BENCHMARKING

TEAM MEMBERS

Ramtohul Nishta Seewoolall Arveeseck Sharma Seesahye Manishsingh

Ramtohul Natasha
Ramsurrun Arvind

INTRODUCTION

General Sun Tzu: If you know your enemy and know yourself, you need not fear the result of hundred battles.

INTRODUCTION
Companies must have:

quality beyond the competition; technology before the competition; and

costs below the competition (Watson, 1993).

INTRODUCTION
Many companies must strive to be better, faster, and
cheaper than their competitors. Benchmarking should be recognized as a catalyst for improvement and innovation. Benchmarking has been a popular topic for the last two decades and its significance as a practical method in

developing critical areas of business is indisputable.

Benchmarking can be termed as a management tool for attaining or exceeding the performance goals by learning from best practices and understanding the processes by which they are achieved.

DEFINITION: BENCHMARKING

Camp (1989):
Benchmarking is the search for the best industry practices which will lead to exceptional performance through the implementation of these best practices

DEFINITION :BENCHMARKING
Kumar et al (2006):
It is the process of identifying, understanding, and
adapting outstanding practices from organizations anywhere in the world to help an organization improve its performance. It is an activity that looks outward to find best practice and high performance and then measures actual business operations against those goals

DEFINITION: BENCHMARKING
Considering various definitions, benchmarking can be described

as:
a continuous analysis of strategies, functions, processes, products or services, performances, etc. compared within or between best-in-class organisations by obtaining information through appropriate data collection method, with the intention of assessing an organisations current standards and thereby carry out self-improvement by implementing changes to scale or exceed those standards.

MAIN ELEMENT THAT DEFINES BENCHMARKING

What it is? What it does?

With whom it compares?

Expected results?

DEFINITION : BENCHLEARNING AND BECNHACTION

Freytag and Hollensen (2001)

Benchlearning.

The process of learning from the best in class with the purpose of integrating these best practices in all organizational levels of the company.

Benchaction.

The actual implementation of the planned changes in the organization

EVOLUTION OF BENCHMARKING

Evolved in early 1950s Deming taught the Japanese the concept of quality control Toyota Motor Corporationg following the footsteps of Ford Motor Corporation Adaptation of Fords Just-In-Case system into Toyotas Just-In-Time system

XEROXS CASE

Originated in late 1970s with Xerox Business System Generic name for all photocopiers Japanese selling their machines at what it cost Xerox to manufacture their machines After period of denial,management accepted that someone else can do it better Evey function and task of productivity,cost and quality were benchmarked

BENEFITS TO XEROX

Quality problems cut by two thirds Manufacturing costs cut in half Development task cut by two thirds

Direct labor cut by 50%

35% cut in corporate staff

Increase in volume

TYPES OF BENCHMARKING

Process benchmarking Financial benchmarking Performance or Competitive benchmarking

Product benchmarking
Strategic benchmarking

Functional benchmarking

TYPES OF BENCHMARKING

Internal Benchmarking External Benchmarking International Benchmarking

Best Practice Benchmarking

Metric Benchmarking

COSTS OF BENCHMARKING
3 main types of costs involved are: Visit Costs - hotel rooms, travel costs, meals, a token gift, and lost labour time. Time Costs - Members of the benchmarking team will be investing time in researching problems, finding exceptional companies to study, visits, and implementation. Benchmarking Database Costs - Organizations that institutionalize benchmarking into their daily procedures find it is useful to create and maintain a database of best practices and the companies associated with each best practice now.

BENEFITS OF BENCHMARKING

Cultural Change Performance Improvement Human Resources New Paradigms

PITFALLS OF BENCHMARKING

Focusing on numbers.

Losing focus on customers.

Losing focus on employees.

Over-reliance on quantitative data

Difficult to obtain useful information about

competitors.

Emulating competitors. Difficult to benchmark services.

PITFALLS OF BENCHMARKING

Lacking proper implementation.

On-going process, not a one-time project.

NIH (not invented here).

Exposure of weaknesses.
Narrow scope of companies studied. Cultural difficulties in transferring best practices in multinational firms.

THE BENCHMARKING PROCESS

BENCHMARKING USUALLY INVOLVES SEVEN MAIN STAGES:

1) Decide what functions of the business to benchmark

by evaluating the KSFs (key success factors).

2) Evaluate the importance of each subject area (KSF).

3) Identify against whom to benchmark (determine benchmarking partners).

4) Gather the benchmarking information.

5) Compare best-in-class with the firm's own performance

(identify performance gaps).

6) Implications of benchmarking-results: how can the firm's skills/ processes be improved by learning from the best-inclass?

7) Implementation of the changes.

1) DECIDE WHAT FUNCTIONS OF THE BUSINESS TO BENCHMARK BY EVALUATING THE KSF

Key success factors (KSFs) are the limited number of the firm's subject areas in which results, if they are

satisfactory,

will

ensure

successful

competitive

performance for the organization.

