices.
Stop... Rather, it is a continuous process
that requires recalibration.
Thank you..