2. What is Benchmarking?
Benchmarking is the process of
measuring an organizationâs internal processes
then identifying, understanding, and adapting outstanding practices from other
organizations considered to be best-in-class.
Definition
âmeasuring our performance against that of best-in- class companies,
determining how the best-in-class achieve those performance levels
and using the information as a basis for our own companyâs targets,
strategies and implementation .â
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Xavier Institute of Management, Jabalpur
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3. The Essence of Benchmarking
âmoving from where we are to where we want to beâ
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Xavier Institute of Management, Jabalpur
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4. Why Benchmarking?
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To Obtain an External Perspective of What Is Possible
To Assist in Setting Strategic Targets
To Promote Improvements in Performance
To Establish a Competitive Edge
To Enhance Customer Satisfaction
To Reduce Costs
To Improve Employee Morale
To Achieve Quality Awards
To Survive
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Xavier Institute of Management, Jabalpur
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5. When Benchmarking?
ï If the companyâs QMS is not properly developed, documented and
implemented.
ï If companyâs great strength areas are not measured.
ï If companyâs great weakness areas are not measured.
ï If companyâs great opportunities are not measured.
ï If customer needs are not assessed and rectified .
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Xavier Institute of Management, Jabalpur
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6. Benchmarking in the Context of TQM
TQM Key principles include:
ïComparisons with best practice.
ïA Strong emphasis on meeting the needs of the customer (internal
and external).
ïThe importance of efficient, effective business processes.
ïThe need for continuous improvement .
ïEnhances a TQM program .
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Xavier Institute of Management, Jabalpur
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7. Levels Of Benchmarking In Competitive Environment
ï Internal benchmarking - Within oneâs org.
ï Competitive benchmarking - Analysis the performance and
practices of best in class companies.
ï Non-competitive benchmarking - Is learning something about a
process a company wants to improve by benchmarking.
ï World class benchmarking - Ambitious and looking towards
recognized leader.
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Xavier Institute of Management, Jabalpur
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8. Benchmarking Methodology
Best Practice
Overlap
Competitive
âą Industry leaders
âą Top performers with
similar operating
characteristics
Functional
Internal
âą Top performers
regardless of industry
âą Aggressive innovators
utilizing new
technology
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Xavier Institute of Management, Jabalpur
âą Top performers
within company
âą Top facilities
within company
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9. Types Of Benchmarking
ïPerformance or operational benchmarking:
It involves â pricing, technical quality, features and other quality.
ïProcess or functional benchmarking:
It involves processes such as billing, order entry or employee training.
ïStrategic benchmarking:
Examines how companies compute and seeks the winning strategies that have
led to competitive advantage and market success.
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Xavier Institute of Management, Jabalpur
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10. Areas Of Benchmarking
Operational Strategies:
Supply chain management:
âą Inventory management
âą Inventory control
âą Warehousing and distribution
âą Transportation
Marketing management:
H.R. Practices:
âą Customer service levels
âą Purchasing
âą Billing and collection
âą Purchasing practices
âą Talent Acquisition / Search
âą Training and Development
âą Compensation management etc.
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Xavier Institute of Management, Jabalpur
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11. Guidelines to Benchmarking
ïDo not go on a fishing expedition.
ï Use company people.
ï Exchange Information.
ï Legal Concerns.
ï Confidentiality.
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Xavier Institute of Management, Jabalpur
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12. Five Phases Of Benchmarking
ï Planning: Identify the product, service or process to be benchmarked
ï Analysis: Determine the gap between the firmâs current performance and that of
the firmâs benchmarked and identify the causes of significant gaps.
ï Integration: Establish goals and obtain the support of managers who must
provide the resources for accomplishing the goals
ï Action: Develop action plans, and team assignment, implement the plans,
monitor progress and recalibrate benchmark as improvements are made.
ï Maturity: Leadership position attended, best practices fully integrated into
process.
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Xavier Institute of Management, Jabalpur
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14. Benchmarking Strategy
ïDecide what to benchmark.
ï Select companies to benchmark.
ï Obtain data and collect information.
ï Analyze data and forms action plans.
ï Recalibrate and start the process again.
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Xavier Institute of Management, Jabalpur
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15. The Seven Step Benchmarking Model
Activity
What is included
Step 1: Identify what to benchmark
ï Clarify the benchmark objectives
ï Decide whom to involve
ï Define the process
ï Consider the scope
ï Set the boundaries
ïAgree on what happens in the process
ï Flowchart the process
Step 2: Determine what to measure
ï Examine the flow chart
ï Establishes the process measures
ï Verify that measures match objectives
Step 3: Identify who to benchmark
ï Conduct general research
ï Choose level to benchmark
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Xavier Institute of Management, Jabalpur
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16. The Seven Step Benchmarking Model
Step 4: Collect data
ï Use a questionnaire
ï Conduct a benchmark site visit
Step 5: Analyze data and determine the gap
ï Quantitative data
ï Qualitative analysis
Step 6: Set goals and develop an âAction
Planâ
ï Set performance goals
ï Develop an action plan
Step 7: Monitor the process
ï Track the changes
ï Make benchmarking a habit
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Xavier Institute of Management, Jabalpur
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17. Factors For Success Of Benchmarking
ï Benchmarking must have the full support of senior management
and they should actively involve with this process.
ï For Benchmarking, team and process training is very imp.
ï Benchmarking should be a team activity.
ï Benchmarking is an ongoing process.
ï Benchmarking efforts must be organized, planned, and carefully
managed.
ï Correct use of benchmarking can lead you to the competitive
edge in todayâs business market place.
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Xavier Institute of Management, Jabalpur
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18. Advantages
ï Benchmarking is a systematic method by which organizations can measure themselves
against the best Industry practices.
ï It promotes superior performance by providing an organized framework through which
organization learn how the â best in classâ do things.
ï Intensive studies of existing practices often lead to identification of non-value added
activities and plans for process improvement.
ï It helps for continuous improvement.
ï Benchmarking inspire managers (and organization) to compete.
ï Through Benchmark process organization can borrow ideas, adopt and refine them to gain
competitive advantages.
ï Benchmarking provides a basis for training human resources.
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Xavier Institute of Management, Jabalpur
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19. Disadvantages
ï The most resistant criticism of Benchmarking comes from the idea of copying
others.
ï It is not a strategy nor is it intended to be a business philosophy. Therefore, it is
a time taking technique.
ï Benchmarking is not âinstant puddingâ. It will not improve performance if
proper infrastructure of Total Quality Management is not in place.
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Xavier Institute of Management, Jabalpur
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20. Conclusion
Now a days, more than 60% companies in the world uses this
technique for fixing their target for continuous improvement. For
them it is an important tool. But to be effective it must be used
properly. It breaks down (waste money, time and energy and some
times morale too) if process owners and managers feel threatened or
do not accept and act on the findings. Finally, benchmarking is not a
substitute for innovation; however, it is a source of ideas from
outside the organization.
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Xavier Institute of Management, Jabalpur
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21. Thank you
and
Have a Nice DayâŠï
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Xavier Institute of Management, Jabalpur
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