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Benchmarking
Benchmarking is a way to go backstage and watch another companys performance from the wings, where all the stage tricks and hurried realignments are visible. Wall Street Journal

Total Quality Management

Learning Objectives
After studying this chapter, you should be able to: To understand the Essence of Benchmarking To identify the evolution of benchmarking To Explain the process of benchmarking To identify the types of benchmarking To learn the steps in benchmarking To identify the advantages and limitations of benchmarking

Benchmarking
Benchmarking can be defined as a process for improving performance by constantly identifying, understanding and adapting best practices and processes followed inside and outside the company and implementing the results. The main emphasis of benchmarking is on improving a given business operation or a process by exploiting 'best practices,' not on 'best performance.

Benchmarking
Benchmarking is the systematic search for best practices, innovative ideas, and highly effective operating procedures. Benchmarking considers the experience of others and uses it. Benchmarking measures performance against that of best-in-class organizations, determines how the best in class achieve those performance levels, and uses the information as the basis for adaptive creativity and breakthrough performance.

Evolution of Benchmarking
The benchmarking may have evolved in the 1950s, when W Edwards Deming taught the Japanese the idea of quality control. The method was rarely used in the United States until the early 1980s, when IBM, Motorola, and Xerox became the pioneers. The Xerox became the best known example of the use of benchmarking.

Evolution of Benchmarking
Time
First Generation

Type
Reverse Engineering

Description
Reverse engineering (RE) is the process of discovering the technological principles of a device, object or system through analysis of its structure, function and operation. Continuous process of comparing a firm's practices and performance measures with that of its most successful competitor(s). The initiating firm focuses its observation and investigation of business processes with a goal of identifying and observing the best practices from one or more benchmark firms. Involves observing how others compete. Benchmarking with the partners across the globe

Second Generation

Competitive Benchmarking

Third Generation

Process Benchmarking

Fourth Generation Fifth Generation

Strategic Benchmarking Global Benchmarking

Benefits of Benchmarking
The results provide answers to the following key questions for the company. How well are we performing compared to other companies? What are the best practices? What improvement opportunities should we focus on?

Benefits of Benchmarking
Continuous benchmarking helped companies deliver best quality products and services and survive competition in all areas.

Types of Benchmarking
Strategic Benchmarking Performance Benchmarking or Competitive Benchmarking Process Benchmarking Functional Benchmarking or Generic Benchmarking Internal Benchmarking External Benchmarking International Benchmarking.

Benchmarking Process
Benchmarking is usually treated as a structured process. The structure is best provided by the development of a step-by-step model. It is important that the benchmarking process be customised to the needs, capabilities and culture of the individual organisation. Benchmarking has to be seen as integral to the business strategy - not just an add-on. What is benchmarked must be important to the whole organisation

Phases in Benchmarking Process

Planning: To identify what to benchmark? ,whom to benchmark? and to determine data collection method and collect data. Analysis: To identify current performance gaps and to project future performance levels. Integration: To communicate benchmark findings and gain acceptance and to establish functional goals. Action: To develop action plans and Implementing Specific Actions and Monitor Progress And recalibrate benchmarks Maturity: To attain leadership position and practices fully integrated into process and to keep the process continuous.

1. Identify what is to be benchmarked.

Benchmarking Phases

Planning

2. Identify comparative companies.

3. Determine data collection method and collect data. 4. Determine current performance gaps. Analysis 5. Project future performance levels.

6. Communicate benchmark findings and gain acceptance. Integration 7. Establish functional goals.

8. Develop action plans.

Action

9. Implement specific actions and monitor progress.

10. Recalibrate benchmarks. Leadership position attained Practices fully integrated into processes

Maturity

Benchmarking- Logical Process Flow

Current system / process performance ranking Competitor performance levels-what did they do to attain the desired ?

Analyse suitability

Look for alternate

Innovate

Adopt

Modify to requirements

Evaluate progress

Continuous improvement

Revisit

Sl. NO. 1

Xeroxs Ten step Process Identify what benchmarked is to be

AT&T Twelve step process Determine who the clients are who will use the information to improve their processes Advance the clients from the literacy stage to the champion stage

Identify comparative organizations

Determine data collection method and collect data

Determine gap current performance

Test the environment. Make sure the clients can and will follow benchmarking findings
Determine urgency. Panic or disinterest indicate little chance for success Determine scope and type of benchmarking needed Select and prepare the team Overlay the benchmarking process onto the business planning process Develop the benchmarking plans Analyse the data Integrate actions Take action Continue improvement the recommended

Project future performance levels Communicate benchmark findings and gain acceptance Establish functional goals

Approaches to Bechmarking

6 7

8 9 10 11 12

Develop action plans Implement specific actions and monitor progress Recalibrate benchmarks

Prerequisites of Benchmarking
The pre-requisite for benchmarking include: corporate culture of quality and the basic components of TQM such as information systems, process control, and human resource program.

Code of Conduct for Benchmarking

Legality Confidentiality Sharing and use of information with whom you are benchmarking Contact Preparation Completion understanding your partners.

Cost of Benchmarking
Visit cost Time cost Benchmarking database cost

Benchmarking Do's and Don'ts

DO's

DON'Ts

Obtain Management Commitment Obtain Resource Commitments Follow Code of Conduct Provide Summary Report Debrief ASAP Be Flexible

Have too Broad of Scope Proceed without Process Modeling Use Questionnaire for "Process" Have Separate Implementation Team Design Lengthy Questionnaire Give up!