Measuring performance Implementing

Adopting Process

Improve

Best-in-Class
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WHY BENCHMARK?
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WHY BENCHMARK?
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 4

TYPES OF BENCHMARKING

Comparison: (Partner Selection)

Internal Best in Firm Competitive Best in Industry Functional Generic

Form:

Performance Benchmarking Process Benchmarking Strategic Benchmarking

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Selecting Benchmarking Partners

Benchmarking Type

Potential Benchmarking Partners

Comparable sites, branches, sections, departments within the business

Internal
External

Within the same industry sector

Functional

Same function across all industry fields

Generic

All industry fields

Internal Benchmarking
ADVANTAGES:

Comparisons between yourself

and similar operations within your own Organization

Sharing - Communication Data easy to get Good results, immediate benefit Good practice
DISADVANTAGES:

Limited focus Internal bias External Ideas blocked

EXTERNAL BENCHMARKING

Advantages

Comparison with external organisations to discover new ideas, methods, products and services. The gap between internal and external practices displays the way where to change and if there is any need to change.

Directly relevant Comparable practices & technologies

Disadvantages

Data collection difficulties Ethical issues

FUNCTIONAL BENCHMARKING:
Comparative research to seek world Discovering innovative class excellence by comparing practices business performance not only against competitors but also against Disadvantage: the best businesses operating in Not suitable for every organisation different industry COST

Advantages:

Benchmarking Methodology
BEST PRACTICE OVERLAP
Competitive
Industry leaders Top performers with similar operating characteristics

Internal
Top performers within company Top facilities within company

Functional
Top performers regardless of industry Aggressive innovators utilizing new technology

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GENERIC BENCHMARKING
Advantages

Break the company into

generic functions

Breakthrough ideas Network development High potential for innovation

Disadvantages:

Hard to do! Some information not transferable Time consuming

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Other Types Of Benchmarking

Performance benchmarking enables managers to assess their competitive positions through product and service comparisons. Process benchmarking focuses on discrete work processes and operating systems, such as the customer complaint process, the order-and-fulfillment process, or the strategic planning process. Strategic benchmarking examines how companies compete and is seldom industry-focused. It roves across industries seeking to identify the winning strategies that have enable high-performing companies to be successful in their marketplaces. 13

PLANNING A BENCHMARKING EXERCISE

Principal Requirements for Success

Strong Commitment From Senior Management Willingness to Act on Any Major Opportunities for Improvement
Revealed by Benchmarking

Resources Staff Capable of Running a Benchmarking Project Time for Employees to Spend on Benchmarking Activities
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THE BENEFITS OF BENCHMARKING

Cultural Change

Benchmarking allows organizations to set realistic,

rigorous new performance targets, and this process helps convince people of the credibility of these targets.

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THE BENEFITS OF BENCHMARKING

Performance Improvement

Benchmarking allows the organization to dene specic gaps in

performance and to select the processes to improve.

It provides a vehicle whereby products and services are redesigned to

achieve outcomes that meet or exceed customer expectations.

The gaps in performance that are discovered can provide objectives and
action plans for improvement at all levels of the organization and promote improved performance for individual and group participants. 16

THE BENEFITS OF BENCHMARKING

Human Resources

Benchmarking provides a basis for training. Employees begin to see the

gap between what they are doing and what best-in-class are doing.

Closing the gap points out the need for personnel to be involved in
techniques of problem solving and process improvement.

Moreover, the synergy between organization activities is improved

through cross-functional cooperation. 17

BENCHMARKING: IS/IS NOT

Continuous process Provides valuable information Learning Time-consuming Viable tool, generically applicable

IS

One-time event Provides simple answers Copying, imitating Quick & easy A buzzword, or fad
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IS NOT

A SIMPLE BENCHMARKING MODEL

Plan The Project

Take Action

Form The Teams

Analyse the data

Collect The Data

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XEROX CASE STUDY

Benchmarking can be called the management tool that revived Xerox. 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. They looked at all aspects of their business. 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

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The Xerox 12-Step Benchmarking Process

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.

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The Xerox 12-Step Benchmarking Process (continued)

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.

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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. Finally, benchmarking is not a substitute for innovation; however, it is a source of ideas from outside the organization.

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