Seminar On Benchmarking

Outline
Benchmarking Definition Benchmarking Background Why Benchmarking? Benchmarking, Dimensions & Types Benchmarking Process

What is Benchmarking?
Benchmarking is the process of improving performance by continuously identifying, understanding, and adapting outstanding practices found inside and outside the organization.

What is Benchmarking?
Benchmarking is the process of comparing one's business processes and performance metrics to industry bests and/or best practices from other industries.
Why are others better ? How are others better ? What can we learn ? How can we catch up ? How can we become the best in our sector ?

What is Benchmarking?
Benchmarking is critical to formulating a knowledge-based plan of action to achieve objectives. A benchmark is a standard that provides a measuring-stick for relative performance. Benchmarking means to measure the best practices of leading businesses, and learn and adapt them for use in your business.

What is Benchmarking?
Benchmarking has three main features:
Continuous method of measuring and comparing a firms business processes against those of another firm. Discover performance gaps between ones own processes and those of leading firms.

Incorporate leading firms processes into ones own strategy to fill the gaps and improve performance.

Operational Definition of Benchmarking

A structured technique Comparing business processes, not only performance measures

Benchmarking is a technique of identifying, understanding and adapting superior practices from organizations locally and world wide to improve performance and achieve priority business results.

Learn from others

External focus

Improvement, not evaluation

What is Benchmarking?
Benchmarking is not a method for 'copying' the practices of competitors, but a way of seeking superior process performance by looking outside the industry.

What is Benchmarking?
Benchmarking is a tool for continuous improvement of the management of processes in companies to help them to gain world leadership.

"Improving ourselves by learning from others."

Benchmark
A benchmark is an organization recognized for its desirable operational performance.

There are many benchmarks in the world including:

Toyota for Intel for Motorola for

Scandinavian Airlines for

Processes
Design

Training
Service
Rapid product development

Honda for

Actual Benchmarking Examples

Initiator Southwest Airlines

Improvement Sought Faster plane turnaround time

Target Firm Indy 500 pit crews

Xerox
IBM

Warehousing operations
Employee theft reduction

L. L. Bean
Las Vegas Casinos

Background of Benchmarking
The term benchmarking was first used by cobblers to measure people's feet for shoes. They would place someone's foot on a "bench" and mark it out to make the pattern for the shoes.

Background of Benchmarking
Benchmarking was originally defined by D.T. Kearns, the CEO of Xerox Corporation, in 1981 as the continuous process of measuring products, services, and practices against the toughest competitors or non-competitors who is the leader in their industry (Kolarik, 1995).

Continuous and Breakthrough Improvement

Time

Why Benchmarking?
Survival lies in emulating best and not in lagging behind. Bench marking is time and cost efficient because it involves imitation and adaptation rather than pure invention. Prevents the Re-inventing the wheel.

Why Benchmarking?
Benchmarking gives us the chance of gaining: Better Awareness of Ourselves (Us)
What we are doing How we are doing it How well we are doing it

Better Awareness of the Best (Them)

What they are doing How they are doing it How well they are doing it

Why Benchmarking
Performance Improvement
.

Meeting Quality Standards

Creative Thinking
.

Innovation In Management Methods

Benchmarking

Keep Pace with Science and Technology Changes

.

Cope with Competitive Markets

Meeting Customers Expectations

.

Three Major Benefits of Benchmarking

Product and Process Improvement

Cost Reduction

Competitive Strategy

Dimensions of Benchmarking
Benchmarking encompasses Total Quality aspects of the organization leading to Business Excellence:
Vision and Mission
.

Leadership Style Benchmarking

Management Systems
.

Employee Behavior
.

Organizational Structure
.

TOP-10 Benchmarking Organizations

Organization Xerox Ranking 1

U.S. Army
Corning Abu Dhabi Food Control Authority Internal Revenue Service United Technologies DynMcDermott Dubai Municipality

2
3 4 5 6 7 8

Dubai Chamber of Commerce and Industry

Allergan

9
10

Benchmarking Process
There are various methods of benchmarking and a variety of methodologic processes in benchmarking mechanisms and implementation. Some important organizations have developed their own benchmarking process.

General Benchmarking Process

Plan Select Process Understand Process Select Partners Analyze Collect Data Establish the gap Identify process changes Target future goals

Act Communicate actions Develop improvement plan Implement Review Progress

Xerox Experience-1 (Brogan, 1994)

The Xerox of today is not the Xerox of the sixties and seventies. During that time period the organization experienced market erosion from competitors, primarily Japanese. These competitors were marketing higher quality products in the United States at the same price or lower as Xerox. Xerox found that the Japanese were able to assemble quality products at a low price. This was hard for Xerox to grasp because they were the first to develop the photocopy and their name had come to be synonymous with photocopies.

Xerox Experience-2 (Brogan, 1994)

How could the Japanese be beating them at their own game? Xerox found that they had to regroup. In doing this they made competitive benchmarking a fundamental part of their operations. Xerox began to study other organizations within and out of their industry. By 1983, Xerox had bench marked more than 230 process performance areas in their operation. Identifying the best processes used by others, Xerox adapted them for their own use. This is how they regained their core competency and strategic advantage in the photocopying industry.

Xerox-Step Benchmarking Process-1

Phase 1: Planning 1. Identify what to benchmark; 2. Identify comparative companies; 3. Determine data collection method & collect data. Phase 2: Analysis 4. Determine current performance gap; 5. Project future performance levels. Phase 3: Integration 6. Communicate finding and gain acceptance; 7. Establish functional goals.

Xerox-Step Benchmarking Process-2

Phase 4: Action 8. Develop action plans; 9. Implement specific actions & monitor progress; 10. Recalibrate benchmarks. Phase 5: Maturity 11. Attain leadership position ; 12. Fully integrate practices into processes.

Conclusion:
Benchmarking does not come as a natural process for many competitiveness does, but not benchmarking, because benchmarking requires a team approach.

Thanking You.