BENCHMARKING:Definition: - Benchmarking is the process of comparing one's business processes and performance

metrics to industry bests and/or best practices from other industries. Dimensions typically measured are quality, time, and cost. Improvements from learning mean doing things better, faster, and cheaper. It involves management identifying the best firms in their industry, or any other industry where similar processes exist, and comparing the results and processes of those studied (the "targets") to one's own results and processes to learn how well the targets perform and, more importantly, how they do it. It is the process of identifying "best practice" in relation to both products (including) and the processes by which those products are created and delivered. The search for "best practice" can take place both inside a particular industry, and also in other industries (for example - are there lessons to be learned from other industries?). The objective of benchmarking is to understand and evaluate the current position of a business or organization in relation to "best practice" and to identify areas and means of performance improvement.

OPERATIONAL DEFINITION OF BENCHMARKING

Comparing business processes, not only performance measures A structured technique Learn from others

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

External focus

Improvement, not evaluation

Birla Institute of Technology, Mesra

Anuradha Tiwary (MBA/1014/09)

WHY BENCHMARKING:Continuous and Breakthrough Improvement

Benchmarking accelerates Innovation and change

Time

Benchmarking for Business Improvement

Output with Competitive Advantage

Business Process

Customer Differentiation

Improved Processes

Greater Increased Customer Competitive Satisfaction Advantage + Increased Profitability

Birla Institute of Technology, Mesra

Anuradha Tiwary (MBA/1014/09)

The Benchmarking Process:-

A Benchmarking Process
1. IDENTIFY WHAT IS TO BE BENCHMARKED

PLANNING

2. IDENTIFY COMPARATIVE COMPANIES

3. DETERMINE DATA COLLECTION METHOD AND COLLECT DATA 4. DETERMINE CURRENT PERFORMANCE "GAP"

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

MATURITY

LEADERSHIP POSITION ATTAINED PRACTICES FULLY INTEGRATED INTO PROCESS

Benchmarking involves looking outward (outside a particular business, organization, industry, region or country) to examine how others achieve their performance levels and to understand the processes they use. In this way benchmarking helps explain the processes behind excellent performance. When the lessons learnt from a benchmarking exercise are applied appropriately, they facilitate improved performance in critical functions within an organization or in key areas of the business environment.

Birla Institute of Technology, Mesra

Anuradha Tiwary (MBA/1014/09)

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

Act Communicate actions Develop improvement plan Implement Review Progress

Types of Benchmarking
There are a number of different types of benchmarking, as summarized below: Type Description Most Appropriate for the Following Purposes Where businesses need to improve overall -Re-aligning business performance by examining the long-term strategies that have strategies and general approaches that have become inappropriate enabled high-performers to succeed. It involves considering high level aspects such as core competencies, developing new products and services and improving capabilities for dealing with changes in the external environment. Changes resulting from this type of benchmarking may be difficult to implement and take a long time to materialize Businesses consider their position in relation to _ Assessing relative performance characteristics of key products and level of performance services. Benchmarking partners are drawn from in key areas or the same sector. This type of analysis is often activities in undertaken through trade associations or third comparison with parties to protect confidentiality. others in the same sector and finding ways of closing gaps in performance Anuradha Tiwary (MBA/1014/09)

Strategic Benchmarking

Performance or Competitive Benchmarking

Birla Institute of Technology, Mesra

Process Benchmarking

Functional Benchmarking

Internal Benchmarking

External Benchmarking

International Benchmarking

Focuses on improving specific critical processes and operations. Benchmarking partners are sought from best practice organisations that perform similar work or deliver similar services. Process benchmarking invariably involves producing process maps to facilitate comparison and analysis. This type of benchmarking often results in short term benefits. Businesses look to benchmark with partners drawn from different business sectors or areas of activity to find ways of improving similar functions or work processes. This sort of benchmarking can lead to innovation and dramatic improvements. Involves benchmarking businesses or operations from within the same organization (e.g. business units in different countries). The main advantages of internal benchmarking are that access to sensitive data and information is easier; standardized data is often readily available; and, usually less time and resources are needed. There may be fewer barriers to implementation as practices may be relatively easy to transfer across the same organization. However, real innovation may be lacking and best in class performance is more likely to be found through external benchmarking. Involves analyzing outside organizations that are known to be best in class. External benchmarking provides opportunities of learning from those who are at the "leading edge". This type of benchmarking can take up significant time and resource to ensure the comparability of data and information, the credibility of the findings and the development of sound recommendations. Best practitioners are identified and analyzed elsewhere in the world, perhaps because there are too few benchmarking partners within the same country to produce valid results. Globalization and advances in information technology are increasing opportunities for international projects. However, these can take more time and resources to set up and implement and the results may need careful analysis due to national differences

- Achieving improvements in key processes to obtain quick benefits

- Improving activities or services for which counterparts do not exist.

- Several business units within the same organization exemplify good practice and management want to spread this expertise quickly, throughout the organization

- Where examples of good practices can be found in other organizations and there is a lack of good practices within internal business units - Where the aim is to achieve world class status or simply because there are insufficient national" businesses against which to benchmark.

Birla Institute of Technology, Mesra

Anuradha Tiwary (MBA/1014/09)

Strategic Benchmarking
Mission Strategy Benchmarking Critical Success Factors

Issues
Benchmarking Improvement

Business Improvement

Success Factors for Benchmarking: Top Management Support and guidance. Aligning benchmarking with the vision and mission of the organization. Thorough process mapping and documentation of ones own practices. Committed Benchmarking team with creative and innovative thinking. Integrating benchmarking with other improvement initiatives in the organization. Selection of right benchmarking partner. Willingness to learn and experiment. Flexible mindset to accept change and findings.

Benchmarking Pitfalls: Mission, goal, Objectives Unconnected Not relating to other improvement initiatives Lack of sponsorship. Unengaged process owner Own process not documented Over emphasizing measures. Not accepting findings. Time and resources overlooked. Notion that we are unique.

Birla Institute of Technology, Mesra

Anuradha Tiwary (MBA/1014/09)