Presented By:

Amarjeet Gorai
Neha Albina Ekka
12/26/16

Xavier Institute of Management,

Jabalpur

What is Benchmarking?
Benchmarking is the process of
measuring an organizations internal processes
then identifying, understanding, and adapting outstanding practices from other
organizations considered to be best-in-class.

Definition
measuring our performance against that of best-in- class companies,
determining how the best-in-class achieve those performance levels
and using the information as a basis for our own companys targets,
strategies and implementation .

12/26/16

Xavier Institute of Management,

Jabalpur

The Essence of Benchmarking

moving from where we are to where we want to be

12/26/16

Xavier Institute of Management,

Jabalpur

Why Benchmarking?

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
To Achieve Quality Awards
To Survive

12/26/16

Xavier Institute of Management,

Jabalpur

When Benchmarking?
If the companys QMS is not properly developed, documented and
implemented.
If companys great strength areas are not measured.
If companys great weakness areas are not measured.
If companys great opportunities are not measured.
If customer needs are not assessed and rectified .

12/26/16

Xavier Institute of Management,

Jabalpur

Benchmarking in the Context of TQM

TQM Key principles include:
Comparisons with best practice.
A Strong emphasis on meeting the needs of the customer (internal
and external).
The importance of efficient, effective business processes.
The need for continuous improvement .
Enhances a TQM program .

12/26/16

Xavier Institute of Management,

Jabalpur

Levels Of Benchmarking In Competitive

Environment
Internal benchmarking - Within ones org.
Competitive benchmarking - Analysis the performance and
practices of best in class companies.
Non-competitive benchmarking - Is learning something about a
process a company wants to improve by benchmarking.
World class benchmarking - Ambitious and looking towards
recognized leader.

12/26/16

Xavier Institute of Management,

Jabalpur

Benchmarking Methodology
Best Practice
Overlap

Competitive
Industry leaders
Top performers with
similar operating
characteristics

Functional

Internal

Top performers
regardless of industry
Aggressive innovators
utilizing new
technology

12/26/16

Xavier Institute of Management,

Jabalpur

Top performers
within company
Top facilities
within company

Types Of Benchmarking
Performance or operational benchmarking:
It involves pricing, technical quality, features and other quality.

Process or functional benchmarking:

It involves processes such as billing, order entry or employee training.

Strategic benchmarking:
Examines how companies compute and seeks the winning strategies that have
led to competitive advantage and market success.

12/26/16

Xavier Institute of Management,

Jabalpur

Areas Of Benchmarking
Operational Strategies:

Supply chain management:

Inventory management
Inventory control

Warehousing and distribution

Transportation

Marketing management:

H.R. Practices:

Customer service levels

Purchasing
Billing and collection
Purchasing practices

Talent Acquisition / Search

Training and Development
Compensation management etc.

12/26/16

Xavier Institute of Management,

Jabalpur

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Guidelines to Benchmarking
Do not go on a fishing expedition.
Use company people.
Exchange Information.
Legal Concerns.
Confidentiality.

12/26/16

Xavier Institute of Management,

Jabalpur

11

Five Phases Of Benchmarking

Planning: Identify the product, service or process to be benchmarked
Analysis: Determine the gap between the firms current performance and that of
the firms benchmarked and identify the causes of significant gaps.
Integration: Establish goals and obtain the support of managers who must
provide the resources for accomplishing the goals
Action: Develop action plans, and team assignment, implement the plans,
monitor progress and recalibrate benchmark as improvements are made.
Maturity: Leadership position attended, best practices fully integrated into
process.

12/26/16

Xavier Institute of Management,

Jabalpur

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Benchmarking Process
In
Motorola

12/26/16

Xavier Institute of Management,

Jabalpur

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Benchmarking Strategy
Decide what to benchmark.
Select companies to benchmark.
Obtain data and collect information.
Analyze data and forms action plans.
Recalibrate and start the process again.

12/26/16

Xavier Institute of Management,

Jabalpur

14

The Seven Step Benchmarking Model

Activity

What is included

Step 1: Identify what to benchmark

Clarify the benchmark objectives

Decide whom to involve
Define the process
Consider the scope
Set the boundaries
Agree on what happens in the process
Flowchart the process

Step 2: Determine what to measure

Examine the flow chart

Establishes the process measures
Verify that measures match objectives

Step 3: Identify who to benchmark

Conduct general research

Choose level to benchmark

12/26/16

Xavier Institute of Management,

Jabalpur

15

The Seven Step Benchmarking Model

Step 4: Collect data

Use a questionnaire
Conduct a benchmark site visit

Step 5: Analyze data and determine the gap

Quantitative data
Qualitative analysis

Step 6: Set goals and develop an Action

Plan

Set performance goals

Develop an action plan

Step 7: Monitor the process

Track the changes

Make benchmarking a habit

12/26/16

Xavier Institute of Management,

Jabalpur

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Factors For Success Of Benchmarking

Benchmarking must have the full support of senior management
and they should actively involve with this process.
For Benchmarking, team and process training is very imp.
Benchmarking should be a team activity.
Benchmarking is an ongoing process.
Benchmarking efforts must be organized, planned, and carefully
managed.
Correct use of benchmarking can lead you to the competitive
edge in todays business market place.
12/26/16

Xavier Institute of Management,

Jabalpur

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Advantages
Benchmarking is a systematic method by which organizations can measure themselves
against the best Industry practices.
It promotes superior performance by providing an organized framework through which
organization learn how the best in class do things.
Intensive studies of existing practices often lead to identification of non-value added
activities and plans for process improvement.
It helps for continuous improvement.
Benchmarking inspire managers (and organization) to compete.
Through Benchmark process organization can borrow ideas, adopt and refine them to gain
competitive advantages.
Benchmarking provides a basis for training human resources.

12/26/16

Xavier Institute of Management,

Jabalpur

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Disadvantages
The most resistant criticism of Benchmarking comes from the idea of copying
others.
It is not a strategy nor is it intended to be a business philosophy. Therefore, it is
a time taking technique.
Benchmarking is not instant pudding. It will not improve performance if
proper infrastructure of Total Quality Management is not in place.

12/26/16

Xavier Institute of Management,

Jabalpur

19

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. It breaks down (waste money, time and energy and some
times morale too) if process owners and managers feel threatened or
do not accept and act on the findings. Finally, benchmarking is not a
substitute for innovation; however, it is a source of ideas from
outside the organization.

12/26/16

Xavier Institute of Management,

Jabalpur

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Thank you
and
Have a Nice Day

12/26/16

Xavier Institute of Management,

Jabalpur

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