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TOPIC:

BENCHMARKING
 Definition 2

Benchmarking is the systematic search for best

practices, innovative ideas, and highly effective
operating procedures.
Benchmarking considers the experience of others
and uses it
It is the common sense proportion to learn from
others what they do right and then imitate it to avoid
reinventing the wheel.
In 1800s, Francis Lowell, a New England colonist,
studied British textile mills and imported many ideas
along with improvements he made for American
textile mills
Introduction and use:
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Benchmarking is an increasingly effective

popular tool.
It is used extensively both manufacturing and
service organizations, including
 Xerox
 AT&T
 Motorola
 Ford
 Toyota
Introduction and use:
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Bench marking stipulate that quality goals and

objectives be based on competitive products
Malcolm Baldridge National Quality Award
requires applicants benchmark external
organizations
 Reasons to Benchmark
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For achieving business and c0mpetitive objectives;

helps in developing strengths and reduce
weaknesses
For functions that are critical to the business
mission, organizations must continue to
INNOVATE as well as IMITATE.
Benchmarking enhances innovation by requiring
organizations to constantly scan the external
environment and to use the information obtained
to improve the process.
 Reasons to Benchmark
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Requires external orientation or competition

would catch unawares
Time and cost efficient – process involves
imitation and adaptation rather than pure
invention

Primary weakness : Best-in-Class performance is a

moving target because of new technology
advancements
Diagram:

What is our 7 What are others`

Performance level ? Performance levels ?
How do we do it ? How did they get there ?

Creative
Adaptation

Breakthrough performance
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 Types of benchmarking:
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There are three main types of benchmarking:

Internal
Competitive and
Process
 Process of benchmarking:
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The following six steps contains the core

techniques:

Decide what to benchmark

Understand current performance
Plan
Study others
Learn from data
Use the findings
 Decide what to benchmark ?
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Benchmarking can be applied to the any business or

production process.
Understanding current performance:
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To compare practices to outside benchmarks, it

is first necessary to thoroughly understand and
documents the current process of your
organization that where you stand.
 Planning
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Once internal process is understood and

documented, it is possible to make decisions about
how to conduct the study.
The team should be decided that what type of
benchmarking to be preformed.

Benchmarking planning is a learning process.

 Studying others
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Benchmarking studies look for two types of

information:

A description of how best in class processes are

practices and
the measurable results of these practices
 Learn from the data:
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 Learning from the data collected in a benchmarking

study involves answering a series of questions:

Is there a gap between the organizations performance

and the performance of the best-in-class organizations ?
What is the gap ? How much is it ?
Why is there a gap ? What does the best-in-class do
differently that is better ?
If best-in-class practices were adopted, what would be the
resulting improvement ?
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Its main objective is to determine from overall

effect on the internal operation of adapting the
best-in-class practice.

In other words, what is the size of the gap and what

are the appropriate benchmark metrics and
objectives ?
 Using the findings:
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Benchmarking is the waste of time if change does

not occurs as a result. To effect the change, the
findings must be communicated to the people
within the organization who can enable
improvement.

The findings must be translated to GOALS and

OBJECTIVES and ACTION PLANS must be
developed to implement new process.
 Using the findings:
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The generic steps for the development and

execution of action plans are:

Specify tasks
Sequence tasks
Determine resource needs
Establish task schedule
Assign responsibility for each task
Describe expected results
Specify methods for monitoring results.
 Using the findings:
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Goals and objectives should be consistent with the

execution of the action plan so that the end result
is process superiority. The best results are obtained
when process owners fully participate in the design
and execution of the plan.
 Pitfalls and Criticisms of Benchmarking
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Not a strategy nor a management philosophy, but an

improvement tool
To be effective, it must be used properly
Not a substitute for innovation
Success depends on setting and achieving goals and
objectives based on external reality caring about
quality, cost and delivery