benchmarking

1. BENCHMARKING
K. KAVITHA
K.PREMKUMAR
M.SRINIVASAN
C.YAZHINI

2. CONTENT
• Introduction
• Procedure
• Levels of benchmarking
• Types of benchmarking
• Process of benchmarking
• Guidelines
• Challenges
• Myths and Paradigms
• Case Study

3. What is Benchmarking
• Benchmarking is the process of comparing one's
business processes and performance metrics to
industry bests or best practices from other
industries
• the continuous process of measuring our products,
services and business practices against the
toughest competitors or those companies
recognized as industry leaders (Xerox Corp.)

4. OBJECTIVE
• To determine what and where improvements are
called for
• To analyze how other organizations achieve their
high performance levels, and
• To use this information to improve performance.

5. • Identify opportunities to improve performance
• Learn from other’s experiences
• Set realistic but ambitious targets
• Uncover strengths in one’s own organization
• Better prioritize and allocate resources
Why Benchmark

6. • Promotes a thorough understanding of company’s
own process
• Saves time and money
• Identify non value added activities
• Focuses on performance measures and processes
and not on products
• It provides a basis for training human resource
Benefits of Benchmarking

7. • Identify your problem areas
• Identify other industries that have similar process
• Identify organization that are leaders in these areas
• Survey companies for measures and practices
• Visit the “BEST PRACTICE” companies to identify
leading edge practices
• Implement new and improved business practices
PROCEDURE

8. • Internal benchmarking
• Competitive benchmarking
• Non-Competitive benchmarking
• World class benchmarking
LEVELS OF BENCHMARKING

9. • Process benchmarking
• Product benchmarking
• Strategic benchmarking
• Functional benchmarking
• Best in class benchmarking
• Operational benchmarking
TYPES OF BENCHMARKING

11. • Decide what you wish to benchmark
• Decide against whom you need to benchmark
• Identify outputs required
• Determine data collection methodologies
PLAN

12. • Secondary/background research
• Primary research - from the benchmark
DATA COLLECTION

13. • Of the gaps
• Of the factors that create the gaps (enablers)
ANALYZE

14. • Implementation planning
• Roll-out of new modus operandi (changes)
IMPLEMENTATION

15. • Collecting data
• Evaluating progress
• Iterative change
MONITORING

16. • Customer service levels
• Inventory management
• Inventory control
• Purchasing
• Billing and collection
• Purchasing practices
• Quality process
• Warehousing and distribution
• Transportation
AREAS TO BENCHMARK

17. Selecting appropriate benchmarking partners is
essential for successful strategic and
performance benchmarking.
A benchmarking partner should:
• Have a compatible mission, values and
objectives
• Be of comparable size
• Be a research intensive university
Selecting Benchmarking Partners

18. • Have a similar discipline mix
• Have superior performance in the areas to
be benchmarked
• Have a commitment to quality management
and a ‘willingness to share
CONTD…

19. • Thorough understanding of one’s own process
• Involvement of management and employees in the
analysis of best practices
• It should be a continuous process as the
competition is always changing
• Partner’s willingness to share information
• Selection and empowerment of benchmarking
teams
• Legal concerns
• Manage confidentiality of critical information
• The practices should be tested and implementation
results verified.
GUIDELINES TO BENCHMARKING

20. • Best-in-class performance is not a static but a
moving target
• Time-consuming and expensive
• Benchmarking not a panacea
• Benchmarking
LIMITATION

21. • Involve the employees who will ultimately use the
information and improve the process
• Relate Process improvement to strategy and
competitive positioning
• Define the firm’s own process before gathering data
for the purpose of comparison
PITFALLS

22. • Business Model variations
• Differences in annual periods
• Accounting methodologies and data
reporting
• Environment impact
• Identifying ‘right measures’
• Balancing ‘lag’ and ‘lead’ indicators
‘appropriate’ analytical tools and techniques
• Management commitment & Leadership
• Employee engagement and motivation
BENCHMARKING
CHALLENGES

23. Benchmarking is not:
• Copying or imitating others
In rapidly changing circumstances, good practices become
dated very quickly. Also, the fact that others are doing things
differently does not necessarily mean they are better
• A quick fix, done once for all time
• Merely competitor comparison
The objective is to figure out how the winner got to be best
and determine what we have to do to get there. Benchmarking
is best undertaken in a collaborative way.
• Spying or espionage
• Industrial tourism
MYTHS & PARADIGMS

24. • Case-1 Reliance Communication:
Earlier routers were configured from the field and a maximum
of 3-4 could be configured.
INTERNAL BENCHMARKING

25. After adopting I.B, the process was carried out from the Network
operation Center, itself by the engineers.
Advantages:
• Increase in efficiency of the work process
• Increase in the no. of routers configuration(3-18)
• Around 6 fold increase in performance
INTERNAL BENCHMARKING

26. CASE 2
• Pre-benchmarking
status:
A line of operators
were required to
monitor every step.
• Disadvantages:
Costs came up to
around Rs.480000 / 1
line/month
More labor required

27. Continued…
• Post-benchmarking
status:
• A single operator was
equipped to deal with 4
systems
simultaneously..
&
• 2 unskilled manpower
to assist him

28. ADVANTAGES
• Costs came down to only
Total = 75,000/4Line/Month
• Manpower requirement reduced
• Efficiency is enhanced

29. • The process of Benchmarking for Xerox was started
in 1980s due to the companies fall in the share
market value by 35% in 1981.
• At first, Xerox met resistance by its employees who
believe that someone else could never do it better.
• When faced with the facts, reaction went from
denial to dismay to frustration and finally to action.
CASE STUDY: XEROX

30. • Their unit manufacturing cost equalled the
Japanese selling price in United States.
• Number of production suppliers was 9 times that of
best companies.
• Assembly line rejects were 10 times higher.
• Product lead times were twice as long.
• Defects per 100 machines were 7 times higher.
PROBLEMS FACED BY XEROX

31. • Once the process began, the company
benchmarked virtually every function and task for
productivity, cost and quality.
• Comparison made for companies both in and
outside the industry.
CONTD…

32. • Suppliers were reduced from 5000 to 300.
• Concurrent Engineering was practised.
• Commonality of parts increased from about 20% to
60-70%.
• Hierarchical organisation structure was reduced and
the use of cross functional teams were established.
RESULTS FOR XEROX

33. • Quality problems cut by 2/3.
• Manufacturing costs cut by 50%.
• Development time cut by 2/3.
• Direct labour cut by 50% and corporate staff cut by
35%.
RESULTS FOR XEROX

34. PERFORMANCE MEASURE IN UK TEXTILE &
CLOTHING INDUSTRIES.
Methodology
• A critical sample of companies has predominantly been
carried out with 10 textile and clothing manufacturing
manufacturers in the UK North West.
• A checklist of questions on performance measurement
and benchmarking was devised.
• Each case study was carried out over a 3 day period.
CASE STUDY 2

35. • From the interview questions afore mentioned
above, responses were codified for data analysis.
• An inter-item (inter-theme) indicated a clear
relationships between strategic direction of the
organization in question and the main products
offered; staff empowerment and the level of
performance measurement and the criteria of
production facility layout and production capacity
planning; level of performance measurement and
the logistics of the production facilities layout;
turnover and the level of operating capital available
as well as the level of skills.
RESULTS

36. DISCUSSION

37. Thank You