First of all identify subject areas within which improvements

are critical.

The criteria for selecting the subject areas are: they should be of strategic importance to the business; and improvements in the areas will make a significant contribution to overall business results.

2) EVALUATE THE IMPORTANCE OF EACH SUBJECT AREA (KSF)

PURPOSE: To narrow down the number of subject areas.

. It is wise to direct attention to a small number of areas, particularly in the early stages of benchmarking when knowledge of the technique needs to be developed concurrently with the process itself.

3) IDENTIFY AGAINST WHOM TO BENCHMARK (DETERMINE BENCHMARKING PARTNERS)

The following two questions provide the starting point in the search for suitable partners:

(1) Who/what is better (at a particular process) than us?

(2) To whom is this process a key to survival?

Essentially, benchmarking partners might be found in two locations:

(1) internally; and (2) externally.

Internal partners

Most organizations start with internal comparisons wherever

possible.

REASONS:

This makes a great deal of sense since there are relatively few hurdles to overcome in terms of language, culture and data availability.

Hierarchies are understood and communication channels

generally exist which makes it easier to visit someone.

The benchmarking teams can develop familiarity with their own work process before they look at what others are doing.

internal benchmarking can produce some relatively quick returns.

External partners

Identifying potential external benchmarking partners is another step in the research phase.

According to Sheth and Sharma (1997) the broader the

horizon of search the greater the likelihood that an entirely new perspective will be found.

The partner could be found:

within the industry at the same location; at other locations but in the same industry; in a different industry and the same type of company; in a different type of company within the same industry; or

completely outside the industry.

Some of the criteria in selecting external partners are:

The partner should be measurably better than the company which is conducting the benchmark.

Avoid direct competitors where possible, unless markets are

exclusive or processes are general and affect the whole

industry.

4) GATHER THE BENCHMARKING INFORMATION

The data collection team needs to have uniform collection

methods .

Be sure to specify the data at the proper aggregation level.

It is good practice to mail any questionnaires to the bestpractice company before visiting the company.

The world is not standing still during this exercise.

Build

in

robustness

in

the

questionnaire

and

the

benchmarking plan .

Information on companies' internal and external relations is

usually considered confidential.

In a way benchmarking to a certain degree contrasts with the idea that discretion is of the utmost importance.

5) COMPARE BEST-IN-CLASS WITH THE FIRM'S OWN PERFORMANCE (IDENTIFY PERFORMANCE GAPS)
The company's internal make-up of the resources,

competencies is special, customer demands and requests vary

and competitors act differently. Of course, these and other

factors create the need to compare the results of a benchmarking process with one's own unique company situation.

ADVANTAGES AND DISADVANTAGES OF BENCHMARKING WITHIN INDUSTRIES

Benchmarking within the industry:

Advantages: similarity of the competitive situation eases

the transfer of experience

Drawbacks: the perception of the competitive situation is too narrow which makes it difficult to catch up with other companies as regards competition

ADVANTAGES AND DISADVANTAGES BENCHMARKING ACROSS INDUSTRIES

Advantages: inspiration to improve processes, etc. In which

areas are the advantages best and/or easy to realize

Drawbacks: it is difficult to transfer experience across industries. Perhaps eliminate focus from the obvious problems in the company

6) IMPLICATIONS OF BENCHMARKINGRESULTS: HOW CAN THE FIRM'S SKILLS/ PROCESSES BE IMPROVED BY LEARNING FROM THE BEST-IN-CLASS?

This is only the first step towards an improvement of the company's performance. when transferring experience from other companies it is important to understand two processes that are closely related: First, the task itself and; the functions and operations in question.

1. 2.

7) IMPLEMENTATION OF THE CHANGES

The actual implementation of the planned changes could take place through developing skills of the employees, training and organizational development.

It is crucial for the benchmark concept that the company sees the results of the benchmarking process only as a snapshot of the

situation.

New concepts have to be learned and put into practice before the benchmarking process can have a real effect.

At this last stage of the benchmarking process any new steps or appropriate follow- up activities also should be

identified, including the continuation of the process.

The overall process usually requires three different teams:

1) A needs assessment team to identify key customer needs and their status:

needs that are not being met (cost, quality, timeliness, etc.); needs that are met better by the competition; and needs that are being met but can be improved.

2) The benchmarking team uses the needs assessment results to design the required benchmarking project.

3) A problem-solving team to take the necessary actions to change the audit process identified by the benchmarking team. The problem-solving team also helps to identify new customer issues for a continuous change management loop.

SUCCESSFUL BENCHMARKING PROJECT

Here are some points to remember to be successful:

1. Do the right kind of benchmarking.

2. Structure the project to maximize learning.

3. Send the right people.

4. Prepare thoroughly. 5. Don't do too much at once

CONCLUSION

THANK FOR YOUR ATTENTION